UPM grows in China and in the fast developing label materials segment

Stock Exchange Release 7.8.2012 12:00 EEST

UPM-Kymmene Corporation         7 August 2012 at 12.00 EET

(UPM, Helsinki, 7 August 2012 at 12.00 EET) – UPM takes further steps to reshape its business portfolio and expands in profitable growth businesses in Asia. The company will increase its presence in the attractive Asian paper segments and strengthen its position in the label materials value chain by building a new woodfree speciality paper machine at its Changshu mill in China.

“This move is aligned with our strategic target to have more than 50 % of our sales from well performing growth businesses in the latter part of the decade. It supports our growth in China and provides an excellent platform to strengthen partnerships with self-adhesive labelstock customers and expand into new end uses in Asia. It also supports the good profitability of our growth businesses”, says Jussi Pesonen, UPM’s President and CEO.

The new machine is an uncoated woodfree speciality machine capable of producing up to 360,000 tonnes of uncoated woodfree grades and high quality label papers. The machine will start up by the end of 2014. The investment will also include future-oriented infrastructure investments in the Changshu site. The total investment cost is CNY 3,000 million (EUR 390 million). In addition, UPM Changshu is finalising a 100,000 tonnes cut-size sheeting line investment which strengthens the Group’s leading position in office paper grades in China. 

Both label paper and uncoated woodfree papers have a healthy demand outlook in Asia. The annual growth of UPM’s label paper mix is expected to be 8 % in Asia and 4 % globally. In uncoated woodfree grades, UPM focuses on high quality office paper, where the Chinese market is expected to grow by 8 % annually.

“China and emerging Asia are our natural growth markets where we already have a unique market position, good customer base and excellent distribution networks. Asian label paper customers with multiple end-use areas clearly pose a further opportunity for us,” says Jyrki Ovaska, President of the Paper Business Group.

“It is worth noting that for the first time about 70 % of the investment will be based on Chinese currency and we aim to maximize the use of Chinese subcontractors.”

Ovaska underlines that Changshu site is very competitive with excellent environmental performance. It accommodates two paper machines, a labelstock factory, power plant and a jetty. The site has been recognized by the Chinese state authorities for its sustainable production and innovative and low-emission technologies.  “We are building the expansion with similar sustainability standards, using best available technology”, concludes Ovaska.

For further information please contact :
Jyrki Ovaska, President, Paper Business Group, UPM, tel: +358 20 41 50564
Pertti Salminen, Senior Vice President, Business Area Asia Pacific, UPM Paper Business Group, tel. +86 136 2179 6979

Notes to the editors:  

UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Our products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 24,000 people and it has production plants in 16 countries. UPM's annual sales exceed EUR 10 billion. UPM's shares are listed on the Helsinki stock exchange. UPM – The Biofore Company – www.upm.com

UPM Paper has 22 modern and sustainable paper mills in Finland, Germany, the United Kingdom, France, Austria, China and the United States. Many of them are large recycling centres and bioenergy producers, as well as paper manufacturers. UPM Paper employs almost 13,000 people. In 2011, the business group’s net sales amounted to EUR 7.2 billion. To learn more, visit: www.upmpaper.com

UPM Changshu

UPM Changshu mill site is situated in China, at Changshu Economic & Technological Development Zone approximately 90 km west of Shanghai. The mill site hosts a 900,000 tpy fine paper mill, a labelstock factory and R&D Center. The Chansghu mill site is logistically well located against south bank of Yangtze River. The nearly 200 hectare mill site is equipped with auxiliary facilities including a power plant, an effluent treatment plant, a process water plant and an in-house jetty.

The UPM Changshu paper mill has approximately 600 employees and two paper machine lines. PM1 produces woodfree uncoated paper while PM2 makes mainly wood-free coated paper and partly uncoated paper as well.

Photos: http://pet.upm-kymmene.com/?cart=5201-mahhklmfmf&language=EN

UPM-Kymmene Corporation

Pirkko Harrela
Executive Vice President, Corporate Communications 

UPM Media Desk, tel. +358 40 588 3284