(Adds detail, quotes, shares, adds biofuels plant)
Jan 28 (Reuters) - Finland’s UPM expects weak paper prices to hit earnings in the first half of 2021, the pulp and paper maker said on Thursday, after reporting a bigger-than-expected fall in fourth-quarter profit.
Maintenance and a continuing fall in paper prices would push first-half underlying operating profit below year-earlier levels before profits recover in the second half, UPM said.
UPM said underlying operating profit for the October-December quarter fell 27% to 252 million euros ($305 million), missing the 311 million expected by analysts in a Refinitiv poll.
The fourth-quarter numbers were hit by weak pulp prices and lockdowns which hit demand.
“The COVID-19 pandemic continues to cause significant uncertainty in 2021,” CEO Jussi Pesonen said in a statement.
Separately, UPM said it has decided to start the basic engineering phase for a biorefinery with annual capacity of 500,000 tonnes of high-quality renewable fuels including sustainable jet fuel.
Pesonen said the facility would improve the long-term competitiveness and sustainability performance of UPM Biofuels “by introducing several sustainable feedstocks and achieving uniquely high CO2 reduction compared to biofuels currently on the market”.
UPM shares were down 1.2% in early trading, roughly in line with the weaker Helsinki bourse.
$1 = 0.8271 euros Reporting by Tarmo Virki in Tallinn; editing by David Goodman and Jason Neely