UPM-Kymmene - Company Announcement

UPM's operating profit improved from the first quarter's level; demand stabilising

UPM-Kymmene Corporation   Stock Exchange Release  4 August 2009  at 09:30       

UPM's operating profit improved from the first quarter's level; demand          
stabilising                                                                     

Interim report 1 January-30 June 2009: Earnings per share for the second quarter
were € -0.02 (0.18), and excluding special items € 0.03 (0.17). Operating profit
excluding special items was € 31 million (155 million) and reported operating   
profit was € 8 million (157 million). Good operating cash flow ensured liquidity
and thus the net interest-bearing liabilities at the end of June came to € 4,036
million (4,479 million). Cost saving measures and temporary layoffs resulted in 
a fixed cost reduction of € 100 million in the second quarter in comparison with
the same period last year.                                                      

Jussi Pesonen, UPM's President and CEO, comments on the result for the second   
quarter of 2009:                                                                

“Weak demand resulting from poor economic activity led to significantly lower   
deliveries across all of UPM's businesses. Our operating profit improved from   
the first quarter of this year although declined clearly from that of the       
equivalent period last year. A good operating cash flow ensured liquidity, and  
we have reduced our net debt by almost EUR 300 million since the beginning of   
the year. Significant cost savings materialised and there were slight positive  
signs in the market”.                                                           "In Paper, our deliveries improved somewhat from the first quarter's level, and 
the flexible operating mode suits the demand situation particularly well. The   
EBITDA margins of our Paper and Label businesses improved. In Paper, the average
price increased by approximately 1 % from the level of the second quarter of    
last year. Sales prices increased also in the Label business. In Plywood and    
Timber, the extremely challenging market situation continued”.                  

“Our cost saving measures and temporary layoffs decreased our fixed costs during
the second quarter by EUR 100 million in comparison to the same period in 2008. 
UPM employees have had a constructive, future oriented approach, and we have    
found permanent solutions to reduce costs. This is very positive in these       
circumstances and crucial also for the long term”.                              

“Our market outlook remains cautious. Contraction of economic activity seems to 
have slowed and demand for our products is stabilising. In Paper, there is also 
some improvement in order intake. However, recession continues to have an impact
on the demand for our products. Therefore, temporary production curtailments    
will continue”.                                                                 

“UPM continues to implement its strategy to reposition the company. The letter  
of intent concerning the ownership structure of Botnia as well as the           
shareholding in the energy company PVO is an important step on the road to      
strong market driven operations in our Pulp and Energy businesses”, 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 Interim Report for       
January-June 2009 in a press conference to be held at the UPM Head Office in    
Helsinki (main entrance Eteläesplanadi 2) today at 14:00 Finnish time (12:00 UK 
time, 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 also take place today at 17:00 Finnish time (15:00 UK time, 
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 Interim Report Q2 2009                                          
Conference ID: 18054882                                                         
International dial-in: +44(0) 1452 555 566                                      
UK Free call: 0800 694 0257                                                     
UK Local call: 0844 493 3800                         
USA Free Call: 1866 966 9439                                                    

Dial-in numbers for replay, available until 10 August 2009:                     
Access code: 18054882#                                                          
International dial in: +44(0) 1452 55 0000                                      
UK Free call: 0800 953 1533                                                     
UK Local call: 0845 245 5205                                                    
USA Free call: 1866 247 4222                                                    

***                                                                             

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, and 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.                                                 

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

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