UPM-Kymmene - Other information disclosed according to the rules of the Exchange

UPM aims higher with renewed long-term financial targets

UPM-Kymmene Corporation       Other information disclosed according to the rules
of the Exchange         31 January 2017 at 10:10 EET

UPM aims higher with renewed long-term financial targets

UPM renews its long-term financial targets. In the new targets,
  * the business area return targets and the comparable ROE target have been
    increased.
  * comparable EBIT growth has been introduced as a new group-level target
  * a new financial policy on leverage based on net debt/EBITDA has been
    introduced
  * the cash flow-based dividend policy remains unchanged.
"Since adopting the current business model of six separate businesses in 2013,
we have achieved a clear improvement in our financial performance. The set-up
has simultaneously opened attractive growth opportunities for us, as well as
enabled us to improve competitiveness in all of the businesses. Now, we are
confident we can continue to aim higher," says Jussi Pesonen, President and CEO
of UPM.

Business area long-term return targets increased

On the business-area level, UPM has increased the long-term return targets for
five of the six business areas.

"The new return targets reflect our increased ambition for business performance.
They are credible and sustainable in the long term, over business and investment
cycles," says UPM's CFO Tapio Korpeinen.

+---------------+---------+------------+----------+----------+----------+------+
|Business area  |Measure  |Previous    |New target|Actual    |Actual    |Actual|
|               |         |target (%)  |(%)       |2016      |2015      |2014  |
|               |         |            |          |(%)       |(%)       |(%)   |
+---------------+---------+------------+----------+----------+----------+------+
|UPM Biorefining|ROCE %   |10-12       |14        |12.6      |14.6      |7.6   |
+---------------+---------+------------+----------+----------+----------+------+
|UPM Energy     |ROCE %** |6           |6         |5.0       |6.7       |6.9   |
+---------------+---------+------------+----------+----------+----------+------+
|UPM Raflatac   |ROCE %   |18          |20        |25.5      |17.6      |15.0  |
+---------------+---------+------------+----------+----------+----------+------+
|UPM Specialty  |ROCE %   |10-12       |14        |12.1      |5.5       |12.6  |
|Papers         |         |            |          |          |          |      |
+---------------+---------+------------+----------+----------+----------+------+
|UPM Paper ENA  |FCF/CE %*|10-12       |14        |31.0      |4.7       |12.9  |
+---------------+---------+------------+----------+----------+----------+------+
|UPM Plywood    |ROCE %   |10-12       |18        |22.6      |20.9      |16.5  |
+---------------+---------+------------+----------+----------+----------+------+
ROCE % = Return of capital employed excluding items affecting comparability.
* Free cash flow after investing activities (investments and/or divestments) and
restructuring costs.
**UPM Energy assets valued at fair value.

Growth target introduced for group comparable EBIT

A new target has been introduced on the group level: UPM aims to grow its
comparable EBIT over the long term.

UPM has a portfolio of five businesses that operate on growing markets and one
business that faces declining demand. All of our businesses are competitive and
have strong market positions.

"We aim to grow the businesses with strong long-term fundamentals for growth and
profitability. At the same time, we aim to maintain strong performance also in
the European and North American paper business.

However, we prioritise earnings growth over top-line growth. We will invest in
projects with attractive and sustainable returns, supported by a clear
competitive advantage or barriers to entry. We also aim to capture opportunities
to develop our business and product mix and further improve our cost
competitiveness," says Korpeinen.

+---------------+----------+------------------+-----------+------------------+
|Measure        |New target|Actual 2016 (EURm)|Actual 2015|Actual 2014 (EURm)|
|               |          |                  |(EURm)     |                  |
+---------------+----------+------------------+-----------+------------------+
|Comparable EBIT|Growth    |1,143             |916        |866               |
+---------------+----------+------------------+-----------+------------------+

Aiming for attractive shareholder returns

UPM has increased its ROE target, now aiming for a 10% return on equity. The
previous target was variable: 5 percentage points over a ten-year risk-free
investment.

"ROE is a good measure for UPM on the group level, as it also takes into account
the financing, taxation and capital structure of the group," says Korpeinen.

+----------------+--------------+----------+-----------+-----------+-----------+
|Measure         |Previous      |New target|Actual 2016|Actual 2015|Actual 2014|
|                |target        |(%)       |(%)        |(%)        |(%)        |
+----------------+--------------+----------+-----------+-----------+-----------+
|Comparable ROE %|5pp over a 10-|10.0      |10.9       |9.5        |8.5        |
|                |year risk-free|          |           |           |           |
|                |rate          |          |           |           |           |
+----------------+--------------+----------+-----------+-----------+-----------+

UPM maintains its cash flow-based dividend policy. UPM aims to pay an attractive
dividend: 30-40% of the company's annual operating cash flow per share.

Maintaining a strong balance sheet

UPM aims to maintain a strong balance sheet. Investment grade rating is an
important element in UPM's financing strategy. UPM has introduced a new
financial policy on leverage:

UPM targets a net debt/EBITDA ratio of approximately 2 times or less.

The previous maximum gearing limit of 90% has been discontinued as redundant.

+---------------+-------------+------------+-----------+-----------+-----------+
|Measure        |Previous     |New policy  |Actual 2016|Actual 2015|Actual 2014|
|               |limit        |            |           |           |           |
+---------------+-------------+------------+-----------+-----------+-----------+
|Net debt/EBITDA|N/A          |approx. 2x  |0.73x      |1.56x      |1.84x      |
|               |             |or less     |           |           |           |
+---------------+-------------+------------+-----------+-----------+-----------+
|Gearing        |<90%         |N/A         |14%        |26%        |32%        |
+---------------+-------------+------------+-----------+-----------+-----------+


For further information, please contact:
Tapio Korpeinen, CFO, tel. +358 2041 50004


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

UPM, Media Relations
Mon-Fri 9:00-16:00 EET
tel. +358 40 588 3284
media@upm.com

UPM
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 Specialty Papers, UPM Paper ENA and UPM Plywood. Our products are
made of renewable raw materials and are recyclable. We serve our customers
worldwide. The group employs around 19,300 people and its annual sales are
approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM
- The Biofore Company - www.upm.com

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upmbiofore.com




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