UPM's Sharpened Future: Biofuels Fly, WISA Demerger Takes Shape, Data Centers Drive Energy
Q2 2026 delivered a 71% EBIT jump, a standout 35% biofuel margin, and a clear runway toward a focused, higher-growth portfolio.
UPM.HE · Earnings Call · 2026-07-23
The Transformation Accelerates
UPM's Q2 2026 call was a study in strategic momentum. The company is deliberately reshaping itself into a focused advanced materials and decarbonization player. The most concrete evidence: WISA Group is on track to list in early November, and the graphic paper joint venture with Sappi has signed its definitive agreement and secured financing. As CEO Massimo Reynaudo put it, “Following these steps, UPM is becoming an increasingly focused advanced materials and decarbonization solution company with stronger growth prospects and improved earnings quality.” — Massimo Reynaudo, CEO · 2026-07-23 The company now generates profits from three roughly balanced pillars—Decarbonization Solutions, Advanced Materials, and Renewable Fibers—and management argues this balance will hold even without the declining paper business. The demerger plan is progressing; the prospectus is public and an EGM is scheduled for August 31. This is not a paper exercise: the new UPM will have no direct exposure to the secular decline in graphic paper in Europe or North America, and it will hold a leaner, more profitable asset base.Biofuels: A Fundamental Breakout
The most striking operational number was the biofuel business's 35% comparable EBIT margin in H1 2026. The strength stems from a full run of the Lappeenranta refinery, meaningful bio premiums (which management calls "structural"), and higher fossil reference prices during the Middle East disruption. CFO Tapio Korpeinen framed it as a result of both self-help and a tailwind: “as our activity increased, our sales was up by 7% or EUR 335 million in the first half of this year sequentially compared to the second half of last year.” — Tapio Korpeinen, CFO · 2026-07-23 This is a company that previously guided toward breakeven in biofuels; now it is a margin standout. The Leuna biochemicals ramp-up remains a drag—costs and depreciation will push H2 EBIT lower sequentially—but the company reiterated its long-held view that the plant reaches full capacity and breakeven in 2027. Management gave a concrete date for the site inauguration (October 15) and expects the first shipments of renewable functional fillers and lignin derivatives in Q3. This is a multi-year investment cycle that is finally moving from cost to revenue.Data Centers: The Next Growth Engine
Energy is the underappreciated part of the story. Finnish electricity consumption grew 5% year-on-year, and management explicitly ties this to data-center construction and electrification. Massimo outlined the opportunity:UPM holds a portfolio of industrial sites with existing or nearby grid connections and can offer 12 TWh of clean baseload power via PPAs. It also has a 1 GW pipeline of wind and solar projects that could be built as early as 2027 if merchant or PPA conditions justify it. The structural demand growth is already visible in energy hedging results—the company generated EUR 10 per MWh of value over spot last year—and is expected to continue for years. This is a unique position: a carbon-neutral, baseload-capable generator sitting on land adjacent to the grid and a growing pool of hyper-scale consumers.The new large-scale consumers need three things to happen at pace; locations where to install data centers or other industrial projects, grid connections to feed them with energy, and reliable baseload CO2-free energy.