New Business Group structure for UPM as of December 1, 2008 - The change supports the company strategy in the new forest industry

Archive 10.9.2008 0:00 EEST

(UPM, Helsinki, 10 September 2008 at 07:45) – UPM will adopt a completely new business structure during the autumn. In the future the company will consist of three Business Groups which are: 1) Energy and Pulp, 2) Paper, and 3) Engineered Materials. Previously the company consisted of five divisions. The change will take effect on December 1, 2008. The current organisation will continue until then.

"Changes in the business environment have continued and intensified. UPM responds to these challenges with a new business structure which improves our capability to leverage the company's competitive advantages. Our target is to create a structure and leadership model which sets the basis for strong, market driven operations in all the three business groups," says Jussi Pesonen, President and CEO of UPM.

Energy and Pulp Business Group consists of pulp mills in Finland, hydro power assets, and shares of associated pulp and energy companies. The Business Group is also responsible for forests and wood sourcing as well as the timber business. Biofuels business will be a part of this entity and their development belongs to this Business Group.

Mr Tapio Korpeinen has been appointed President of the Energy and Pulp Business Group. Tapio Korpeinen, 45, holds a M.Sc.(Eng.) and MBA and is currently UPM's Senior Vice President, Strategic Planning.

"We have taken pioneering steps and invested heavily in this area. The results are convincing. Growth and development prospects continue to be interesting. We want to take a more market driven approach to these business areas and also increase their transparency towards the investors," says Korpeinen.

Paper Business Group consists of magazine, fine and speciality paper as well as newsprint businesses. Mr Jyrki Ovaska has been appointed President of Paper Business Group. Jyrki Ovaska, 49, holds a M.Sc. (Eng.) and is currently the President of UPM's Magazine Paper Division.

"Combining the current three paper divisions enables faster decision making and more streamlined processes. To improve our profitability we will develop new customer focused operating modes and intensify our supply chain management. UPM has a unique opportunity to strengthen the cost leadership by optimizing resources, production and investments," says Ovaska.

Engineered Materials Business Group consists of self-adhesive labelstock, plywood, wood plastic composite and RFID business areas. Mr Jussi Vanhanen has been appointed President of the Engineered Materials Business Group. Jussi Vanhanen, 36, holds a LL.M. and MBA and is currently Senior Vice President, Europe, in UPM's Label Division.

"UPM intends to increase the weight of fast growing higher added value businesses in the company. Important is that these business areas build on the company's proprietary know-how. Leveraging growth opportunities in these business areas requires high level of agility and flexibility but also a committed growth strategy," says Vanhanen.

Group Executive Board and Executive Team

The new Executive Board consists of the President and CEO, the three Business Group Presidents and Mr Jyrki Salo, Executive Vice President, CFO. Jyrki Salo's resposibilities will also include Information Technology, Logistics and Global Sourcing.

Besides the persons mentioned above, the Executive Team consists of the following members as of December 1, 2008:
- Mr Juha Mäkelä, Group General Counsel,
- Mr Hartmut Wurster, Executive Vice President, Technology,
- Mr Hans Sohlström, Executive Vice President, Corporate Relations and Development,
- Ms Pirkko Harrela, Executive Vice President, Corporate Communications,
- Ms Riitta Savonlahti, Executive Vice President, Human Resources, and
- Ms Anu Ahola, Executive Vice President, Strategic Planning.

Tapio Korpeinen, Jussi Vanhanen, Juha Mäkelä and Anu Ahola are new Executive Team members.

Mr Pauli Hänninen, the current Executive Vice President, Technology will continue in Group projects reporting to the CEO.

As earlier agreed, Mr Matti Lindahl, the President of Wood Products Divisions, will retire at the end of 2008 at the age of 62.

Mr Heikki Pikkarainen has stated that as he is not able to identify a suitable position in the new organisation, he has decided to leave the company later this year in a jointly agreed manner.

Mr Markku Tynkkynen will leave the Executive Team out of his own initiative. He will leave the company by a mutual agreement.

The new organisation and responsibilities will take effect December 1, 2008.

Changes in reporting segments

After the new business structure will take effect, the company will report financial information for the following segments: Energy, Pulp, Forest and Timber, Paper, Label Materials, Plywood and Other operations. Energy and Pulp include shares of corresponding associated companies.

UPM will report the results for 2008 according to the new structure on 5 February 2009. Comparable financial figures for Q107–Q308 will be published in December 2008.

* * *
Press conference in Finnish today at 12:00 Finnish time
Conference call in English today at 16:00 Finnish time

UPM will organize a press conference, hosted by Jussi Pesonen, President and CEO of UPM, in Finnish language in its Group Head Office at Eteläesplanadi 2, Helsinki, today on Wednesday, 10 September 2008 at 12:00 Finnish time.

A conference call for investors and analysts will be arranged in English language today 10 September 2008 at 16:00 Finnish time, hosted by President and CEO Jussi Pesonen. Dial-in numbers for the conference call are:

Call title: UPM Conference Call 10.09.2008
Conference ID: 64065573
International dial-in: +44 (0) 1452 555 566
UK Free Call: 0800 694 0257

Dial-in numbers for replay are available until 16 September 2008
Access number: 64065573#
International Dial In: +44 (0) 1452 55 0000

For further information please contact:
Mr Jyrki Salo, UPM, Executive Vice President and CFO, tel. +358 204 15 0011
Ms Pirkko Harrela, UPM, Executive Vice President, Corporate Communications, tel. +358 204 15 0588

UPM, Corporate Communications
Media Desk, tel. +358 40 588 3284