UPM plans to keep its leading office paper position in China

UPM (OMXH: UPM1V) is making another investments on its Changshu mill site near Shanghai. It will add a new wood-free speciality paper machine in a 3 billion RMB (around 390 million Euros) investment. The new machine will start by the end of 2014. Local subcontractors should have sizeable deals in the offing. In addition a 100 000 tonnes cut-size sheeting line investment is already in the process of completion.

Changshu Economic & Technological Development Zone already hosts a 900,000 tpy fine paper mill, a labelstock factory and R&D Centre as well as supporting facilities. The two machines lines produce mainly wood-free uncoated and wood-free coated paper respectively. UPM plans to have over half ot its sales to come from”well performing growth businesses” by the end of this decade. High quality office paper demand is expected to grow by 8% each year in China.

The Finnish firm reported quarterly earnings this morning. Sales of 2.6 billion, EBITDA of 316 million and operating profit of a mere 92 million Euros were a disappointment. The company does not foresee profitability improvement during H2 2012 and operating profit excluding special items for the full year is expected to be lower than last year.