UPM-Kymmene - Company Announcement

UPM's operating profit for 2008 impacted by high cost of wood and economic downturn; Restructuring measures implemented promptly to face a challenging year

UPM-Kymmene Corporation  Stock Exchange Release  5 February 2009  at 09:30      

UPM's operating profit for 2008 impacted by high cost of wood and economic
downturn; Restructuring measures implemented promptly to face a challenging
year 2009 

Financial review for 2008: Earnings per share for 2008 were EUR -0.35 (EUR      
0.16), excluding special items EUR 0.42 (EUR 1.00). Operating profit for the    
year was EUR 24 million (EUR 483 million), excluding special items EUR 513      
million (EUR 835 million). Operating loss for the fourth quarter was EUR 286    
(profit of EUR 142 million), excluding special items a loss of EUR 46 million   
(profit of EUR 194 million).                                                    

Jussi Pesonen, UPM's President and CEO, comments on the financial review for    
2008:                                                                           "The year was characterised by high wood costs and a quick deterioration of the 
economy, which affected all of UPM's businesses. Sales decreased across all of  
UPM's businesses and profitability declined from the level of 2007.""UPM responded already in early September by announcing plans for permanent     
closures, streamlining of operations through a new business structure and       
introduction of a flexible way of working in production. The measures were      
implemented promptly in order to be ready to face the weaker demand and high raw
material costs.""As we headed towards a downturn we also wanted to preserve cash flow. Therefore
we reduced our product inventories to a record low level.  At the end of the    
year, our paper inventories were 200,000 tonnes lower than a year ago.""In plywood and sawn timber, the markets have declined dramatically, and we need
to continue with actions to improve profitability.""Last year our internal efficiency improved and comparable fixed costs decreased
by EUR 120 million. Unfortunately that was not enough. High wood and energy     
costs more than did away with the profit improvements in our operations.        
Adjusted by volume, wood costs increased by EUR 220 million, and energy costs by
EUR 100 million.                                                                "The operating environment will be difficult in 2009. It is crucial to ensure   
the implementation of our streamlined, flexible way of working so that we       
maintain a high level of customer service but at the same time save costs. This 
will also permit us to quickly restore activities when the business turns around
again."

For more information please contact:                                            
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001                 
Mr Jyrki Salo, 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 review for 2008
in a press conference to be held at UPM Head Office in Helsinki (main entrance  
Eteläesplanadi 2) today on 5 February 2009 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 5 February 2009 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, Financial Review for 2008                              
Access code: 79589133                                                           
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 11 February 2009:                   
Access code: 79589133#                                                          
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                                                 

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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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.