UPM-Kymmene - Financial Statement Release

Financial Statements Release 2016: UPM finishes a record-strong year with a good quarter

UPM-Kymmene Corporation      Financial Statements Release         31 January
2017 at 9:35 EET

Financial Statements Release 2016: UPM finishes a record-strong year with a good
quarter

Q4 2016 highlights
  * Comparable EBIT increased by 15% to EUR 283 million (247 million).
  * High maintenance activity resulted in temporarily higher fixed costs and
    lower operational efficiency.
  * Growth projects contributed significantly to earnings.
  * Strong operating cash flow at EUR 405 million (390 million).
  * The Otepää plywood mill expansion and UPM Kaukas pulp mill investment
    started production.
  * In October, UPM announced a new self-adhesive label stock investment in
    Poland to meet the growing demand in Europe.
  * In November, UPM announced plans to close 305,000 tonnes of SC paper
    capacity in Germany and Austria.

2016 highlights
  * Comparable EBIT increased by 25% to EUR 1,143 million (916 million).
  * Growth projects contributed significantly to earnings and cost efficiency
    measures continued on a strong track.
  * Operating cash flow reached a record high of EUR 1,686 million (1,185
    million).
  * Net debt decreased to a record low of EUR 1,131 million (2,100 million).
  * UPM closed the Madison Paper Industries in the US in May and sold the
    Schwedt newsprint mill in Germany in July.
  * In July, UPM announced expansion of the UPM Kymi pulp mill capacity to
    870,000 tonnes.
  * The Board proposes a dividend of EUR 0.95 (0.75) per share, representing
    30% of operating cash flow per share.

Key figures                        Q4/2016 Q4/2015 Q3/2016 Q1-Q4/2016 Q1-Q4/2015

Sales, EURm                          2,476   2,574   2,445      9,812     10,138

Comparable EBITDA, EURm                349     363     423      1,560      1,350

  % of sales                          14.1    14.1    17.3       15.9       13.3

Operating profit, EURm                 232     220     364      1,135      1,142

Comparable EBIT, EURm                  283     247     314      1,143        916

  % of sales                          11.4     9.6    12.8       11.6        9.0

Profit before tax, EURm                231     214     336      1,080      1,075

  Comparable profit before tax,
EURm                                   282     241     288      1,089        849

Profit for the period, EURm            187     193     268        880        916

Comparable profit for the period,
EURm                                   220     215     234        879        734

Earnings per share (EPS), EUR         0.35    0.36    0.50       1.65       1.72

  Comparable EPS, EUR                 0.41    0.41    0.44       1.65       1.38

Return on equity (ROE), %              9.3     9.7    13.8       10.9       11.9

Comparable ROE, %                     10.9    10.8    12.1       10.9        9.5

Return on capital employed (ROCE),
%                                      9.4     8.2    13.4       10.5       10.3

Comparable ROCE, %                    11.4     9.2    11.5       10.6        8.3

Operating cash flow, EURm              405     390     506      1,686      1,185

Operating cash flow per share, EUR    0.76    0.73    0.95       3.16       2.22

Equity per share at end of period,
EUR                                  15.43   14.89   14.75      15.43      14.89

Capital employed at the end of
period, EURm                        10,657  11,010  10,463     10,657     11,010

Net interest-bearing liabilities
at end of period, EURm               1,131   2,100   1,479      1,131      2,100

Gearing ratio at end of period, %       14      26      19         14         26

Personnel at the end of period      19,310  19,578  19,559     19,310     19,578


Jussi Pesonen, President and CEO, comments on Q4 and full year 2016 results:

"Year 2016 was financially a record year. It demonstrates the results of our
transformation and sets the stage for the future: Today's UPM is earnings growth
oriented, capable and financially strong. Now we have the opportunity to seek
new horizons and continue to aim higher.

We achieved a lot over the course of the year. We grew with our customers in
many growth markets. In addition, our own cost-efficiency measures succeeded
well. Our comparable EBIT increased by 25% and our operating cash flow was
record strong at EUR 1,686 million. Our net debt was EUR 969 million lower than
a year ago, reaching an industry-leading 0.73 times EBITDA. All of this was
reflected in the positive share price performance during the year.

Our performance stayed at a good level also during the fourth quarter and
comparable EBIT increased to EUR 283 million. As expected, the quarter was
impacted by heavy maintenance activity, especially in UPM Biorefining, resulting
in temporarily higher fixed costs and lower operational efficiency than in the
comparison periods.

The growth projects proceeded well during the autumn. All the first wave growth
investments are contributing to our earnings. With further potential, especially
in the specialty paper machine in UPM Changshu and the Lappeenranta biorefinery,
optimisation continues.

Further growth initiatives are ongoing. The Otepää plywood mill and UPM Kaukas
pulp mill expansions started successfully in Q4. Construction of the UPM Kymi
pulp mill expansion and UPM Raflatac factory investment in Poland are in full
swing. Our discussions with the Government of Uruguay on the prerequisites for
long-term industrial development in the country have proceeded in positive
spirit. Many important topics are still under discussion, however.

We look confidently to the future. Our competitive position and market demand
enable us to expand our growth businesses further and aim higher with our long-
term earnings. Today, we have decided on new long-term financial targets
reflecting our new ambition level.

UPM's Board of Directors has today proposed that the dividend for 2016 be
increased to EUR 0.95 (0.75) per share, which is 30% of the operating cash flow
per share".


Outlook for 2017

UPM's profitability improved significantly in 2016 and is expected to remain on
a good level in 2017.

Demand growth is expected to continue for most of UPM's businesses, while demand
decline is expected to continue for UPM Paper ENA. The focused growth projects
continue to contribute gradually to UPM's performance.

Following a deflationary environment in recent years, 2017 is expected to show
modest input cost inflation. UPM will continue measures to reduce fixed and
variable costs to mitigate this.

2017 starts with lower pulp prices and lower availability of hydropower than in
the beginning of 2016.


Webcast and press conference

UPM's President and CEO Jussi Pesonen will present the results in a webcast and
a conference call for analysts and investors, held in English language, today at
13:15 EET.

Later in the afternoon, Jussi Pesonen will present the results in a press
conference held in Finnish language at the UPM Group Head Office (The Biofore
House) in Helsinki, Alvar Aallon katu 1, at 14:30 EET.

Webcast and conference call details:

The conference call can be participated in either by dialling a number in the
list below or following the webcast online at www.upm.com or through this link.

Only participants who wish to ask questions in the conference call need to dial
in. We recommend that participants start dialling in 5-10 minutes prior to
ensure a timely start of the webcast.

The presentation is available at www.upm.com for 12 months after the call.

Conference call title: Financial Statements Release for the year 2016

Direct telephone numbers:

BE: +3224040635
DK: +45 823 331 78
FI: +358981710495
UK: +442031940552
NO: +4723500211
SE: +46856642702
US: +18557161597

International telephone numbers with a pin code 36958264#

AU: +61 29253 5844
AT: +43 19282 258
CH: +44 44580 0083
CN: +86 400 681 5421
DE: +49 030 221 510 067
ES: +34 911 143 608
FR: +33 (0)2 9092 0977
HK: +852 3068 9834
IN: 0018038524634
IR: +353 1696 8154
IT: +39 2 3604 6798
JP: +81 3 4455 9554
NL: +31 20 716 8427
SP: +65 6307 7610

**

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. The main earnings sensitivities and the group's
cost structure are presented on page 18 of the 2015 Annual Report. Risks and
opportunities are discussed on pages 17-18 and risks and risk management are
presented on pages 84-86 of the report.

**

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

UPM, Media Relations
Mon-Fri from 9:00 to 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

Follow UPM on Twitter | LinkedIn | Facebook | YouTube | Instagram |
upmbiofore.com



[]

Viðhengi:

UPM Financial Statements Release 2016.pdf