UPM-Kymmene - Company Announcement

UPM’s EBITDA and operating cash flow improved in 2011

Myllykoski integration and restructuring proceed well

(UPM, Helsinki, 1 February 2012 at 09.30) - Financial Statements 2011:

October-December 2011:
Earnings per share excluding special items were EUR 0.16 (0.27), and reported
EUR 0.20 (0.28) 
EBITDA was EUR 301 million, 11.2% of sales (318 million, 13.5% of sales)
Delivery volumes decreased and variable costs remained high
Operating cash flow continued to be strong at EUR 310 million

January-December 2011:
Earnings per share excluding special items were EUR 0.93 (0.99), and reported
EUR 0.88 (1.08) 
EBITDA was EUR 1,383 million, 13.7% of sales (1,343 million, 15.0% of sales)
Solid cash flow ensured strong balance sheet after the Myllykoski acquisition
Board's proposal for dividend per share EUR 0.60 (0.55)

Key figures                                 Q4/201  Q4/201  Q1-Q4/201  Q1-Q4/201
                                                 1       0          1          0
Sales, EURm                                  2,686   2,357     10,068      8,924
EBITDA, EURm 1)                                301     318      1,383      1,343
% of sales                                    11.2    13.5       13.7       15.0
Operating profit (loss), EURm                  131     207        459        755
excluding special items, EURm                  147     212        682        731
% of sales                                     5.5     9.0        6.8        8.2
Profit (loss) before tax, EURm                  94     173        417        635
excluding special items, EURm                  110     178        572        611
Net profit (loss) for the period, EURm         102     144        457        561
Earnings per share, EUR                       0.20    0.28       0.88       1.08
excluding special items, EUR                  0.16    0.27       0.93       0.99
Operating cash flow per share, EUR            0.59    0.66       1.99       1.89
Shareholders' equity per share at end of     14.22   13.64      14.22      13.64
 period, EUR                                                                    
Gearing ratio at end of period, %               48      46         48         46
Net interest-bearing liabilities at end of   3,592   3,286      3,592      3,286
 period, EURm                                                                   

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. 

Jussi Pesonen, President and CEO, comments the year:

“During 2011 our EBITDA and operating cash flow improved on 2010 and our strong
financial position continued. 

Prices of all production inputs increased substantially compared to 2010 but we
succeeded in raising prices to cover the cost increases. 

However, during the latter part of the year the deterioration of pulp prices
and lower demand for paper and wood products had a clear impact on our
profitability. In the label market the weak demand was evident in Europe but
solid development continued in other markets. 

Demand weakened during the fourth quarter, but we were able to maintain stable
sales prices in most businesses with the exception of Pulp and Timber. Raw
material market prices started to decline towards the end of the year, but our
variable costs still remained on a high level during the last quarter of 2011. 

The major strategic signpost in 2011 was the Myllykoski acquisition. The
transaction, the integration and the restructuring have all proceeded in line
with our plans. The consolidation and the consequent restructuring have
improved our cost position on the paper markets. Also, our customer offering in
paper has been enhanced. Targeted synergy benefits are well on the way to being
successfully implemented and this will start to be visible as of the first
quarter of 2012. 

Although our markets have been affected by the uncertainties in the world
economy, UPM's outlook into the first half of 2012 is fairly stable. We are in
a good position to proceed with the next steps in our Biofore strategy,” says
Pesonen. 


Outlook for 2012

Global economic growth is expected to continue in 2012. In Europe, however, the
on-going sovereign debt crisis introduces uncertainty to the economic outlook.
Economists estimate that the Euro zone will experience a mild recession in the
early part of 2012. 

In UPM's businesses, market conditions are estimated to have stabilised. While
the second half of 2011 was characterised by weakening demand, the demand and
price outlook for UPM's products is broadly stable for early 2012 compared with
late 2011, taking into account seasonal variations. 

Costs are expected to decrease in the early part of 2012 from the fourth
quarter of 2011. Raw material market prices started to decrease during the
fourth quarter and this is expected to result into slightly lower variable
costs in the first quarter of 2012 compared with the fourth quarter of 2011. 

Operating profit in the first half of 2012, excluding special items, is
expected to be at around the same level as in second half of 2011. 

Capital expenditure for 2012 is forecast to be around EUR 350 million.


Dividend for 2011

The Board of Directors will propose to the Annual General Meeting, to be held
on 30 March 2012 that a dividend of EUR 0.60 per share be paid in respect of
the 2011 financial year (EUR 0.55). It is proposed that the dividend be paid on
13 April 2012. 

Financial information in 2012

The Annual Report for 2011 will be published on the company's website
www.upm.com on 23 February 2012. The printed Annual Report will be available in
the week starting on 12 March 2012. The Interim Reports will be published as
follows: 

Interim Report January-March 2012 on 26 April 2012
Interim Report January-June 2012 on 7 August 2012
Interim Report January-September 2012 on 25 October 2012

For more information please contact:
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001
Mr Tapio Korpeinen, CFO, UPM, tel. +358 204 15 0004


Webcast and press conference:

UPM's President and CEO Jussi Pesonen will present the Annual Results 2011 in a
conference call and webcast for analysts and investors, held in English
language, on 1 February at 13:00 Finnish time (11:00 BST, 06:00 EST). 

Later in the afternoon, UPM's President and CEO Jussi Pesonen will present the
Annual results 2011 in a press conference held in Finnish language at UPM Group
Head Office in Helsinki (main entrance, Eteläesplanadi 2) on 1 February, at
14:30 Finnish time (12:30 GMT, 07:30 EST). 

Conference call and webcast details:

The conference call can be joined either by dialling a number in the list below
or following the webcast online at www.upm.com. 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 dialling in 5-10 minutes prior to ensure a
timely start to the conference. 

Conference call title: UPM Financial Review 2011
Conference ID: 910475

Phone numbers:
Participant - US: +1 334 323 6201
Participant - Australia LC: +61 (0)28 2239 543
Participant - Hong Kong LC: +852 300 278 26
Participant - Japan LC: +81 (3)45 8001 94
Participant - Malaysia LC: +60 (0)37 7124 471
Participant - New Zealand LC: +64 (0)99 1924 18
Participant - Singapore LC: +65 6823 2169
Participant - South Korea LC: +82 (0)23 4831 070
Participant - Taiwan LC: +886 (0)22 1626 701
Participant - Austria: +43 (0)268 2205 6292
Participant - Belgium: +32 (0)2 290 14 07
Participant - Czech Republic: +420 (2)3900 0635
Participant - Denmark: +45 3271 4607
Participant - Finland: +358 (0)9 2313 9201
Participant - France: +33 (0)1 7099 3208
Participant - Germany: +49 (0)695 8999 0507
Participant - Hungary: +36 (0)618 8932 15
Participant - Ireland: +353 (0)1 4364 106
Participant - Italy: +39 023 0350 9003
Participant - Luxembourg: +352 270 0073 408
Participant - Netherlands: +31 (0)20 7965 008
Participant - Norway: +47 2156 312 0
Participant - Russia: +7 49 5642 8394
Participant - Spain: +34 917 889 507
Participant - Sweden: +46 (0)8 5052 0110
Participant - Switzerland (Geneva): +41 (0)2 2592 7007
Participant - Switzerland (Zurich): +41 (0)434 5692 61
Participant - UK: +44 (0)20 7162 0077

The webcast can be replayed at www.upm.com for 12 months.

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 86-88 of the company's annual report 2010. 


UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President,
Corporate Communications


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

Attachments:

UPM Financial Statements 2011.pdf