UPM-Kymmene - Company Announcement

UPM to close down Kajaani paper mill and Tervasaari pulp mill in Finland by the end of the year; Kajaani saw mill and Tervasaari paper mill continue operations

UPM-Kymmene Corporation   Stock Exchange Release  6 November 2008  at 08:30     

UPM to close down Kajaani paper mill and Tervasaari pulp mill in Finland by the 
end of the year; Kajaani saw mill and Tervasaari paper mill continue operations 

UPM will close down Kajaani paper mill and Tervasaari pulp mill by the end of   
the year. The company announced its plans on the closures in September.         
Financial prerequisites to continue the operations of the mills could not be    
found in the negotiations with employees. The slowing economy has further       
weakened the situation of these mills during the autumn.                        

At both Kajaani paper mill and Tervasaari pulp mill, negotiations also included 
alternatives for retirement, re-employment within the company, retraining and   
measures to alleviate the impacts of redundancy. UPM will start a "From job to  
job" programme in Kajaani and Valkeakoski, where the Tervasaari mill is located.

Possibilities for profitable operations at the Kajaani paper mill have          
constantly weakened due to the price development of wood and energy as well as  
the weak long term demand outlook for its main products. The mill is not        
competitive in the long term despite many well completed efficiency             
improvements. UPM's sawmill and wood procurement will continue operations in    
Kajaani.                                                                        

Profitability of pulp production has significantly decreased in Finland. The    
main driver for this is the high price of wood fibre. Tervasaari pulp mill is   
the smallest and oldest of UPM's Finnish pulp mills and it has no prerequisites 
to operate profitably in this wood supply situation. UPM steers fibre to its    
bigger, newer and more competitive pulp mills in Finland. Tervasaari mill's     
three paper machines continue operations. In future, chemical pulp will be      
supplied to Tervasaari from more competitive pulp mills in Finland.             

The implementation of the decisions made will reduce the number of UPM's        
employees in Finland by around 700 persons. In Kajaani, the number of employees 
will reduce by 535 persons, around 100 through retirement. At the Tervasaari    
mill, the number of permanent jobs will reduce by 166. The number of people who 
will be eligible for a pension will be available by the end of the year.        

Based on these decisions, UPM will book at the end of the year an approximately 
EUR 170 million write-off in fixed assets and make a provision for the reduction
in the number of employees, and other closure costs of approximately EUR 30     
million with cash impact mainly in 2009.                                        

Press conferences:                                                              
UPM will arrange press conferences today on 6 November 2008 at 11:00 Finnish    
time:                                                                           
- in Kajaani in the mill's meeting room 5, hosted by Mr Pauli Hänninen,         
Executive Vice President, Technology, Mr Kari Pasanen, General Manager, UPM,    
Kajaani, Mr Sakari Toivonen, Vice President, Human Resources, UPM Northern      
Europe and Mr Tapio Laine, HR Manager, UPM, Kajaani.                            
- in Valkeakoski in the AV room of the PM8 at the Tervasaari mill, registration 
at the mill's main entrance, hosted by Mr Johan Karjaluoto, Senior Vice         
President, Speciality Papers, Mr Juha Kääriäinen, General Manager, UPM,         
Tervasaari and Mr Jari Mäkinen, Director, Human Resources, UPM, Tervasaari.     

For more information, please contact                                            
Kajaani: Mr Pauli Hänninen, UPM, Executive Vice President, Technology, tel. +358
40 581 4720 (after 12 Finnish time), Mr Kari Pasanen, General Manager, UPM,     
Kajaani, tel. +358 204 14 2100 (after 12 Finnish time)                          
Tervasaari: Mr Juha Kääriäinen, General Manager, UPM, Tervasaari, tel. +358 204 
16 2300 (after 12 Finnish time)                                                 
Mr Sakari Toivonen, Director, Human Resources, UPM Northern Europe, tel. +358 40
512 2042 (after 12 Finnish time)                                                
Mr Jyrki Salo, Executive Vice President and CFO, tel. +358 204 15 0011          


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


UPM, Kajaani                                                                    
UPM Kajaani paper mill manufactures uncoated magazine papers, newsprint and     
special newsprint. Its three production lines have a combined annual capacity of
640,000 tonnes. Located in north eastern Finland, the mill employs 535 people.  
The mill was founded in 1907. In addition, UPM has a sawmill, local UPM Forest  
wood procurement office as well as the power company, Kainuun Voima.            

UPM, Tervasaari                                                                 
UPM's Tervasaari paper mill manufactures label papers, packaging papers and     
envelope papers. The mill's three paper machines have a combined annual capacity
of 370,000 tonnes. The mill is located in central Finland and it employs around 
640 people, of which some 110 in the pulp and energy department. The mill was   
founded in 1872.                                                                

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

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