Sales were down 11% to €10.46bn (£8.95bn), while operating profits fell to €608m from €1.97bn the prior year.
Comparable EBIT margins fell from 17.9% to 9.7%.
President and CEO Massimo Reynaudo commented: “UPM delivered solid 2023 results in a very challenging operating environment as the world went through an exceptional economic cycle.
“During the first half of the year, we experienced an exceptionally sharp downturn, especially in European markets. Unprecedented destocking significantly affected market deliveries and was combined with falling pulp and energy prices. As the year progressed, there were signs of gradual recovery in many product markets, and we were able to deliver improving earnings.”
Last year UPM shuttered its UPM Plattling paper mill in Germany entirely.
It also closed PM6 at UPM Schongau in Germany, as well as PM4 at UPM Steyrermühl in Austria.
Reynaudo said the highlight of the year was the completion of two major investments “that will generate material growth and value for years to come”.
The UPM Paso de los Toros pulp mill in Uruguay started production in Q2, and the OL3 nuclear power plant in Finland also began commercial production during the same quarter.
“These milestone investments increased our pulp and energy capacity by about 50% and contributed to our deliveries already during the second half of the year,” he said.
UPM Communications Papers achieved strong results in full year 2023. The business generated a record-high cash flow despite low capacity utilisation rates. It also benefited from annual energy-related refunds in Europe.
UPM also reported modest improvement in market demand at its two packaging businesses as the impact of destocking came to an end.
Results at UPM Specialty Papers improved, while performance at labels wing UPM Raflatac was seasonally weaker, resulting in continued cost reductions and capacity adjustments to align with current demand.
Regarding the outlook for 2024, UPM said: “Demand for many UPM products is expected to continue to improve gradually as the destocking seen in 2023 is largely over.”
Shares in UPM fell from €33.67 to €30.50 after the results announcement.
