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Investing.com -- Shares of UPM-Kymmene Corp. (HE:UPM). rose on Monday after the Finnish forestry company announced it would discontinue work on a planned biofuels refinery in Rotterdam, ending all engineering and site-related activity tied to the project.
UPM said the decision came after extended technical, commercial and strategic evaluations. The company currently operates a single bio-refinery in Lappeenranta, Finland.
Stifel in a note said the cancellation is a positive development. They noted that UPM’s biofuels operations have underperformed relative to expectations, and halting the Rotterdam project improves medium-term cash flow visibility.
Stifel said the move signals a sharper focus on profitable growth rather than expansion for its own sake.
UPM said it will continue to pursue growth in biofuels through lower-capex alternatives.
That includes evaluating the potential to debottleneck its Lappeenranta facility and further capitalize on market demand for crude tall oil (CTO)-based biofuels.
The company also plans to continue efforts to qualify CTO-derived fuels as sustainable aviation fuel and to develop proprietary technologies that broaden its feedstock base.
Stifel analysts added that Lappeenranta debottlenecking and SAF qualification present growth opportunities with reduced capital risk.