UPM-Kymmene - Interim report (Q1 and Q3)

Interim report Q1/2016: Growth projects and cost efficiency measures deliver improved earnings

UPM-Kymmene Corporation      Stock Exchange Release         26 April 2016 at
9:25 EET

Interim report Q1/2016: Growth projects and cost efficiency measures deliver
improved earnings

Q1 2016 highlights

· Comparable EBIT increased by 34% to EUR 281 million (210 million).
· Growth projects contributed to UPM's earnings, with increasing deliveries in
pulp, biofuels, label papers, fine papers in Asia and self-adhesive label
materials.
· Variable and fixed costs decreased significantly, showing the full impact of
last year's cost efficiency measures.
· Operating cash flow was strong at EUR 341 million (108 million).
· Net debt decreased to EUR 1,873 million (2,419 million), and gearing to 23%
(31%).

 Key figures                                 Q1/2016 Q1/2015 Q4/2015 Q1-Q4/2015

 Sales, EURm                                   2,446   2,486   2,574     10,138

 Comparable EBITDA, EURm                         403     325     363      1,350

   % of sales                                   16.5    13.1    14.1       13.3

 Operating profit, EURm                          277     203     220      1,142

 Comparable EBIT, EURm                           281     210     247        916

   % of sales                                   11.5     8.4     9.6        9.0

 Profit before tax, EURm                         263     181     214      1,075

   Comparable profit before tax, EURm            267     188     241        849

 Profit for the period, EURm                     227     155     193        916

 Comparable profit for the period, EURm          225     160     215        734

 Earnings per share (EPS), EUR                  0.43    0.29    0.36       1.72

   Comparable EPS, EUR                          0.42    0.30    0.41       1.38

 Return on equity (ROE), %                      11.4     8.1     9.7       11.9

 Comparable ROE, %                              11.3     8.4    10.8        9.5

 Return on capital employed (ROCE), %            9.9     7.0     8.2       10.3

 Comparable ROCE, %                             10.1     7.3     9.2        8.3

 Operating cash flow, EURm                       341     108     390      1,185

 Operating cash flow per share, EUR             0.64    0.20    0.73       2.22

 Equity per share at end of period, EUR        14.94   14.61   14.89      14.89

 Capital employed at the end of period, EURm  11,000  11,106  11,010     11,010

 Net interest-bearing liabilities at end of
 period, EURm                                  1,873   2,419   2,100      2,100

 Gearing ratio at end of period, %                23      31      26         26

 Personnel at the end of period               19,870  20,210  19,578     19,578


Jussi Pesonen, President and CEO, comments on the Q1 result:

"All in all, 2016 got off to a very good start. During the first quarter, we
achieved a good level of operational efficiency, we were able to lower our costs
significantly and the market environment was mostly favourable. Our comparable
EBIT increased by 34% year-on-year to reach a record level in years. In
addition, our cash flow was particularly strong, driving net debt further down.

The first quarter showed the full impact of last year's cost efficiency
measures. Costs decreased in all businesses, but the impact was particularly
visible in UPM Paper ENA's improved profitability. Our customers continued to
rely on us with their business, while we improved operational efficiency
significantly by closing up 800,000 tonnes of capacity.

Market demand continued to develop mostly favourably. We were able to respond to
the increased customer demand with our growth projects in UPM Biorefining, UPM
Paper Asia and UPM Raflatac. The ramp-ups started well and contributed to the
deliveries and earnings.

Our work continues to realise the full earnings potential from the completed
growth projects. Additionally, we will finalise the ongoing projects in Otepää
plywood mill in Estonia and UPM Kaukas pulp mill in Finland. We will continue
implementing our cost efficiency measures across all businesses. In the case of
UPM Paper ENA, we are ensuring competitiveness by closing Madison Paper
Industries in the US and selling UPM Schwedt paper mill in Germany.

We look confidently forward. Our balance sheet and cash flow are strong and put
us in a good position to act on future opportunities."


Outlook for 2016

UPM's profitability improved in 2015 and the improvement is expected to continue
in 2016. The business performance is underpinned by the company's growth
projects and continuous cost efficiency measures.

UPM's growth projects are expected to contribute positively to the company's
earnings in 2016, compared with 2015. UPM continues its measures to reduce
variable and fixed costs also in 2016. Currencies are expected to contribute
positively as hedges roll over, assuming relevant currencies stay at the same
level as at the end of 2015.


Conference call and press conference

UPM's President and CEO Jussi Pesonen will present the results in a webcast and
a conference call for analysts and investors, held in English language, today at
13:15 EET.

Later in the afternoon, Jussi Pesonen will present the results in a press
conference held in Finnish language at the UPM Group Head Office (The Biofore
House) in Helsinki, Alvar Aallon katu 1, at 14:30 EET.

Conference call and webcast details:

The conference call can be participated in either by dialling a number in the
list below or following the webcast online at www.upm.com or through this link.

Only participants who wish to ask questions in the conference call need to dial
in. All participants can view the webcast presentation online. We recommend that
participants start dialing in 5-10 minutes prior to ensure a timely start of the
webcast.

The presentation is available at www.upm.com for 12 months after the call.

Conference call title: UPM Interim Report for January - March 2016

 Direct telephone numbers:



 BE: +3224040635

 DK: +45 823 331 78

 FI: +358981710495

 FR: +33170750712

 UK: +442031940552

 NO: +4723500211

 SE: +46856642702

 US: +18557161597



 International telephone numbers with a pin code 95858953#



 AU: +61 (0) 284058555

 AT: +43 (0) 19287909

 CH: +41 (0) 445831883

 CN: +86 4006815487

 DE: +49 (0) 6922224998

 ES: +34 914146225

 HK: +852 30600228

 IN: 0018038524627

 IR: +353 (0) 12475065

 IT: +39 (0) 236010935


**

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 including the
availability and cost of production inputs, 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. The main earnings sensitivities and the group's
cost structure are presented on page 18 of the 2015 Annual Report. Risks and
opportunities are discussed on pages 17-18 and risks and risk management are
presented on pages 84-86 of the report.

**

UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Stakeholder Relations

UPM, Media Relations
9.00-16.00 EET
tel. +358 40 588 3284
media@upm.com

UPM
Through the renewing of the bio and forest industries, UPM is building a
sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM
Raflatac, UPM Paper Asia, UPM Paper ENA and UPM Plywood. Our products are made
of renewable raw materials and are recyclable. We serve our customers worldwide.
The group employs around 19,600 people and its annual sales are approximately
EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM - The Biofore
Company - www.upm.com

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Bifogade filer:

UPM Interim Report Q1 2016.pdf