UPM increases the IFRS fair value of its forest assets in Finland
December 10, 2018
HELSINKI (News release) -- UPM increases the IFRS fair value of its forest assets in Finland, mainly due to higher forest growth estimates. In addition, the company adjusts its long-term wood price estimates slightly. The impact of these changes on the fair value of forest assets is approximately Euro 320 million and will be reported as an item affecting comparability in 4Q 2018 under Other operations.
The updated forest growth model indicates higher forest growth volumes that are explained mainly by sustainable forest management.
"UPM's own forests are strategic source for UPM's wood supply. Active, timely and sustainable forest management combined with high quality seedling material have increased UPM's own forests' growth significantly over the years. Increasing forest growth and carbon sequestration enable higher sustainable harvesting volumes from UPM's own forests now and in the future," says Sauli Brander, Senior Vice President, Wood Sourcing and Forestry Northern Europe.
UPM continues to estimate a declining trend of real wood prices in Finland with a slightly slower rate than previously. The pre-tax discount rate used to determine the fair value of the Finnish forests remains at 7%.
There is no significant change in the fair value of Uruguayan plantations. The pre-tax discount rate used to determine the fair value of the plantations increases from 9.5% to 9.9%.