UPM-Kymmene - Company Announcement

Costs and record-strong euro impacted UPM's results, Magazine paper markets now tight

Interim report January-September 2007: Earnings per share, excluding special    
items, for the third quarter were EUR 0.23 (EUR 0.25 for the third quarter of   
2006). EBITDA was EUR 366 million, 14.8% of sales (EUR 427 million, 17.1%).     
Operating profit excluding special items was EUR 195 million (EUR 209 million). 
The increase in costs, particularly wood costs, and the strengthened euro       
reduced profitability.                                                          

Jussi Pesonen, President and CEO, comments on the result of the third quarter of
2007:                                                                           

"UPM's deliveries increased during the third quarter by 4% and the efficiency of
operations improved. However, the rapidly increasing costs and the strengthening
of euro were challenging for the whole industry and they impacted on our        
results. In particular, wood and recycled paper prices were markedly higher than
earlier and our stringent cost control was no longer sufficient to offset the   
cost increase. At the same time, the average price for all paper deliveries was 
approximately 2% lower than last year."                                         

"This situation calls for strong action in order to move on with our profit     
improvement."                                                                   

"Firstly, price increases are necessary in this situation. We have already      
notified our paper customers of upcoming price increases. We see that the market
continues to be tight in magazine papers, and our target is to close the deals  
by the end of the year. We have also challenged our fairly long contract        
validity times due to the rapidly rising costs."                                

"Secondly, we will revisit the cost competitiveness of our asset portfolio and  
check it against the current business environment. The review may result in     
permanent or temporary capacity closures."                                      

"Thirdly, we are introducing stricter guidelines for our capital expenditure in 
2008, and we will reallocate them towards growth markets and new businesses.    
Next year, we expect our capital expenditure to be approximately 500 million    
euros. That is substantially below the current level."                          

"We estimate that the cost pressure will continue. Our overall cost inflation   
for 2007 is estimated to be at the level of approx. 2.5% including the expected 
cost savings from the ongoing profitability programme."                         

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     
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News conference and conference call information                                 

A news conference on the Interim Report January-September 2007 will be held     
today, October 30, 2007, at UPM's Head Office in Helsinki, Eteläesplanadi 2, at 
14:00 Finnish time (12:00 GMT, 07:00 EST). The briefing can be followed live on 
the Internet at www.upm-kymmene.com. The on-demand version of the audio cast    
will be available online for three months.                                      

To participate in the UPM conference call, please dial +44 (0)1452 555 566 today
at 17:00 Finnish time (15:00 GMT, 10:00 EST). The conference call title is: "UPM
Q3 2007 Financial Results", access code: 16638655. A recording of the discussion
can be heard until November 6, 2007 by calling +44 (0)1452 550 000, access code 
16638655#.                                                                      

In the United States and Canada, the Conference Call toll free number is +1 866 
966 9439. The recording can be heard at the toll free dial at the number +1 866 
247 4222, access code: 16638655#.                                               

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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 15-17 of the company's annual report 2006.              

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

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OMX Nordic Exchange Helsinki                                                    
New York Stock Exchange                                                         
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