The ratings on Finland-based forest products producer UPM-Kymmene Corp. reflect our view of its "fair" business risk profile and "significant" financial risk profile. The business risk profile is supported by a cost position and margins that are better than the industry average, high levels of internally generated energy and pulp production, and a diverse portfolio of forest products. These benefits are, however, offset by exposure to the cyclical pulp and paper industry, which faces oversupply, and by a structural decline in demand for graphic paper. UPM-Kymmene's financial risk profile reflects our view of the group's cyclical and weak cash flow generation, and risk of increased leverage from debt-financed acquisitions, mitigated by a currently balanced capital structure and strong liquidity. Higher...
Companies mentioned in this report are: UPM-Kymmene Corp.
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