Q3/2005: Cost-cutting and self-sufficiency in resources supported UPM's result, Efficiency improvements in all operations to continue

Archive 1.11.2005 0:00 EET

UPM’s Interim Report for January – September 2005:

Key figures for July – September 2005 (July – September 2004)
· Operating profit, excluding non-recurring items: EUR 157 million (137 million)
· Earnings per share, excluding non-recurring items: EUR 0.19 (0.19)
· Profit before tax, excluding non-recurring items: EUR 141 million (121 million)
· Sales: EUR 2,243 million (2,449 million)
· Balance sheet strengthened, gearing ratio 65%

UPM’s President and CEO Jussi Pesonen comments on the third quarter of 2005:

"UPM's financial results in the third quarter of 2005 reflect systematic cost-reductions and high self-sufficiency in resources. However, this year is again marked by a sharp increase in the cost of both raw materials and energy. To restore targeted profitability, both significant improvements in our operational efficiency and increases in paper prices are needed. The biggest challenges are in our magazine paper and newsprint businesses, where it is clear we must further improve our cost-competitiveness."

"We intend to remain the cost leader in the industry. Large production units and high self-sufficiency in both energy and chemical pulp give us a clear competitive advantage. However, we continue to look for ways to improve efficiency throughout the organisation. It is vital that we achieve the very highest degree of cost-competitiveness."

"The start-up of Changshu’s new paper machine in China was very successful. During its first months of operation, we established a solid customer base. The machine achieved positive operating profit in September. Demand for its fine papers has developed as projected and prices are firm."

"Advertising driven paper has continued to be in good demand. Average prices have been raised somewhat since the summer. Prices outside Europe have continued to show a positive trend and are well above those in Europe. Further price increases are expected as of the beginning of next year."

"Demand for papers during the fourth quarter is predicted to be as good as in the same period last year. Average paper prices are forecast to be higher. Converted products and plywood continue to be in good demand, but the markets for sawn timber will remain oversupplied. The rise in costs is likely to be only moderate thanks to greater efficiency and high energy self-sufficiency."

For more information please contact:
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001
Mr Kari Toikka, Executive Vice President and CFO, UPM, tel. +358 204 15 0014

Corporate Communications
November 1, 2005


News Conference and Conference Call Information

A news conference regarding the Interim Report for January-September will be held today, November 1, 2005, at Restaurant Bank (entrance: Unioninkatu 22, Helsinki) at 15:00 Finnish time (13:00 GMT, 08:00 EST). The briefing can be followed live on the internet at the address www.upm-kymmene.com. A recording of the briefing can be seen at this address for the following three months.

To participate in the UPM Conference Call, please dial +44 (0) 1452 542 300 at 17:00 (Finnish time) (15:00 GMT, 10:00 EST). A recording of the discussion can be heard until November 8, 2005 by calling: +44 (0) 1452 550 000, access code: 1205635#. The conference call title is UPM Interim Report Q3/2005 Conference Call.

In the United States and Canada, the Conference Call toll free number is +1 866 220 1452. The recording can be heard at the toll free dial in number +1 866 247 4222, access code: 1205635#.