UPM-Kymmene - Company Announcement

UPM plans to reduce 580,000 tonnes of graphic paper capacity in Europe

UPM-Kymmene Corporation       Stock exchange release        January 17  2013 at
09:30 EET 

The continuing challenges in European economy have significantly impacted the
consumption of  paper, exacerbating the effect of structural changes in paper
end-uses and resulting in further decline in the demand of graphic papers in
Europe. High costs and significant overcapacity continue to challenge the
industry operators in Europe. 

UPM is planning to permanently reduce paper capacity in Europe  by a further
580,000 tonnes. The capacity reductions are planned to take place in Finland,
Germany and France. The business environment also makes evident the need for
streamlining of the Paper Business Group and UPM's global functions to remain
cost competitive in the new business scale. 

In early January, UPM finalized the employee consultation process in UPM
Stracel, France, implying reduction of 270,000 tonnes of coated magazine paper
capacity. With UPM Stracel and today's plans, UPM would reduce a total of
approximately 850,000 tonnes of graphic paper capacity in 2013. 

UPM plans:

  -- a permanent closure of paper machine 3 at UPM Rauma mill in Finland, 
  -- a permanent closure of paper machine 4 at UPM Ettringen in Germany, 
  -- a sale or other exit of UPM Docelles mill in France, and
  -- subject to further analysis, streamlining in the Paper Business and UPM's
     global functions.

If all plans will be implemented, UPM's personnel would be reduced by
approximately 860 persons. The plans would affect several countries. 

According to the plan the Rauma and Ettringen machine lines would be
permanently closed by the end of first half of 2013. Both machines are
producing uncoated magazine paper, in total 420,000 tonnes annually. 

The employee information and consultation processes will start in line with the
local legislation.  In case of Ettringen and Rauma the process will start
immediately. 

The process for selling the UPM Docelles mill will start immediately. The
process will be given maximum six months. Docelles is producing uncoated
woodfree papers, 160,000 tonnes annually. 

As for Paper Business Group and global functions streamlining, the process will
start after further analysis as of the beginning of February 2013. 

Including UPM Stracel, the plans are estimated to result in annual fixed cost
savings of EUR 90 million, and one-time cash costs of EUR 100 million. 

“The target of the planned actions is to ensure the efficient use of UPM's
remaining capacity. The paper machines targeted for closure are either at the
end of their technical age, have limited product flexibility or poor
profitability. The situation is very regrettable for the personnel, however, in
the overcapacity situation, we need to adjust our capacity to the level of
profitable customer demand,” says Jyrki Ovaska, President of the UPM Paper
Business Group. 

“Healthy cash flow is critical for UPM and its employees. Therefore UPM must
take action to secure it. Under these circumstances only the most efficient and
the most flexible production lines and organizations are competitive,” says
Ovaska. 

***

UPM will publish its Financial Statement 2012 on January 31, 2013 with analyst
conference call as well as Finnish press conference on the same day. 

For further information, please contact:

Jyrki Ovaska, President, Paper Business Group, UPM, (best available from 10:45
until 12:00 EET and from 14:00 until 16:00 EET), Tel. +358 204 150564 
In German: Hartmut Wurster, Executive Vice President, Technology, UPM,
Tel. +49 821 3109 243 (from 13:00 until 16:00 CET)
In French: Jean Marc Louvet, Director,  French Projects, UPM,  Tel. +33 6 0742
1115, (from 10:30 until 14:00 CET) 

Note to the editors

UPM Rauma and PM 3

UPM Rauma paper mill manufacturers LWC and SC papers with annual capacity of 
1,210,000 tonnes. PM 3's annual production capacity is 245,000 tonnes of SC
paper and it employs 90 persons. Located in Western Finland the mill employs
710 people. The mill was founded in 1969. 

UPM Ettringen and PM 4

UPM Ettringen paper mill manufactures uncoated magazine papers. Its two
production lines have a combined annual capacity of 460,000 tonnes. PM 4 has a
capacity of 175,000 tonnes of SC papers annually and it employs 155 persons.
Located in Bavaria, south Germany, the mill employs 391 people. The mill was
founded in 1897. 

UPM Docelles

UPM Docelles paper mill manufactures woodfree uncoated fine paper with the
annual capacity of 160,000 tonnes. Located in Eastern France the mill employs
165 people. The mill was founded in 1478. 

UPM Stracel

UPM Stracel paper mill manufactured coated magazine papers until 4 January
2013. Its annual capacity was 270,000 tonnes. Located in Eastern France the
mill employed 250 people. The mill was founded in 1936. 

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 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 23,000 people and it
has production plants in 17 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-Kymmene Corporation
Pirkko Harrela
Executive Vice President,
Corporate Communications

UPM, Corporate Communications
Media Desk, tel. +358 40 588 3284
media@upm.com
www.twitter.com/UPM_News