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2010-02-02 08:35:25 CET 2010-02-02 08:36:04 CET REGULATED INFORMATION UPM-Kymmene - Financial Statement ReleaseUPM Financial Review for 2009UPM-Kymmene Corporation Financial Review 2009 2 February 2010 at 09:30 UPM Financial Review for 2009 Q4/2009: Earnings per share were EUR 0.57 (-0.56), excluding special items EUR 0.21 (-0.19). Operating profit excluding special items was EUR 186 million (loss of EUR 46 million). Stringent cost control contributed to profit improvement, EBITDA margin was 17.2%. Demand has started to improve. Q1-Q4/2009: Earnings per share were EUR 0.33 (-0.35), excluding special items EUR 0.11 (0.42). Operating profit excluding special items was EUR 270 million (513 million). Strong operating cash flow EUR 1,259 million, net debt reduced by EUR 591 million. Fixed cost savings worth EUR 300 million. Key figures Q4/ Q4/ Q1-Q4/ Q1-Q4/ 2009 2008 2009 2008 Sales, EUR million 2,108 2,315 7,719 9,461 EBITDA, EUR million 1) 362 178 1,062 1,206 % of sales 17.2 7.7 13.8 12.7 Operating profit (loss), EUR 126 -286 135 24 million excluding special items, EUR 186 -46 270 513 million % of sales 8.8 -2.0 3.5 5.4 Profit (loss) before tax, EUR 311 -360 187 -201 million excluding special items, EUR 156 -120 107 282 million Net profit (loss) for the 295 -286 169 -180 period, EUR million Earnings per share, EUR 0.57 -0.56 0.33 -0.35 excluding special items, EUR 0.21 -0.19 0.11 0.42 Diluted earnings per share, 0.57 -0.56 0.33 -0.35 EUR Return on equity, % 19.4 neg. 2.8 neg. excluding special items, % 7.4 neg. 1.0 3.4 Return on capital employed, % 13.2 neg. 3.2 0.2 excluding special items, % 7.2 neg. 2.5 4.6 Operating cash flow per 0.71 0.69 2.42 1.21 share, EUR Shareholders' equity per 12.67 11.74 12.67 11.74 share at end of period, EUR Gearing ratio at end of 56 71 56 71 period, % Net interest-bearing 3,730 4,321 3,730 4,321 liabilities at end of period, EUR million Capital employed at end of 11,066 11,193 11,066 11,193 period, EUR million Capital expenditure, EUR million 741 113 913 551 Capital expenditure excluding 58 102 229 532 acquisitions and shares Personnel at end of period 23,213 24,983 23,213 24,983 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets, excluding the share of results of associated companies and joint ventures, and special items. The market in 2009 The global economy experienced a severe recession in 2009 as the financial crisis spread into the real economy. Consumer confidence bottomed out at a historic low level both in Europe and in the US. Declining demand led to lower industrial production, exports and investments. The global economy showed signals of stabilisation in the third quarter of 2009 supported by rebounding confidence and a pickup in global trade. This was partly driven by China, which performed exceptionally well during the recession in comparison with any other major country. The euro strengthened against the US dollar from February onwards and weakened the competitiveness of euro-area industries. The UK pound, the Russian rouble and the Swedish crown also weakened against the euro. Prices for commodities and raw materials were declining most of the year but started to increase in the late autumn as the economy started to stabilise. Demand for wood raw material decreased from the previous year due to exceptionally low industrial production and high wood inventories in the beginning of the year. Average market prices in Finland declined from peak years of 2007-2007. Demand for chemical pulp declined in the first half of the year, but a rebound took place in the second half of the year due to strong demand in China. Chemical pulp market prices started to increase after the second quarter of the year. Global advertising expenditure plummeted under the global economic downturn. In Europe, total advertising expenditure fell more than 10% in 2009 while the print media spend declined by some 15%. Although print advertising lost some of its share, it held its place as the largest media in Europe and as the second largest media globally after television. Global direct mail expenditure held up better than total advertising, declining by 4% from the previous year. As a consequence of the decline in print advertising, the demand for graphic papers in Europe and North America declined. Market balance remained weak throughout the year. The retail sector both in Europe and in the US suffered from the low level of private consumption. The demand shifted towards discount stores at the expense of branded products and affected the demand for packaging materials as well as the advertising focus of the retail sector. Exceptionally low construction activity in 2009 decreased demand for building materials, including wood-based materials. The construction confidence indicator started to improve in late 2009, but still remained at a very low level. Results Q4 of 2009 compared with Q4 of 2008 Sales for the fourth quarter of 2009 were EUR 2,108 million, 9% lower than the EUR 2,315 million in the fourth quarter of 2008. Sales decreased mainly due to lower sales prices in most of UPM's business areas. Operating profit was EUR 126 million, 6.0% of sales (loss of EUR 286 million, -12.4% of sales). The operating profit excluding special items was EUR 186 million, 8.8% of sales (loss of EUR 46 million, -2.0% of sales). Operating profit includes net charges of EUR 60 million as special items, including restructuring charges of EUR 44 million in Timber and Plywood operations in Finland. Operating profit excluding special items was clearly better than in the same quarter last year. The comparison period was exceptionally weak, as it included a wood inventory write down and extensive production downtime in paper, pulp and plywood mills and sawmills. The improvement in profitability was mainly driven by lower variable and fixed costs. Wood costs declined by EUR 80 million from the previous year. Other variable costs also decreased clearly, including EUR 25 million saved in lower energy costs. Cost-saving measures reduced the company's fixed costs by EUR 60 million in comparison with the same period last year. As part of the measures, UPM initiated a flexible operating mode in the beginning of 2009, using temporary capacity shutdowns to adjust production to the low demand. Changes in sales prices in euro terms reduced operating profit by about EUR 160 million. The average paper price in euros decreased by approximately 8% from the same period last year. The average price for label materials in local currencies was about the same. Timber and plywood prices fell substantially. The increase in the fair value of biological assets net of wood harvested was EUR 9 million compared to a decrease of EUR 2 million a year before. The share of results of associated companies and joint ventures was EUR 1 million (16 million negative). The accounting treatment of the associated company Metsä-Botnia was changed as of 30 June 2009. As of December 2009, Metsä-Botnia no longer is UPM's associated company (see Pulp business area footnote 3). Profit before tax was EUR 311 million (loss of EUR 360 million) and excluding special items EUR 156 million (loss of EUR 120 million). Special items of EUR 215 million reported in financial items include a capital gain of EUR 220 million on the sales of the approximately 30% share in Metsä-Botnia and a capital loss of EUR 5 million related to investments in development units. Interest and other finance costs, excluding special items, were EUR 30 million (60 million) net. Exchange rate and fair value gains and losses were EUR 0 million (loss of EUR 14 million). Income taxes were EUR 16 million (74 million positive). The impact on taxes from special items was EUR 28 million positive (51 million positive). Profit for the fourth quarter was EUR 295 million (loss of EUR 286 million) and earnings per share were EUR 0.57 (-0.56). Earnings per share excluding special items were EUR 0.21 (-0.19). 2009 compared with 2008 Sales for 2009 were EUR 7,719 million, 18% lower than the EUR 9,461 million in 2008. Sales decreased mainly due to lower deliveries across all of UPM's business areas. Operating profit was EUR 135 million, 1.7% of sales (24 million, 0.3% of sales). The operating profit excluding special items was EUR 270 million, 3.5% of sales (513 million, 5.4% of sales). Operating profit includes net charges of EUR 135 million as special items. UPM sold assets related to the former Miramichi paper mill in Canada and recorded an income of EUR 21 million. Restructuring measures resulted in net special charges of EUR 109 million including impairment charges of EUR 18 million. The share of the results of associated companies includes special charges of EUR 47 million. Operating profit declined clearly from the previous year. The main reason for weaker profitability was significantly lower deliveries in all of UPM's business areas. Lower sales prices also impacted operating profit negatively. Changes in sales prices in euro terms reduced operating profit by about EUR 260 million. The average paper price in euros decreased by approximately 3% from last year. The average price for label materials increased. Timber and plywood prices fell substantially. UPM responded to lower demand with a flexible way of operating in all of its business areas, using temporary capacity shutdowns to adjust production to the low demand. Due to cost saving measures, the company's fixed costs decreased by EUR 300 million from the previous year. Wood costs decreased from their earlier peak levels. Compared with last year, wood costs decreased by EUR 190 million. Energy costs increased slightly. The increase in the fair value of biological assets net of wood harvested was EUR 17 million compared to EUR 50 million a year before. The share of results of associated companies and joint ventures was EUR 95 million negative (62 million positive). The result includes special charges of EUR 29 million from Metsä-Botnia's Kaskinen pulp mill closure, and impairment charges of EUR 18 million related to Pohjolan Voima's two power plants. The accounting treatment of the associated company Metsä-Botnia was changed as of 30 June 2009. As of December 2009, Metsä-Botnia no longer is UPM's associated company (see Pulp business area footnote 3). Profit before tax was EUR 187 million (loss of EUR 201 million). Profit before tax excluding special items was EUR 107 million (282 million). Special items of EUR 215 million reported in financial items include a capital gain of EUR 220 million on the sales of the approximately 30% share in Metsä-Botnia and a capital loss of EUR 5 million related to investments in development units. Interest and other finance costs, excluding special items, were EUR 153 million (202 million) net. Exchange rate and fair value gains and losses resulted in a loss of EUR 9 million (25 million). Income taxes were EUR 18 million (21 million positive). The impact on taxes from special items was EUR 31 million positive (86 million positive). Profit for the period was EUR 169 million (loss of EUR 180 million) and earnings per share were EUR 0.33 (-0.35). Earnings per share excluding special items were EUR 0.11 (0.42). Operating cash flow per share was EUR 2.42 (1.21). Financing In 2009, cash flow from operating activities before capital expenditure and financing, was EUR 1,259 million (628 million). Net working capital decreased by EUR 532 million during the period (increased by EUR 132 million). The gearing ratio as of 31 December 2009 was 56% (71%). Net interest-bearing liabilities at the end of the period came to EUR 3,730 million (4,321 million). This includes the consolidated debt from the acquired Fray Bentos pulp mill and Forestal Oriental plantation forestry company. In March 2009, UPM replaced the EUR 1.5 billion credit facility that was to mature in 2010 with a new EUR 825 million credit facility, maturing in 2012. On 31 December 2009, UPM's cash funds and unused committed credit facilities totalled EUR 2.2 billion. Personnel In 2009, UPM had an average of 23,618 employees (26,017). At the beginning of the year, the number of employees was 24,983 and at the end of the year it was 23,213. The reduction of 2,294 employees, excluding the impact of Uruguay, is mostly attributable to ongoing restructuring. The acquisition of the Fray Bentos pulp mill and Forestal Oriental plantation forestry company added 524 employees. Capital expenditure In 2009, capital expenditure was EUR 913 million, 11.8% of sales (EUR 551 million, 5.8% of sales) and excluding acquisitions and share purchases, EUR 229 million, 3.0% of sales (EUR 532 million, 5.6% of sales). Acquisition of Metsä-Botnia's Uruguayan operations amounted to EUR 602 million. Operational capital expenditure totalled EUR 148 million (235 million). The new renewable energy power plant at the Caledonian mill in Irvine, Scotland was started in June. The total investment cost was GBP 68 million. UPM continued its tight investment discipline during 2009. Only few new investment decisions were made. The largest ongoing project is now the rebuild of the debarking plant at the Pietarsaari mill in Finland. The total investment cost is estimated to be EUR 30 million. In December 2009, UPM made a decision to invest GBP 17 million in a materials recovery facility at its Shotton paper mill in North Wales. Construction of the facility will be completed by January 2011. The ownership of Botnia and its assets in Uruguay On 8 December, UPM, Metsäliitto Cooperative, M-real Corporation and Oy Metsä-Botnia Ab (Botnia) completed a transaction whereby Metsäliitto's and Botnia's shares of the Fray Bentos pulp mill and the eucalyptus plantation forestry company Forestal Oriental in Uruguay were acquired by UPM and UPM sold approximately 30% in Botnia to Metsäliitto. In addition UPM acquired 1.2% of the energy company Pohjolan Voima Oy from Botnia. The companies signed an agreement concerning the transaction on 22 October 2009. Following the transaction, UPM has a 91% ownership of common shares in the Fray Bentos pulp mill, 100% in Forestal Oriental and 17% in Botnia. As of December 2009, Botnia no longer is UPM's associated company but accounted for as an available-for-sale investment. Consequently, UPM's own annual pulp production capacity increased from 2.1 million tonnes to 3.2 million tonnes a year and UPM's share of Botnia's capacity was reduced to 400,000 tonnes. UPM's total pulp production capacity including its entitlement to Botnia's capacity is 3.6 million tonnes a year. UPM recorded a EUR 220 million capital gain on the sale of Botnia's shares. UPM's assets increased by EUR 1,209 million and interest-bearing net debt by EUR 370 million. In addition, the changes in fair values of the previous holding increased UPM's equity by EUR 443 million. Pro forma financial information If the Botnia transaction had occurred on 1 January 2009, UPM's sales would have been EUR 7,923 million, operating profit EUR 202 million, and operating profit excluding special items EUR 308 million. Profit for the period would have been EUR 219 million. Pro forma key figures EUR million Reported 2009 Pro forma 1) Pro forma 2) adjustments 2009 Sales 7,719 204 7,923 EBITDA 1,062 92 1,154 Operating profit 135 67 202 excluding special items 270 38 308 Profit before tax 187 52 239 excluding special items 107 23 130 Profit for the period 169 50 219 1) Sales total of EUR 350 million include sales of EUR 146 million to UPM's units. Adjustments, among others, include reversal of special items of EUR 29 million related to the closure of the Kaskinen mill. Pulp business area pro forma key figures EUR million Reported 2009 Pro forma Pro forma 2) adjustments 2009 Sales 653 350 1,003 EBITDA -18 92 74 Operating profit -156 67 -89 excluding special items -127 38 -89 2)Reported 2009 includes December 2009, and the pro forma adjustments January-November of the Uruguayan operations. Restructuring The Kajaani paper mill and Tervasaari pulp mill closures were completed at the end of 2008. Due to the reduced demand for paper and pulp, the closures had only minor impact on UPM's paper or pulp deliveries. The Label business restructured its European operations in 2009. The plan was announced in November 2008. UPM Raflatac permanently closed a number of self-adhesive labelstock production lines and reduced slitting capacity in the United Kingdom, France, Germany, Hungary and Finland. One slitting terminal was also closed in the United States. The restructuring was completed by the end of the third quarter of 2009. In November 2009, UPM announced a plan to improve the plywood and timber businesses' long term cost competitiveness and increase added value in birch plywood production in Finland. Decisions on the plan were announced in January 2010. UPM will permanently close the plywood mill and sawmill in Heinola, the Kaukas plywood mill in Lappeenranta, and the further processing mill in Parkano during the first half of 2010. These measures will decrease the number of UPM employees by approximately 830. As part of the restructuring, UPM will invest approximately EUR 25 million in the expansion of the Savonlinna plywood mill and the development of production at the Kaukas sawmill and the Aureskoski further processing mill. The Lahti plywood processing mill was closed in October and its production was moved to other mills. In Forest and timber, a further processing mill in Boulogne in France was closed in August and the operations were centralised to the Aigrefeuille mill. Restructuring has been necessary to improve cost competitiveness. The measures taken in 2009, together with measures initiated in previous years, reduced the number of employees by 2,300 from the end of 2008. Out of these, 620 were due to closures of production. The annualised employee-related cost savings are about EUR 115 million. Shares UPM shares worth EUR 5,691 million (10,549 million) in total were traded on the NASDAQ OMX Helsinki stock exchange during 2009. The highest quotation was EUR 9.78 in January and the lowest EUR 4.33 in April. The company's ADSs are traded on the US over-the-counter (OTC) market under a Level 1 sponsored American Depositary Receipt programme. The Annual General Meeting held on 25 March 2009 approved a proposal by the Board of Directors to authorise the Board of Directors to decide on the buy-back of not more than 51,000,000 of the company's own shares. The authorisation is valid for 18 months from the date of the decision. The Annual General Meeting of 27 March 2007 authorised the Board to decide on a free issue of shares to the company itself so that the total number of shares to be issued to the company combined with the number of its own shares bought back under the buy-back authorisation may not exceed 1/10 of the total number of shares in the company. In addition, the Board has the authority to decide to issue shares and special rights entitling the holder to shares of the company. The number of new shares to be issued, including shares to be obtained under special rights, shall be no more than 250,000,000. Of that, the maximum number that can be issued to the company's shareholders based on their pre-emptive rights is 250,000,000 shares and the maximum number that can be issued deviating from the shareholders' pre-emptive rights in a directed share issue is 100,000,000 shares. The maximum number of new shares to be issued as part of the company's incentive programmes is 5,000,000. Furthermore, the Board is authorised to decide on the disposal of the company's own shares. To date, this authorisation has not been used. These authorisations of the Annual General Meeting 2007 will remain valid for no more than three years from the date of the decision. The Annual General Meeting of 27 March 2007 also decided to grant share options in connection with the company's share-based incentive plans. In option programmes 2007A, 2007B and 2007C, the total number of share options is no more than 15,000,000 and they will entitle the holders to subscribe for a total of no more than 15,000,000 new shares in the company. The Annual General Meeting of 2005 decided to grant a total of 9,000,000 share options of which the total number of share options designated as 2005H was not more than 3,000,000, and would entitle the holders to subscribe for a total of no more than 3,000,000 new shares. The share options designated as 2005H are outstanding as at 31 December 2009. The share options designated as 2005G expired at the end of October 2009. No shares were subscribed with share options 2005G. Apart from the above, the Board of Directors has no current authorisation to issue shares, convertible bonds or share options. The number of shares entered in the Trade Register on 31 December 2009 was 519,970,088. Through the issuance authorisation and share options, the number of shares may increase to a maximum of 787,970,088. At the end of the year the company did not hold any of its own shares. The company has received the following notifications from shareholders: BlackRock Inc. on 8 December 2009 held 5.36% of UPM's shares and voting rights. Franklin Templeton on 27 July 2009 announced its ownership in UPM had declined below 5% of the company's shares and voting rights. Company directors At the Annual General Meeting nine members were elected to the Board of Directors. Mr Matti Alahuhta, President and CEO of KONE Corporation, Mr Berndt Brunow, Board member of Oy Karl Fazer Ab, Mr Karl Grotenfelt, Chairman of the Board of Directors of Famigro Oy, Dr. Georg Holzhey, former Executive Vice President of UPM and Director of G. Haindl'sche Papierfabriken KGaA, Ms Wendy E. Lane, Chairman of the American investment firm Lane Holdings, Inc., Mr Jussi Pesonen, President and CEO of UPM, Ms Ursula Ranin, Board member of Finnair plc, Mr Veli-Matti Reinikkala, President of ABB Process Automation Division and Mr Björn Wahlroos, Chairman of the Board of Sampo plc were re-elected as members of the Board of Directors. The term of office of the members of the Board of Directors lasts until the end of the next Annual General Meeting. At the assembly meeting of the Board of Directors, Mr Björn Wahlroos was re-elected as Chairman, and Mr Berndt Brunow and Dr. Georg Holzhey were re-elected as Vice Chairmen. In addition, the Board of Directors appointed from among its members an Audit Committee with Mr Karl Grotenfelt as Chairman, and Ms Wendy E. Lane and Mr Veli-Matti Reinikkala as members. A Human Resources Committee was appointed with Mr Berndt Brunow as Chairman, and Dr. Georg Holzhey and Ms Ursula Ranin as members. Furthermore, a Nomination and Corporate Governance Committee was appointed with Mr Björn Wahlroos as Chairman, and Mr Matti Alahuhta and Mr Karl Grotenfelt as members. Litigation and other legal actions The investigations of certain competition authorities into alleged antitrust activities with respect to various UPM products, as well as litigation arising therefrom, have ended in all material respects. In Finland, UPM is participating in the building project of a new nuclear power plant, Olkiluoto 3, through its associated company Pohjolan Voima Oy. Pohjolan Voima Oy is a majority shareholder of Teollisuuden Voima Oy ("TVO") with 58.12% of shares. UPM's indirect share of the capacity of the Olkiluoto 3 is approximately 29 %. The original agreed timetable for the start up was summer 2009 but the construction of the unit is delayed. The latest anticipated start-up time is after June 2012. TVO has requested the plant supplier, the consortium AREVA-Siemens, to provide a re-analysis of the anticipated start-up time. TVO has informed UPM that the arbitration filed in December 2008 by AREVA-Siemens, concerning the delay at Olkiluoto 3 and related costs, amounted to EUR 1.0 billion. In response, TVO filed a counter-claim in April 2009 for costs and losses that TVO is incurring due to the delay and other defaults on the part of the supplier. The value of TVO's counterclaim was approximately EUR 1.4 billion. Events after the balance sheet date The Group's management is not aware of any significant events occurring after 31 December 2009. Risk factors UPM has increased its ownership interest in the Fray Bentos pulp mill in Uruguay to 91% as a result of the acqusition of Metsäliitto Cooperative's and Oy Metsä-Botnia Ab's shares in the Fray Bentos pulp mill in December 2009. There are three separate litigations pending against the government of Uruguay related to the Fray Bentos pulp mill, and one litigation directly against the company operating the pulp mill. All of these litigations have been commenced before the pulp mill started its operations in November 2007 and may last several years. Outlook for 2010 Recovery in UPM's main markets is expected to be slow and differ country by country. Demand for consumer goods is forecast to improve, but advertising expenditure in print media and demand for graphic papers are expected to improve with some delay. Investment activity, including construction, has shown only weak signs of recovery and this will delay pick up in demand for construction materials such as timber and plywood. In Asia growth is expected to continue especially in China. Low capacity utilisation rates of the company's timber, plywood and European paper mills will continue. Necessary production curtailments will require continuation of a flexible way of working in these operations. Electricity generation volume will be about the same as last year. This is assuming that lower than average hydrological balance continues in Finland. Based on current forward sale agreements and Nordpool forward prices, average sales price for electricity is estimated to be about the same as last year. Chemical pulp deliveries, on a comparable basis, are expected to be higher than last year. Current prices for both hardwood and softwood pulp are higher than last year. Paper demand in Europe is forecast to increase from 2009 and thus UPM's paper deliveries for 2010 are expected to be higher than last year. However, in Europe negotiations for 2010 deliveries of publication papers are still ongoing and there is a severe price pressure especially for newsprint deliveries. Price outlook for fine and speciality papers is more positive due to better market balance and increased cost of chemical pulp. Current estimate is that average price for UPM's all paper deliveries for the year will be clearly lower than last year. Order intake for the first quarter deliveries has been better than a year ago but average price for these deliveries is clearly lower than last year. Demand for self-adhesive labelstock is estimated to improve from the last year in all main markets. There are cost pressures especially from oil based raw materials but on average prices are expected to increase to compensate at least part of such cost increases. The operating profit (excluding special items) for the year 2010 is not expected to change materially from the last year. The first quarter is expected to be seasonally the weakest quarter. Capital expenditure for 2010 is forecast to be about EUR 300 million. Dividend for 2009 The Board of Directors will propose to the Annual General Meeting to be held on 22 March 2010 that a dividend of EUR 0.45 per share be paid in respect of the 2009 financial year (EUR 0.40). It is proposed that the dividend be paid on 7 April 2010. Financial information in 2010 The Annual Report for 2009 will be published on the company's website www.upm-kymmene.com on 23 February 2010. The printed Annual Report will be available on 15 March 2010. Interim Report January-March 2010: 28 April 2010 Interim Report January-June 2010: 3 August 2010 Interim Report January-September 2010: 28 October 2010 Business area reviews Energy Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ 2009 2009 2009 2009 2008 2008 2008 Sales, EUR million 128 108 100 136 141 129 103 EBITDA, EUR million 1) 57 35 41 57 76 58 34 % of sales 44.5 32.4 41.0 41.9 53.9 45.0 33.0 Share of results of -8 -24 -4 -4 -11 -8 -2 associated companies and joint ventures, EUR million Depreciation, amortisation -2 -1 -1 -2 -3 -1 -1 and impairment charges, EUR million Operating profit, EUR million 47 10 36 51 62 49 31 % of sales 36.7 9.3 36.0 37.5 44.0 38.0 30.1 Special items, EUR million 2) -1 -17 - - - - - Operating profit excl. 48 27 36 51 62 49 31 special items, EUR million % of sales 37.5 25.0 36.0 37.5 44.0 38.0 30.1 Electricity deliveries, 1,000 2,277 2,103 1,999 2,486 2,731 2,653 2,344 MWh Q1/ Q1-Q4/ Q1-Q4/ 2008 2009 2008 Sales, EUR million 105 472 478 EBITDA, EUR million 1) 39 190 207 % of sales 37.1 40.3 43.3 Share of results of -5 -40 -26 associated companies and joint ventures, EUR million Depreciation, amortisation -1 -6 -6 and impairment charges, EUR million Operating profit, EUR million 33 144 175 % of sales 31.4 30.5 36.6 Special items, EUR million 2) - -18 - Operating profit excl. 33 162 175 special items, EUR million % of sales 31.4 34.3 36.6 Electricity deliveries, 1,000 2,439 8,865 10,167 MWh Capital employed (average), 870 951 EUR million ROCE (excl. special items), % 18.6 18.4 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) In 2009, special items relate to impairments of associated company Pohjolan Voima's two power plants. Q4 of 2009 compared with Q4 of 2008 Operating profit excluding special items was EUR 48 million, EUR 14 million lower than last year (62 million). Sales decreased by 9% to EUR 128 million (141 million). External sales was EUR 38 million (57 million). The total electricity sales volume was 2.3 TWh in the quarter (2.7 TWh). Profitability weakened mainly due to lower sales volumes. The hydropower volume was 38% lower in comparison with the previous year. 2009 compared with 2008 Operating profit excluding special items was EUR 162 million (175 million). Sales decreased slightly to EUR 472 million (478 million). External sales was EUR 135 million (137 million). The electricity deliveries were 8.9 TWh (10.2 TWh). Profitability weakened in comparison with the previous year due to lower sales volumes as the annual volume of hydropower was almost 32% lower than last year. The average electricity sales price increased by 17% to EUR 43.8/MWh (37.5/ MWh) mainly due to long-term market-based pricing formula. The average cost of procured electricity increased due to the lower share of hydro power volumes. The share of results of associated companies includes asset write-downs of EUR 18 million related to Pohjolan Voima's two power plants. Market review In 2009, the average spot electricity price in the Nordic electricity exchange decreased 22% from the previous year to EUR 35.0/MWh (44.7/MWh). The consumption of electricity in the Nordic area decreased due to low industrial activity. The Nordic water reservoirs were 10% below the long term average level. The average price for EUA CO2 emission allowances was EUR 13.8/t, almost 41% lower than in the previous year. After a substantial decline in the market prices of oil and coal during the second half of 2008, coal market prices remained fairly stable in 2009. During 2009, oil market prices increased from about USD 46/barrel to about USD 78/barrel. The one-year forward electricity price in the Nordic electricity exchange was EUR 42.5/MWh at the end of 2009, 12% higher than the one year forward price at the end of 2008 (37.9/MWh). Pulp Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2009 2009 2009 2008 2008 2008 2008 Sales, EUR million 226 156 132 139 200 228 247 269 EBITDA, EUR million 1) 53 8 -24 -55 9 38 35 57 % of sales 23.5 5.1 -18.2 -39.6 4.5 16.7 14.2 21.2 Change in fair value of -1 - - - - - - - biological assets and wood harvested, EUR million Share of results of 7 4 -16 -47 -4 44 20 26 associated companies and joint ventures, EUR million 3) Depreciation, amortisation -24 -21 -20 -20 -73 -22 -17 -16 and impairment charges, EUR million Operating profit, EUR million 35 -9 -60 -122 -76 60 38 67 % of sales 15.5 -5.8 -45.5 -87.8 -38.0 26.3 15.4 24.9 Special items, EUR million 2) - - - -29 -59 - - - Operating profit excl. 35 -9 -60 -93 -17 60 38 67 special items, EUR million % of sales 15.5 -5.8 -45.5 -66.9 -8.5 26.3 15.4 24.9 Pulp deliveries, 1,000 t 550 446 391 372 421 480 527 554 Q1-Q4/Q1-Q4/ 2009 2008 Sales, EUR million 653 944 EBITDA, EUR million 1) -18 139 % of sales -2.8 14.7 Change in fair value of -1 - biological assets and wood harvested, EUR million Share of results of -52 86 associated companies and joint ventures, EUR million 3) Depreciation, amortisation -85 -128 and impairment charges, EUR million Operating profit, EUR million -156 89 % of sales -23.9 9.4 Special items, EUR million 2) -29 -59 Operating profit excl. -127 148 special items, EUR million % of sales -19.4 15.7 Pulp deliveries, 1,000 t 1,759 1,982 Capital employed (average), 1,668 1,674 EUR million ROCE (excl. special items), % -7.6 8.8 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) In 2009, special items of EUR 29 million relate to the associated company Metsä-Botnia's Kaskinen pulp mill closure. In 2008, special items of EUR 59 million relate to the closure of the Tervasaari pulp mill. 3) In the balance sheet in the interim report for January-June, on 30 June 2009, UPM has regrouped the 30% transferable share of Botnia's book value as assets held for sale. Consequently, from July 2009, UPM has not included the share of the transferable Botnia operations in the share of results of associated companies. Q4 of 2009 compared with Q4 of 2008 Operating profit excluding special items was EUR 35 million (loss of EUR 17 million). The sales from UPM's own pulp mills increased by 13% to EUR 226 million (200 million) and deliveries by 31% to 550,000 tonnes (421,000) mainly attributed to the newly acquired Fray Bentos mill. The share of results of the associated company Metsä-Botnia was profit of EUR 7 million (loss of EUR 4 million). Profitability improved in comparison with the previous year due to lower wood and energy costs. The sales price was lower. The Fray Bentos mill and Forestal Oriental eucalyptus plantation forestry company are included in the Pulp business area as of December 2009. Consequently, Oy Metsä-Botnia Ab is no longer an associated company of UPM and therefore is not reported on in the Pulp business area. 2009 compared with 2008 Operating loss excluding special items was EUR 127 million (profit of EUR 148 million). The sales from UPM's own pulp mills decreased by 31% to EUR 653 million (944 million) and deliveries by 11% to 1,759,000 tonnes (1,982,000). Due to reduced internal consumption, the Tervasaari pulp mill closure at the end of 2008 did not have a notable impact on deliveries. Profitability weakened from last year mainly due to an approximately 23% lower average pulp price and lower deliveries. Wood costs were at a high level until autumn but started to decline towards the end of the year. Chemical pulp inventories decreased from the beginning of the year and remained low in the latter part of the year. The share of results of the associated company Metsä-Botnia was loss of EUR 52 million (profit of EUR 86 million). The result includes special charges of EUR 29 million from Metsä-Botnia's Kaskinen mill closure. The Fray Bentos mill and Forestal Oriental eucalyptus plantation forestry company are included in the Pulp business area as of December 2009. As of the same date, Oy Metsä-Botnia Ab is no longer an associated company of UPM and therefore is not reported in the Pulp business area. Market review Annual shipments of global chemical market pulp increased almost 2% from the previous year. In the first half of 2009, shipments declined from the comparison period, but in the second part of the year, shipments increased due to strong demand in China. Chemical pulp producer inventories declined from the high level of the beginning of the year due to extensive production curtailments and strong demand in China. Chemical pulp market prices declined in the first half of the year but started to increase during the second half. The average softwood pulp (NBSK) market price in euro terms, at EUR 471/tonne, was 19% lower than in last year (EUR 582/tonne). The bottom market price during the period was EUR 421/tonne. At the end of the year, the NBSK market price was EUR 555/ tonne. The average hardwood pulp (BHKP) market price in euro terms also decreased by 25% from last year to EUR 402/tonne (EUR 539/tonne). The bottom market price during the period was EUR 352/tonne. At the end of the year the BHKP market price was EUR 486/tonne. Forest and timber Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2009 2009 2009 2008 2008 2008 2008 Sales, EUR million 348 295 309 385 419 475 518 508 EBITDA, EUR million 1) 30 24 -15 -15 -52 -4 4 4 % of sales 8.6 8.1 -4.9 -3.9 -12.4 -0.8 0.8 0.8 Change in fair value of 10 -13 10 11 -2 4 20 28 biological assets and wood harvested, EUR million Share of results of 1 -1 1 1 -1 - - 1 associated companies and joint ventures, EUR million Depreciation, amortisation -11 -4 -14 -5 -6 -36 -7 -7 and impairment charges, EUR million Operating profit, EUR million 21 6 -18 -18 -63 -38 17 25 % of sales 6.0 2.0 -5.8 -4.7 -15.0 -8.0 3.3 4.9 Special items, EUR million 2) -14 1 -8 -10 -2 -33 - -1 Operating profit excl. 35 5 -10 -8 -61 -5 17 26 special items, EUR million % of sales 10.1 1.7 -3.2 -2.1 -14.6 -1.1 3.3 5.1 Sawn timber deliveries, 1,000 413 355 366 363 421 510 628 573 m3 Q1-Q4/Q1-Q4/ 2009 2008 Sales, EUR million 1,337 1,920 EBITDA, EUR million 1) 24 -48 % of sales 1.8 -2.5 Change in fair value of 18 50 biological assets and wood harvested, EUR million Share of results of 2 - associated companies and joint ventures, EUR million Depreciation, amortisation -34 -56 and impairment charges, EUR million Operating profit, EUR million -9 -59 % of sales -0.7 -3.1 Special items, EUR million 2) -31 -36 Operating profit excl. 22 -23 special items, EUR million % of sales 1.6 -1.2 Sawn timber deliveries, 1,000 1,497 2,132 m3 Capital employed (average), 1,717 1,878 EUR million ROCE (excl. special items), % 1.3 -1.2 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) Special items of EUR 14 million including impairment charges of EUR 5 million, in the fourth quarter of 2009 relate to restructuring of Timber operations in Finland. Special items for the second quarter of 2009 include impairment charges of EUR 7 million related to wood procurement operations. In the first quarter of 2009, special items of EUR 10 million relate to the sales loss of Miramichi's forestry and sawmilling operations' assets. Special items in 2008 include an impairment charge of EUR 31 million related to fixed assets of the Finnish sawmills. Q4 of 2009 compared with Q4 of 2008 Operating profit excluding special items was EUR 35 million (loss of EUR 61 million). Sales declined by 17% to EUR 348 million (419 million). Sawn timber deliveries decreased by 2% to 413,000 cubic metres (421,000). The increase in the fair value of biological assets (growing trees) was EUR 52 million (12 million). The cost of wood raw material harvested from the Group's own forests was EUR 42 million (14 million). The net effect was EUR 10 million positive (2 million negative). 2009 compared with 2008 Operating profit excluding special items was EUR 22 million (loss of EUR 23 million). Sales declined by 30% to EUR 1,337 million (1,920 million). Sawn timber deliveries decreased by 30% to 1,497,000 cubic metres (2,132,000). Comparison period included a wood inventory write down of EUR 36 million, which was booked at the end of year 2008. The average price of delivered timber goods decreased by 7%. Wood inventories decreased significantly from the beginning of the year and released working capital. The increase in the fair value of biological assets (growing trees) was EUR 98 million (138 million). The cost of wood raw material harvested from the Group's own forests was EUR 80 million (88 million). The net effect was EUR 18 million positive (50 million positive). In November 2009, UPM announced restructuring plans to improve the competitiveness of its Timber operations in Finland. UPM will permanently close the sawmill in Heinola and the further processing mill in Parkano during the first half of 2010. Market review Wood purchases in the Finnish wood market were 45% lower compared to the previous year. However, market activity started to recover slightly towards the end of the year. Lower industrial production and high wood inventories at the beginning of the year were the main reasons for lower purchases. Wood market prices declined by an average of almost 20% compared to the previous year. In 2009, demand for both redwood and whitewood sawn timber in Europe declined substantially in comparison with the previous year. The weak market balance resulted in lower prices. Paper Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ 2009 2009 2009 2009 2008 2008 2008 Sales, EUR million 1,558 1,454 1,388 1,367 1,750 1,761 1,727 EBITDA, EUR million 1) 221 274 247 187 189 271 216 % of sales 14.2 18.8 17.8 13.7 10.8 15.4 12.5 Share of results of 1 - -1 -1 1 - - associated companies and joint ventures, EUR million Depreciation, amortisation -140 -142 -147 -149 -264 -388 -156 and impairment charges, EUR million Operating profit, EUR million 74 126 85 60 -126 -114 60 % of sales 4.7 8.7 6.1 4.4 -7.2 -6.5 3.5 Special items, EUR million 2) -8 -6 -10 23 -153 -227 - Operating profit excl. 82 132 95 37 27 113 60 special items, EUR million % of sales 5.3 9.1 6.8 2.7 1.5 6.4 3.5 Deliveries, publication 1,576 1,464 1,323 1,304 1,809 1,760 1,749 papers, 1,000 t Deliveries, fine and 945 872 813 724 784 863 923 speciality papers, 1,000 t Paper deliveries total, 1,000 2,521 2,336 2,136 2,028 2,593 2,623 2,672 t Q1/ Q1-Q4/ Q1-Q4/ 2008 2009 2008 Sales, EUR million 1,773 5,767 7,011 EBITDA, EUR million 1) 209 929 885 % of sales 11.8 16.1 12.6 Share of results of - -1 1 associated companies and joint ventures, EUR million Depreciation, amortisation -159 -578 -967 and impairment charges, EUR million Operating profit, EUR million 51 345 -129 % of sales 2.9 6.0 -1.8 Special items, EUR million 2) 1 -1 -379 Operating profit excl. 50 346 250 special items, EUR million % of sales 2.8 6.0 3.6 Deliveries, publication 1,772 5,667 7,090 papers, 1,000 t Deliveries, fine and 981 3,354 3,551 speciality papers, 1,000 t Paper deliveries total, 1,000 t 2,753 9,021 10,641 Capital employed (average), 5,714 6,503 EUR million ROCE (excl. special items), % 6.1 3.8 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) In the fourth and third quarter of 2009, special items of EUR 8 million and EUR 6 million relate to restructuring charges. Special items for the second quarter of 2009 include charges of EUR 9 million related to personnel reduction in Nordland mill, impairment reversals of EUR 4 million and other restructuring charges of EUR 5 million. In the first quarter of 2009, special items include an income of EUR 31 million related to the sale of the assets of the former Miramichi paper mill and charges of EUR 8 million related to restructuring measures. In 2008, special items include the goodwill impairment charge of EUR 230 million, impairment charges of EUR 101 million and other restructuring costs of EUR 42 million related to the closure of the Kajaani paper mill, and other restructuring costs, net of EUR 6 million. Q4 of 2009 compared with Q4 of 2008 Operating profit excluding special items was EUR 82 million, EUR 55 million higher than a year ago (27 million). Sales were EUR 1,558 million (1,750 million). Paper deliveries decreased by 3% to 2,521,000 tonnes (2,593,000). Publication paper deliveries (magazine papers and newsprint) decreased by 13%. Fine and speciality paper deliveries increased by 21% from the previous year, driven especially by the recovery of fine paper demand in China. Profitability improved from the comparison period. Lower paper prices had a significant negative impact on profitability, but this was more than offset by lower fibre and other variable costs, and decreased fixed costs. The average price for all paper deliveries when translated into euros was 8% lower than in the fourth quarter of 2008. 2009 compared with 2008 Operating profit excluding special items was EUR 346 million, EUR 96 million higher than a year ago (250 million). Sales were EUR 5,767 million (7,011 million). Paper deliveries decreased by 15% to 9,021,000 tonnes (10,641,000). Publication paper deliveries (magazine papers and newsprint) decreased by 20% and fine and speciality paper deliveries by 6% from the previous year. The Kajaani paper mill was closed at the end of 2008. Due to reduced demand, the closure had only a minor impact on UPM's paper deliveries. Profitability improved from the corresponding period last year. Lower deliveries and sales prices had a significant negative impact on profitability, but this was more than offset by lower costs for fibre, mainly for chemical pulp, and decreased fixed costs. The average price for all paper deliveries when translated into euros was 3% lower than last year. Market review In Europe in 2009, demand for both publication papers and fine papers was 16% lower than a year ago. In North America, demand for publication papers continued to decline and was 22% down from last year. In Asia, however, demand for fine papers grew. In Europe, paper prices decreased in the fourth quarter of 2009 from the previous quarter. For magazine papers, prices decreased by about 3% from the third quarter and for newsprint by about 2%. Coated and uncoated fine paper prices decreased by about 2%. In 2009, average prices decreased by 1% for magazine papers and by 8% for uncoated fine paper, but increased by 2% for newsprint. Coated fine paper prices remained unchanged from the previous year. In North America, the average US dollar price for magazine papers was 13% lower in 2009 than in 2008. In Asia, market prices for fine papers decreased from last year, but increased in the second half of 2009 from the first half. In the fourth quarter, prices had risen higher than in the same period last year. Label Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2009 2009 2009 2008 2008 2008 2008 Sales, EUR million 252 242 226 223 233 239 245 242 EBITDA, EUR million 1) 25 29 18 6 -1 9 15 11 % of sales 9.9 12.0 8.0 2.7 -0.4 3.8 6.1 4.5 Depreciation, amortisation -8 -9 -11 -9 -16 -8 -7 -8 and impairment charges, EUR million Operating profit, EUR million 16 18 4 -3 -38 1 8 3 % of sales 6.3 7.4 1.8 -1.3 -16.3 0.4 3.3 1.2 Special items, EUR million 2) -1 -2 -5 - -28 - - - Operating profit excl. 17 20 9 -3 -10 1 8 3 special items, EUR million % of sales 6.7 8.3 4.0 -1.3 -4.3 0.4 3.3 1.2 Q1-Q4/Q1-Q4/ 2009 2008 Sales, EUR million 943 959 EBITDA, EUR million 1) 78 34 % of sales 8.3 3.5 Depreciation, amortisation -37 -39 and impairment charges, EUR million Operating profit, EUR million 35 -26 % of sales 3.7 -2.7 Special items, EUR million 2) -8 -28 Operating profit excl. 43 2 special items, EUR million % of sales 4.6 0.2 Capital employed (average), 503 510 EUR million ROCE (excl. special items), % 8.5 0.4 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) In the fourth and third quarter of 2009, special items relate to restructuring charges. In the second quarter of 2009, special items include impairment charges of EUR 2 million and other restructuring charges of EUR 3 million. In 2008, special items of EUR 28 million relate to measures to reduce coating capacity and close two slitting terminals in Europe. Q4 of 2009 compared with Q4 of 2008 Operating profit excluding special items was EUR 17 million (loss of EUR 10 million). Sales were EUR 252 million (233 million). Profitability improved clearly from the same period last year. Delivery volumes of self-adhesive label materials grew from the previous year. Raw material costs were lower than last year. Fixed costs decreased. Average sales prices in local currencies were on about the same level. 2009 compared with 2008 Operating profit excluding special items was EUR 43 million (2 million). Sales were EUR 943 million (959 million). Profitability improved from the same period last year due to decreased costs and increased prices. Fixed costs decreased substantially and raw material costs were lower than in the previous year. Average sales prices both in local currency and converted to euros increased from last year. Delivery volumes of self-adhesive label materials declined from last year, driven by lower economic activity. The restructuring of European operations was completed as planned by the end of the third quarter. The restructuring, combined with the new plant in Wroclaw that started up in November 2008, has improved the competitiveness of European operations. Market review During the first half of the year, demand for self-adhesive label materials declined in all markets from last year as demand for consumer products and shipments of goods slowed down. Demand started to improve in the third quarter, and in the fourth quarter it is estimated to have grown compared with the same period last year. Plywood Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2009 2009 2009 2008 2008 2008 2008 Sales, EUR million 81 73 77 75 102 121 150 157 EBITDA, EUR million 1) 3 -5 -5 -23 -5 3 22 26 % of sales 3.7 -6.8 -6.5 -30.7 -4.9 2.5 14.7 16.6 Depreciation, amortisation -12 -5 -5 -5 -5 -5 -6 -5 and impairment charges, EUR million Operating profit, EUR million -33 -10 -10 -29 -10 -2 19 21 % of sales -40.7 -13.7 -13.0 -38.7 -9.8 -1.7 12.7 13.4 Special items, EUR million 2) -30 - - -1 - - 3 - Operating profit excl. -3 -10 -10 -28 -10 -2 16 21 special items, EUR million % of sales -3.7 -13.7 -13.0 -37.3 -9.8 -1.7 10.7 13.4 Deliveries, plywood, 1,000 m3 150 143 141 133 160 188 227 231 Q1-Q4/Q1-Q4/ 2009 2008 Sales, EUR million 306 530 EBITDA, EUR million 1) -30 46 % of sales -9.8 8.7 Depreciation, amortisation -27 -21 and impairment charges, EUR million Operating profit, EUR million -82 28 % of sales -26.8 5.3 Special items, EUR million 2) -31 3 Operating profit excl. -51 25 special items, EUR million % of sales -16.7 4.7 Deliveries, plywood, 1,000 m3 567 806 Capital employed (average), 266 307 EUR million ROCE (excl. special items), % -19.2 8.1 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) Special items in the fourth quarter of 2009 include impairment charges of E 6 million and other restructuring charges of E 24 million. Special items in 2008 include reversals of provisions related to the disposed Kuopio plywood mill. Q4 of 2009 compared with Q4 of 2008 Operating loss excluding special items was EUR 3 million (loss of EUR 10 million). Sales decreased by 21% to EUR 81 million (102 million). Plywood deliveries declined by 6% to 150,000 cubic metres (160,000). Plywood reported a smaller operating loss, than in the comparison period due to decreased fixed costs and lower wood costs. Lower sales prices had a negative impact on the results. 2009 compared with 2008 Operating loss excluding special items was EUR 51 million (profit of EUR 25 million). Sales decreased by 42% to EUR 306 million (530 million). Plywood deliveries declined by 30% to 567,000 cubic metres (806,000). Plywood reported an operating loss due to significantly lower delivery volumes and sales prices than in the comparison period. Weak market demand led to extensive production downtime at all mills. Material fixed cost reductions were achieved throughout the organisation, but these could not compensate for the adverse impact of lower deliveries and prices. In November 2009, UPM announced a plan to improve the plywood businesses' long term cost competitiveness and increase added value in birch plywood production in Finland. UPM will rebuild the Savonlinna plywood mill and permanently close the Heinola and Kaukas mills. The Heinola mill was temporarily shut down from January 2009 onwards. The Kaukas plywood mill was temporarily shut down from May onwards. At the Kalso veneer mill, a production automation project was completed in May 2009. The Lahti plywood processing mill was closed in October 2009 and its production was moved to other mills. Market review In Europe, plywood demand declined substantially from last year due to record low construction activity and low demand for engineered end products in transportation and other industrial end uses. Declined demand in Europe has left much idle capacity. Inventories were reduced in all parts of the supply chain in the first half of the year. This inventory reduction came to an end in the third quarter. The market prices of plywood declined from the previous year. Other operations Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 20092009200920092008200820082008 Sales, EUR million 35 21 21 34 34 52 66 48 EBITDA, EUR million 1) -27 -31 -24 -29 -38 3 -13 -9 Share of results of - - -2 -2 -1 -1 3 - associated companies and joint ventures, EUR million Depreciation, amortisation -3 -3 -3 -3 2 -2 -5 -3 and impairment charges, EUR million Operating profit, EUR million -34 -45 -29 -34 -35 4 -16 -7 Special items, EUR million 2) -6 -11 - - 2 4 -1 5 Operating profit excl. -28 -34 -29 -34 -37 0 -15 -12 special items, EUR million Q1-Q4/Q1-Q4/ 2009 2008 Sales, EUR million 111 200 EBITDA, EUR million 1) -111 -57 Share of results of -4 1 associated companies and joint ventures, EUR million Depreciation, amortisation -12 -8 and impairment charges, EUR million Operating profit, EUR million -142 -54 Special items, EUR million 2) -17 10 Operating profit excl. -125 -64 special items, EUR million Capital employed (average), 141 137 EUR million ROCE (excl. special items), % -88.7 -46.7 1) EBITDA is operating profit before depreciation, amortisation and impairment charges, excluding the change in value of biological assets and wood harvested, the share of results of associated companies and joint ventures, and special items. 2) In 2009, special items in the fourth quarter include impairment charges of EUR 2 million and other charges of EUR 4 million both relating to terminated activities. Special items of EUR 11 million in the third quarter of 2009 relate mainly to estates of closed industrial sites in Finland. In 2008, special items include an adjustment of EUR 5 million to sales of disposals of 2007 and other restructuring income net of EUR 5 million. Other operations include development units (RFID tags, the wood plastic composite unit UPM ProFi and biofuels), logistic services and corporate administration. Q4 of 2009 compared with Q4 of 2008 Operating loss excluding special items was EUR 28 million (37 million). Sales amounted to EUR 35 million (34 million). Hedging resulted in a profit of EUR 2 million (profit of EUR 2 million). The development units continued to incur an operating loss. 2009 compared with 2008 Operating loss excluding special items was EUR 125 million (loss of EUR 64 million). Sales amounted to EUR 111 million (200 million). The operating loss was greater than in the comparison period, mainly due to hedging losses of EUR 23 million (profit of EUR 24 million). The development units continued to incur an operating loss. Helsinki, 2 February 2010 UPM-Kymmene Corporation Board of Directors Financial information This financial review is unaudited Consolidated income statement EUR million Q4/ Q4/ Q1-Q4/ Q1-Q4/ 2009 2008 2009 2008 Sales 2,108 2,315 7,719 9,461 Other operating income 18 9 47 83 Costs and expenses -1,810 -2,227 -6,774 -8,407 Change in fair value of 9 -2 17 50 biological assets and wood harvested Share of results of 1 -16 -95 62 associated companies and joint ventures Depreciation, amortisation -200 -365 -779 -1,225 and impairment charges Operating profit (loss) 126 -286 135 24 Gains on available-for-sale - - -1 2 investments, net Exchange rate and fair value - -14 -9 -25 gains and losses Interest and other finance 185 -60 62 -202 costs, net Profit (loss) before tax 311 -360 187 -201 Income taxes -16 74 -18 21 Profit (loss) for the period 295 -286 169 -180 Attributable to: Equity holders of the parent 295 -287 169 -179 company Minority interest - 1 - -1 295 -286 169 -180 Earnings per share for profit (loss) attributable to the equity holders of the parenT company Basic earnings per share, EUR 0.57 -0.56 0.33 -0.35 Diluted earnings per share, EUR 0.57 -0.56 0.33 -0.35 Statement of comprehensive income EUR million Q4/ Q4/Q1-Q4/Q1-Q4/ 2009 2008 2009 2008 Profit (loss) for the period 295 -286 169 -180 Other comprehensive income for the period, after tax: Translation differences 115 -195 165 -206 Net investment hedge -19 61 -56 56 Cash flow hedges -13 18 -4 -33 Available-for-sale 21 - 21 - investments Share of other comprehensive 40 -11 30 1 income of associated companies Other comprehensive income 144 -127 156 -182 for the period, net of tax Total comprehensive income 439 -413 325 -362 for the period Total comprehensive income attributable to: Equity holders of the parent 439 -414 325 -361 company Minority interest - 1 - -1 439 -413 325 -362 Consolidated balance sheet EUR million 31.12.2009 31.12.2008 ASSETS Non-current assets Goodwill 1,017 933 Other intangible assets 423 403 Property, plant and equipment 6,192 5,688 Investment property 22 19 Biological assets 1,293 1,133 Investments in associated 553 1,263 companies and joint ventures Available-for-sale 320 116 investments Non-current financial assets 263 361 Deferred tax assets 287 258 Other non-current assets 211 201 10,581 10,375 Current assets Inventories 1,112 1,354 Trade and other receivables 1,446 1,686 Income tax receivables 28 24 Cash and cash equivalents 438 330 3,024 3,394 Assets classified as held for sale - 12 Total assets 13,605 13,781 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company Share capital 890 890 Translation differences -164 -295 Fair value and other reserves 141 130 Reserve for invested 1,145 1,145 non-restricted equity Retained earnings 4,574 4,236 6,586 6,106 Minority interest 16 14 Total equity 6,602 6,120 Non-current liabilities Deferred tax liabilities 608 658 Retirement benefit obligations 418 408 Provisions 191 191 Interest-bearing liabilities 4,164 4,534 Other liabilities 51 25 5,432 5,816 Current liabilities Current interest-bearing liabilities 300 537 Trade and other payables 1,206 1,258 Income tax payables 65 33 1,571 1,828 Liabilities related to assets - 17 classified as held for sale Total liabilities 7,003 7,661 Total equity and liabilities 13,605 13,781 Consolidated cash flow statement Year ended 31 December EUR million 2009 2008 Cash flow from operating activities Profit (loss) for the period 169 -180 Adjustments to profit (loss) for the period 772 1,232 Interest received 6 9 Interest paid -163 -202 Dividends received 24 18 Other financial items, net -50 -41 Income taxes paid -31 -76 Change in working capital 532 -132 Net cash generated from 1,259 628 operating activities Cash flow from investing activities Acquisition of subsidiaries, -508 - net of cash acquired Acquisition of shares in associated companies -78 -19 Capital expenditure -236 -558 Proceeds from disposal of subsidiary shares, net of cash - 6 Proceeds from disposal of 565 4 shares in associated companies Proceeds from disposal of - 2 available-for-sale investments Proceeds from sale of 46 33 tangible and intangible assets Increase in non-current receivables -3 - Net cash used in investing activities -214 -532 Cash flow from financing activities Proceeds from non-current liabilities 325 1,083 Payments of non-current liabilities -1,051 -624 Payments of current liabilities, net -6 -153 Share options exercised - 78 Dividends paid -208 -384 Other financing cash flow - -1 Net cash used in financing activities -940 -1 Change in cash and cash equivalents 105 95 Cash and cash equivalents at 330 237 the beginning of year Foreign exchange effect on cash 3 -2 Change in cash and cash equivalents 105 95 Cash and cash equivalents at year-end 438 330 Consolidated statement of changes in equity Attributable to equity holders of the parent company EUR million Share Translation Fair value and capital differences other reserves Balance at 1 January 2008 890 -158 193 Changes in equity for 2008 Share options exercised - - - Share-based compensation, net of tax - - -29 Dividend paid - - - Acquisitions and disposals - - - Other items - - -1 Total comprehensive income - -137 -33 for the period Balance at 31 December 2008 890 -295 130 Balance at 1 January 2009 890 -295 130 Changes in equity for 2009 Share-based compensation, net of tax - - -6 Dividend paid - - - Acquisitions and disposals - - - Other items - - - Total comprehensive income - 131 17 for the period Balance at 31 December 2009 890 -164 141 EUR million Reserve for Retained Total invested earnings non-restricted equity Balance at 1 January 2008 1,067 4,778 6,770 Changes in equity for 2008 Share options exercised 78 - 78 Share-based compensation, net of tax - 33 4 Dividend paid - -384 -384 Acquisitions and disposals - - - Other items - - -1 Total comprehensive income - -191 -361 for the period Balance at 31 December 2008 1,145 4,236 6,106 Balance at 1 January 2009 1,145 4,236 6,106 Changes in equity for 2009 Share-based compensation, net of tax - 12 6 Dividend paid - -208 -208 Acquisitions and disposals - 358 358 Other items - -1 -1 Total comprehensive income - 177 325 for the period Balance at 31 December 2009 1,145 4,574 6,586 EUR million Minority Total interest equity Balance at 1 January 2008 13 6,783 Changes in equity for 2008 Share options exercised - 78 Share-based compensation, net of tax - 4 Dividend paid - -384 Acquisitions and disposals 2 2 Other items - -1 Total comprehensive income -1 -362 for the period Balance at 31 December 2008 14 6,120 Balance at 1 January 2009 14 6,120 Changes in equity for 2009 Share-based compensation, net of tax - 6 Dividend paid - -208 Acquisitions and disposals 2 360 Other items - -1 Total comprehensive income - 325 for the period Balance at 31 December 2009 16 6,602 Quarterly information EUR million Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ 2009 2009 2009 2009 2008 2008 Sales 2,108 1,913 1,841 1,857 2,315 2,358 Other operating income 18 5 7 17 9 23 Costs and expenses -1,810 -1,603 -1,627 -1,734 -2,227 -1,998 Change in fair value of 9 -13 10 11 -2 4 biological assets and wood harvested Share of results of 1 -21 -22 -53 -16 35 associated companies and joint ventures Depreciation, amortisation -200 -185 -201 -193 -365 -462 and impairment charges Operating profit (loss) 126 96 8 -95 -286 -40 Gains on available-for-sale - -1 - - - - investments, net Exchange rate and fair value - -3 3 -9 -14 - gains and losses Interest and other finance 185 -28 -37 -58 -60 -50 costs, net Profit (loss) before tax 311 64 -26 -162 -360 -90 Income taxes -16 -24 18 4 74 3 Profit (loss) for the period 295 40 -8 -158 -286 -87 Attributable to: Equity holders of the parent 295 40 -8 -158 -287 -86 company Minority interest - - - - 1 -1 295 40 -8 -158 -286 -87 Basic earnings per share, EUR 0.57 0.08 -0.02 -0.30 -0.56 -0.17 Diluted earnings per share, EUR 0.57 0.08 -0.02 -0.30 -0.56 -0.17 Earnings per share, excluding 0.21 0.14 0.03 -0.27 -0.19 0.25 special items, EUR Average number of shares 519,958 519,954 519,954 519,954 519,979 519,999 basic (1,000) Average number of shares 518,876 521,036 519,954 519,954 519,979 519,999 diluted (1,000) Special items in operating -60 -35 -23 -17 -240 -256 profit (loss) Operating profit (loss), 186 131 31 -78 -46 216 excl. special items % of sales 8.8 6.8 1.7 -4.2 -2.0 9.2 Special items before tax 155 -35 -23 -17 -240 -250 Profit (loss) before tax, 156 99 -3 -145 -120 160 excl. special items % of sales 7.4 5.2 -0.2 -7.8 -5.2 6.8 Return on equity, excl. 7.4 5.0 0.8 neg. neg. 7.8 special items, % Return on capital employed, 7.2 4.9 1.3 neg. neg. 7.7 excl. special items, % EBITDA 362 334 238 128 178 378 % of sales 17.2 17.5 12.9 6.9 7.7 16.0 Share of results of associated companies and joint ventures Energy -8 -24 -4 -4 -11 -8 Pulp 7 4 -16 -47 -4 44 Forest and timber 1 -1 1 1 -1 - Paper 1 - -1 -1 1 - Other operations - - -2 -2 -1 -1 Total 1 -21 -22 -53 -16 35 EUR million Q2/ Q1/ Q1-Q4 / Q1-Q4 / 2008 2008 2009 2008 Sales 2,378 2,410 7,719 9,461 Other operating income 11 40 47 83 Costs and expenses -2,074 -2,108 -6,774 -8,407 Change in fair value of 20 28 17 50 biological assets and wood harvested Share of results of 21 22 -95 62 associated companies and joint ventures Depreciation, amortisation -199 -199 -779 -1,225 and impairment charges Operating profit (loss) 157 193 135 24 Gains on available-for-sale 2 - -1 2 investments, net Exchange rate and fair value -1 -10 -9 -25 gains and losses Interest and other finance -43 -49 62 -202 costs, net Profit (loss) before tax 115 134 187 -201 Income taxes -25 -31 -18 21 Profit (loss) for the period 90 103 169 -180 Attributable to: Equity holders of the parent 92 102 169 -179 company Minority interest -2 1 - -1 90 103 169 -180 Basic earnings per share, EUR 0.18 0.20 0.33 -0.35 Diluted earnings per share, EUR 0.18 0.20 0.33 -0.35 Earnings per share, excluding 0.17 0.19 0.11 0.42 special items, EUR Average number of shares 517,622 512,581 519,955 517,545 basic (1,000) Average number of shares 516,791 513,412 519,955 517,545 diluted (1,000) Special items in operating 2 5 -135 -489 profit (loss) Operating profit (loss), 155 188 270 513 excl. special items % of sales 6.5 7.8 3.5 5.4 Special items before tax 2 5 80 -483 Profit (loss) before tax, 113 129 107 282 excl. special items % of sales 4.8 5.4 1.4 3.0 Return on equity, excl. 5.4 5.9 1.0 3.4 special items, % Return on capital employed, 5.7 6.5 2.5 4.6 excl. special items, % EBITDA 313 337 1,062 1,206 % of sales 13.2 14.0 13.8 12.7 Share of results of associated companies and joint ventures Energy -2 -5 -40 -26 Pulp 20 26 -52 86 Forest and timber - 1 2 - Paper - - -1 1 Other operations 3 - -4 1 Total 21 22 -95 62 Deliveries Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ 2009 2009 2009 2009 2008 2008 2008 Electricity, 1,000 MWh 2,277 2,103 1,999 2,486 2,731 2,653 2,344 Pulp, 1,000 t 550 446 391 372 421 480 527 Sawn timber, 1,000 m3 413 355 366 363 421 510 628 Publication papers, 1,000 t 1,576 1,464 1,323 1,304 1,809 1,760 1,749 Fine and speciality papers, 945 872 813 724 784 863 923 1,000 t Paper deliveries total, 1,000t 2,521 2,336 2,136 2,028 2,593 2,623 2,672 Plywood, 1,000 m3 150 143 141 133 160 188 227 Q1/ Q1-Q4/ Q1-Q4/ 2008 2009 2008 Electricity, 1,000 MWh 2,439 8,865 10,167 Pulp, 1,000 t 554 1,759 1,982 Sawn timber, 1,000 m3 573 1,497 2,132 Publication papers, 1,000 t 1,772 5,667 7,090 Fine and speciality papers, 981 3,354 3,551 1,000 t Paper deliveries total, 1,000t 2,753 9,021 10,641 Plywood, 1,000 m3 231 567 806 Quarterly segment information EUR million Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ 2009 2009 2009 2009 2008 2008 2008 Sales Energy 128 108 100 136 141 129 103 Pulp 226 156 132 139 200 228 247 Forest and timber 348 295 309 385 419 475 518 Paper 1,558 1,454 1,388 1,367 1,750 1,761 1,727 Label 252 242 226 223 233 239 245 Plywood 81 73 77 75 102 121 150 Other operations 35 21 21 34 34 52 66 Internal sales -520 -436 -412 -502 -564 -647 -678 Sales, total 2,108 1,913 1,841 1,857 2,315 2,358 2,378 EBITDA Energy 57 35 41 57 76 58 34 Pulp 53 8 -24 -55 9 38 35 Forest and timber 30 24 -15 -15 -52 -4 4 Paper 221 274 247 187 189 271 216 Label 25 29 18 6 -1 9 15 Plywood 3 -5 -5 -23 -5 3 22 Other operations -27 -31 -24 -29 -38 3 -13 EBITDA, total 362 334 238 128 178 378 313 Operating profit (loss) Energy 47 10 36 51 62 49 31 Pulp 35 -9 -60 -122 -76 60 38 Forest and timber 21 6 -18 -18 -63 -38 17 Paper 74 126 85 60 -126 -114 60 Label 16 18 4 -3 -38 1 8 Plywood -33 -10 -10 -29 -10 -2 19 Other operations -34 -45 -29 -34 -35 4 -16 Operating profit (loss), 126 96 8 -95 -286 -40 157 total % of sales 6.0 5.0 0.4 -5.1 -12.4 -1.7 6.6 Special items in operating profit Energy -1 -17 - - - - - Pulp - - - -29 -59 - - Forest and timber -14 1 -8 -10 -2 -33 - Paper -8 -6 -10 23 -153 -227 - Label -1 -2 -5 - -28 - - Plywood -30 - - -1 - - 3 Other operations -6 -11 - - 2 4 -1 Special items in operating -60 -35 -23 -17 -240 -256 2 profit, total Operating profit (loss) excl.special items Energy 48 27 36 51 62 49 31 Pulp 35 -9 -60 -93 -17 60 38 Forest and timber 35 5 -10 -8 -61 -5 17 Paper 82 132 95 37 27 113 60 Label 17 20 9 -3 -10 1 8 Plywood -3 -10 -10 -28 -10 -2 16 Other operations -28 -34 -29 -34 -37 - -15 Operating profit (loss) excl. 186 131 31 -78 -46 216 155 special items, total % of sales 8.8 6.8 1.7 -4.2 -2.0 9.2 6.5 External sales Energy 38 24 24 49 57 45 20 Pulp 34 9 10 10 6 17 18 Forest and timber 171 145 150 152 199 197 240 Paper 1,500 1,409 1,355 1,327 1,701 1,699 1,657 Label 252 243 225 222 233 238 244 Plywood 77 69 73 72 94 111 139 Other operations 36 14 4 25 25 51 60 External sales, total 2,108 1,913 1,841 1,857 2,315 2,358 2,378 Internal sales Energy 90 84 76 87 84 84 83 Pulp 192 147 122 129 194 211 229 Forest and timber 177 150 159 233 220 278 278 Paper 58 45 33 40 49 62 70 Label - -1 1 1 - 1 1 Plywood 4 4 4 3 8 10 11 Other operations -1 7 17 9 9 1 6 Internal sales, total 520 436 412 502 564 647 678 EUR million Q1/ Q1-Q4/ Q1-Q4/ 2008 2009 2008 Sales Energy 105 472 478 Pulp 269 653 944 Forest and timber 508 1,337 1,920 Paper 1,773 5,767 7,011 Label 242 943 959 Plywood 157 306 530 Other operations 48 111 200 Internal sales -692 -1,870 -2,581 Sales, total 2,410 7,719 9,461 EBITDA Energy 39 190 207 Pulp 57 -18 139 Forest and timber 4 24 -48 Paper 209 929 885 Label 11 78 34 Plywood 26 -30 46 Other operations -9 -111 -57 EBITDA, total 337 1,062 1,206 Operating profit (loss) Energy 33 144 175 Pulp 67 -156 89 Forest and timber 25 -9 -59 Paper 51 345 -129 Label 3 35 -26 Plywood 21 -82 28 Other operations -7 -142 -54 Operating profit (loss), 193 135 24 total % of sales 8.0 1.7 0.3 Special items in operating profit Energy - -18 - Pulp - -29 -59 Forest and timber -1 -31 -36 Paper 1 -1 -379 Label - -8 -28 Plywood - -31 3 Other operations 5 -17 10 Special items in operating 5 -135 -489 profit, total Operating profit (loss) excl.special items Energy 33 162 175 Pulp 67 -127 148 Forest and timber 26 22 -23 Paper 50 346 250 Label 3 43 2 Plywood 21 -51 25 Other operations -12 -125 -64 Operating profit (loss) excl. 188 270 513 special items, total % of sales 7.8 3.5 5.4 External sales Energy 15 135 137 Pulp 22 63 63 Forest and timber 233 618 869 Paper 1,704 5,591 6,761 Label 241 942 956 Plywood 147 291 491 Other operations 48 79 184 External sales, total 2,410 7,719 9,461 Internal sales Energy 90 337 341 Pulp 247 590 881 Forest and timber 275 719 1,051 Paper 69 176 250 Label 1 1 3 Plywood 10 15 39 Other operations - 32 16 Internal sales, total 692 1,870 2,581 Business combinations On 8 December 2009, UPM, Metsäliitto Cooperative, M-Real corporation and Oy Metsä-Botnia Ab (Botnia) completed a transaction whereby UPM acquired Botnia's and Metsäliitto's shares of the Uruguayan Fray Bentos pulp mill and the forestry company Forestal Oriental, and whereby UPM sold approximately 30% of shares in Oy Metsä-Botnia Ab. If the transaction had occurred on 1 January 2009, UPM's sales would have been EUR 7,923 million and profit for the period EUR 219 million. Purchase consideration EUR million 2009 Cash paid 597 Transaction costs 5 Total purchase consideration 602 The assets and liabilities as of 8 December 2009 arising from the acquisition are as follows: EUR million Fair value Fair value Acquired of net assets adjustments carrying acquired amount Cash and cash equivalents 94 - 94 Goodwill - -43 43 Other intangible assets 4 - 4 Customer relationships and 43 43 - other intangible assets Property, plant and equipment 1,013 227 786 Biological assets 150 - 150 Investment in associated companies 3 - 3 Inventories 121 11 110 Trade and other receivables 75 - 75 Trade and other payables -68 - -68 Interest-bearing liabilities -359 - -359 Deferred income taxes -12 -10 -2 Total identifiable net assets 1,064 228 836 Minority interests -2 Asset valuation surplus and -542 cost of the prior ownership Total acquired net assets 520 Goodwill 82 Total purchase consideration 602 Purchase consideration 602 settled in cash Cash and cash equivalents in -94 subsidiary acquired Cash outflow on acquisition 508 The fair value of the acquired net assets is provisional pending on the final valuations. Notes to the consolidated cash flow statement Adjustments to net profit (loss) Year ended 31 December EUR million 2009 2008 Taxes 18 -21 Depreciation, amortisation 779 1,225 and impairment charges Share of results in 95 -62 associated companies and joint ventures Capital gains on sale of -235 -30 non-current assets, net Finance costs, net 167 227 Settlement of restructuring -43 -56 charges One-time contributions to - -85 pension funds Other adjustments -9 34 Total 772 1,232 Change in working capital Inventories 400 -55 Current receivables 156 138 Current non-interest bearing -24 -215 liabilities Total 532 -132 Changes in property, plant and equipment EUR million Q1-Q4/Q1-Q4/ 2009 2008 Book value at beginning of 5,688 6,179 period Capital expenditure 181 471 Companies acquired 1,013 - Decreases -20 -24 Depreciation -696 -748 Impairment charges -14 -182 Impairment reversal 5 - Translation difference and 35 -8 other changes Book value at end of period 6,192 5,688 Commitments and contingencies EUR million 31.12.2009 31.12.2008 Own commitments Mortgages and pledges 1) 1,043 787 On behalf of associated companies and joint ventures Guarantees for loans 8 10 On behalf of others Other guarantees 1 2 Other own commitments Leasing commitments for the 24 17 next 12 months Leasing commitments for 60 56 subsequent periods Other commitments 69 62 1) Mortgages and pledges relate mainly to Uruguayan operations, and to giving mandatory security for borrowing from Finnish pension insurance companies. Capital commitments EUR million Completion Total cost By 31.12. 2008 Materials recovery facility January 2011 19 - (MRF), Shotton Waste water treatment plant, September 2010 19 - Blandin Plywood development December 2011 18 - Rebuild of debarking plant, October 2010 30 1 Wisaforest Energy saving TMP plant, January 2011 16 - Steyrermühl EUR million Q1-Q4/ After 200931.12. 2009 Materials recovery facility - 19 (MRF), Shotton Waste water treatment plant, - 19 Blandin Plywood development - 18 Rebuild of debarking plant, 13 16 Wisaforest Energy saving TMP plant, - 16 Steyrermühl Notional amounts of derivative financial instruments EUR million 31.12.2009 31.12.2008 Currency derivatives Forward contracts 3,791 4,598 Options, bought 20 - Options, written 20 - Swaps 514 508 Interest rate derivatives Forward contracts 3,259 2,668 Swaps 2,701 2,833 Other derivatives Forward contracts 25 172 Options, bought 73 - Options, written 73 78 Swaps 4 8 Related party (associated companies and joint ventures) transactions and balances EUR million Q1-Q4/Q1-Q4/ 2009 2008 Sales to associated 114 138 companies Purchases from associated 560 592 companies Non-current receivables at 2 - end of period Trade and other receivables 23 37 at end of period Trade and other payables at 32 27 end of period Basis of preparation This unaudited financial report has been prepared in accordance with the accounting policies set out in International Accounting Standard 34 on Interim Financial Reporting and in the Group's Consolidated Financial Statements for 2008. Income tax expense is recognised based on the best estimate of the weighted average annual income tax rate expected for the full financial year. The Group has adopted the following standard: IAS 1 (Revised) Presentation of Financial Statements became effective 1 January 2009. The revised standard prohibits the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. Following the adoption of the revised standard the Group will present two separate statements (a separate income statement followed by a statement of comprehensive income). Calculation of key indicators Return on equity, %: (Profit before tax - income taxes)/ Total equity (average) x 100 Return on capital employed, %: (Profit before tax + interest expenses and other financial expenses)/ (Total equity + interest-bearing liabilities (average)) x 100 Earnings per share: Profit for the period attributable to equity holders of the parent company/ Adjusted average number of shares during the period excluding treasury shares Key exchange rates for the euro at end of period 31.12.2009 30.09.2009 30.06.2009 USD 1.4406 1.4643 1.4134 CAD 1.5128 1.5709 1.6275 JPY 133.16 131.07 135.51 GBP 0.8881 0.9093 0.8521 SEK 10.2520 10.2320 10.8125 31.03.2009 31.12.2008 30.09.2008 USD 1.3308 1.3917 1.4303 CAD 1.6685 1.6998 1.4961 JPY 131.17 126.14 150.47 GBP 0.9308 0.9525 0.7903 SEK 10.9400 10.8700 9.7943 30.06.2008 31.03.2008 USD 1.5764 1.5812 CAD 1.5942 1.6226 JPY 166.44 157.37 GBP 0.7923 0.7958 SEK 9.4703 9.3970 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. For more detailed information about risk factors, see pages 71-73 of the company's annual report 2008 UPM, Corporate Communications Media Desk, tel. +358 40 588 3284 communications@upm-kymmene.com UPM-Kymmene Corporation Pirkko Harrela Executive Vice President, Corporate Communications DISTRIBUTION NASDAQ OMX Helsinki Ltd Main media www.upm-kymmene.com |
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