UPM's result clearly improved: Sales exceeded EUR 10 billion, Operating profit for 2006 grew 30%

Archive 1.2.2007 0:00 EET

(UPM, Helsinki, February 1, 2007) – UPM’s President and CEO Jussi Pesonen comments on the Financial Review 2006:
"UPM’s operating profit improved clearly over the last year and the profitability of all business areas developed well. In the spring, UPM launched a profitability programme that improved the company’s competitiveness in the paper industry and laid the foundation for sustainable profitability. In 2006, UPM Raflatac developed into a major global business and the reorganisation of the Wood Products Division had a positive impact on the business area’s profitability. UPM made good progress.”

"The year was a turning point for UPM, but the ongoing industry transformation is not over. The forest industry’s business environment will continue to be challenging. Only efficient production and supply can guarantee future success. UPM got off to a good start in this race last year.”

"What’s critical is that customer deliveries from the closed, unprofitable paper machines were successfully transferred to UPM’s other machines. During the year, mill productivity improved and we can use our own capacity more effectively and profitably than before,” says Mr. Pesonen.

"We expect the Group’s profits to grow this year. Despite the increase in wood, raw material and energy prices, the increase in the company's overall costs is expected to increase moderately, 1-2%. This year, the annual cost savings of the profitability programme are estimated to amount to EUR 110 million.”

“Demand forecasts are largely positive across the board. Demand for printing papers is forecast to grow somewhat from last year. The strongest growth in demand will be in emerging markets. In North America, weak demand is expected to continue. We expect paper deliveries to increase over last year. Average paper price is slightly higher in the first quarter of 2007 than that of the fourth quarter of 2006.”

“Demand for self-adhesive labelstock is expected to grow in all markets and prices are forecast to remain stable. Demand for industrial wrappings is also expected to grow slightly. In wood products demand for plywood and sawn timber will remain good,” says President and CEO Pesonen.

For more information please contact:
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001
Mr Jyrki Salo, Executive Vice President and CFO, UPM, tel. +358 204 15 0011

News conference and conference call information
A news conference on the Financial Review for 2006 will be held today, February 1, 2007, at UPM's Head Office in Helsinki at 14:00 Finnish time (12:00 GMT, 07:00 EST). The briefing can be followed live on the Internet at the address www.upm-kymmene.com. A recording of the briefing will be available 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). The conference call title is: UPM Financial Results 2006, access code: 5921648. A recording of the discussion can be heard until February 7, 2007 by calling: +44 (0)1452 550 000, access code 5921648#.

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: 5921648#.

It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by "believes", "expects", "anticipates", "foresees", or similar expressions, are forward-looking statements. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development, acceptance of new products or services by the Group's targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the Group's patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group's products and the pricing pressures thereto, financial condition of the customers and the competitors of the Group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group's principal geographic markets or fluctuations in exchange and interest rates. For more detailed information about risk factors, see pages 4-8 of the company's annual report on form 20-F for the year-ended 31 December, 2005 under "Item 3. Risk Factors".