UPM-Kymmene - Company Announcement

UPM proceeds with Changshu investment to strengthen its leading global position in labelling materials

UPM-Kymmene Corporation   Stock Exchange Release      28 February 2014 at 8.00
EET 

UPM implements the construction of the third production unit on its Changshu
mill in China with improved capital efficiency. With the investment, the
company is strengthening its leading global position in labelling materials as
a cost competitive high quality supplier.  The Changshu investment was
announced August 7th, 2012. 

The investment scope has been moderately revised by specifying more focused
infrastructure investments as compared to the original scope. Instead of
constructing a new power plant, UPM will upgrade existing boilers providing
opportunity to consider more environmentally effective fuels or solutions for
the mill's energy supply in the future. The mill also aims at utilizing
existing facilities more effectively instead of building new infrastructure.
With the revised plan the investment cost is EUR 277 million instead of the
original EUR 390 million. 

“We have set ourselves clear targets for focused growth initiatives over the
next three years in biofuels, speciality papers in Asia, label materials and
pulp production.  With these initiatives we are targeting an additional EUR 200
million EBITDA when in full operation. The return on the Changshu investment is
attractive and is expected to bring a significant contribution to our EBITDA
growth target,” says Jussi Pesonen, UPM's CEO and President. 

“The Changshu investment is targeted to serve growing end uses in Asia markets
with wide range of release liner materials and speciality products. This
investment is implemented in our existing platform in Changshu, and will give
us competitive production cost base through local synergies. The business
fundamentals for the investment continue to be positive as both release liner
materials and uncoated woodfree office and speciality papers enjoy a healthy
demand outlook in Asia,” says Kim Poulsen, Executive Vice President, UPM Paper
Asia. 

The annual growth of labelling materials is expected to be globally ca. 4 %.
More than half of the global growth takes place in Asia with annual growth over
8%. The most attractive growth markets are China, Southeast Asia and India. 

The new machine is capable of producing up to 360,000 tonnes of speciality
papers and labelling materials. The machine will start up at the end of 2015. 

For further information please contact :
Kim Poulsen, Executive Vice President, UPM Paper Asia,  tel: +86 158 5158 0606

Pictures from Changshu: http://pet.upm.com/?cart=7691-fggcahiljl&l=EN

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

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

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UPM Paper Asia is the world's leading producer of fine papers and label papers,
serving customers in Magazine Publishing & Advertising, Merchants, Catalogues
and Offices. A leader in sustainable and high performance papers, UPM Paper
Asia's production is located in China and Finland. With headquarters in China,
UPM Paper Asia employs approximately 1,700 people in China, Finland, Japan,
Korea, Singapore and Australia. 

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 Europe and North America and UPM Plywood.
Our products are made of renewable raw materials and are recyclable. We serve
our customers worldwide. The group employs around 21,000 people and its annual
sales are approximately € 10 billion. UPM shares are listed on NASDAQ OMX
Helsinki. UPM - The Biofore Company - www.upm.com