UPM-Kymmene - Company Announcement

UPM's profitability improved, macro economic outlook uncertain; UPM continues actions to improve its profitability in slowing economy

UPM-Kymmene Corporation  Stock Exchange Release  28 October 2008  at 09:30      

Interim report January-September 2008: Operating profit excluding special items 
was EUR 216 million (195 million). Earnings per share for the third quarter were
EUR -0.17 (0.23 for the third quarter of 2007), excluding special items EUR 0.25
(0.23). Higher paper prices together with stringent cost control improved       
profitability.                                                                  

Jussi Pesonen, UPM's President and CEO, comments on the result of the third     
quarter of 2008:                                                                "During the third quarter, higher paper prices together with stringent cost     
control improved profitability. Our competitive energy and pulp assets also     
contributed to the better result. The recent weakening of the euro improves our 
profitability in all export markets.""Proactive and timely capacity closures in magazine papers, newsprint, and fine 
papers improved the market and customer mix of our paper business. However, the 
permanent and temporary closures decreased our deliveries. We also gave up some 
market share by refusing low-priced contracts.""While the operating profit improved in paper business, the profitability in    
Label Materials and Wood Products was weak. Label Materials suffers from poor   
demand development and increasing costs. In Wood Products, the cost of wood has 
remained high while prices and demand for sawn timber and plywood have declined.
We plan significant efficiency improvements in Label Materials and will today   
announce plans to curtail production in Wood Products.""With these plans we are ready to face the business environment of slow growth  
and high costs.""The demand for our products is not immune to the economic slowdown. We are     
confident, however, that the internal restructuring and savings programmes that 
we have successfully implemented, will give us competitive advantage in this    
extremely challenging financial environment.""Our new business structure, announced in September, will help us to leverage   
our competitive advantages. Preparations for the new structure have proceeded   
well, and we believe that it will have a far-reaching impact on our operations.""We estimate that our operating profit for the fourth quarter, excluding special
items and change in the fair value of biological assets, will be about the same 
as last year. Due to cost savings from the ongoing profitability actions, an    
increase in the company's overall costs for the full year is still expected to  
be about 2%," says Pesonen.                                                     

For more information please contact:                                            
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001                 
Mr Jyrki Salo, Executive Vice President and CFO, UPM, tel. +358 204 15 0011     

UPM, Corporate Communications                                                   
Media Desk, tel. +358 40 588 3284                       
communications@upm-kymmene.com                                                  

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News conference and conference call information                                 

UPM's President and CEO Jussi Pesonen will present the financial results for the
period January-September 2008 in a press conference to be held at UPM Head      
Office in Helsinki (main entrance, Eteläesplanadi 2) today, 28 October 2008, at 
14:00 Finnish time (12:00 GMT, 07:00 EST).                                      
The joint press conference for media and financial analysts can be listened     
online at www.upm-kymmene.com. The on-demand version of the audio cast will be  
available online for three months.                                              

A conference call for analysts and investors, hosted by UPM's President and CEO 
Jussi Pesonen, will take place today on 28 October 2008, at 17:00 Finnish time  
(15:00 GMT, 10:00 EST, please see dial-in details below). Participants are      
registered by the operator before the start of the conference call. In order to 
ensure a timely conference start, please dial in 10 minutes before the          
conference start time.                                                          

Dial-in numbers for conference call:                                            
Call title: UPM-Kymmene, Interim Review Q3 2008                                 
Access code: 68849755                                                           
International dial-in: +44 (0) 1452 555 566                                     
UK Free call: 0800 6940 257                                                     
UK Local call: 0844 493 3800                                                    
USA Free Call: 1866 966 9439                                                    

Dial-in numbers for replay, available until 3 November 2008:                    
Access code: 68849755#                                                  
International dial-in: +44 (0) 1452 550 000                                     
UK Free dial-in: 0800 953 1533                                                  
UK Local dial-in: 0845 245 5205                                                 
USA Free dial-in: 1866 247 4222                                                 

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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 68-69 of the company's Annual Report 2007.                   

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

DISTRIBUTION                                                                    
NASDAQ OMX Helsinki Ltd                                                         
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www.upm-kymmene.com