S&P lifts UPM-Kymmene view to positive

Standard & Poor's said it revised the outlook on UPM-Kymmene Corp. to positive from stable.

The agency also said it affirmed the company's BB long-term and B short-term corporate credit ratings and the BB rating on its senior unsecured debt.

The recovery rating on the senior unsecured debt is unchanged at 3, indicating 50% to 70% expected default recovery.

The outlook revision primarily reflects expectations that ongoing cost cutting and expansion investments will lead to a profitability improvement in the coming years, S&P said.

These initiatives might offset the structural weaknesses in European paper operations, which face a challenging market due to falling demand and structural overcapacity, the agency said.

The ratings also consider the company's large proportion of earnings stemming from very profitable pulp and energy operations, S&P said, and its position as one of the world's largest forest- and paper-products companies.

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