2007-06-05 14:01:00 CEST

2007-06-05 14:01:00 CEST


REGULATED INFORMATION

Finnish English
UPM-Kymmene - Company Announcement

UPM RECORDS GOODWILL IMPAIRMENT CHARGE IN MAGAZINE PAPERS, AND WRITES OFF ASSETS OF MIRAMICHI PAPER MILL


UPM will record an impairment charge of the Magazine Papers' goodwill and write
off the remaining carrying value of the Miramichi paper mill's production
facilities in the second quarter. The Company's view of the magazine paper
demand development remains unchanged and it expects good demand for magazine
papers to continue. 

UPM has carried out the testing of goodwill of the Magazine Papers according to
IAS 36. Based on the outcome, UPM will record an impairment charge of
approximately EUR 350 million from the goodwill. The primary drivers for the
impairment relate to lower-than-forecast realized magazine paper price and the
adverse development of exchange rates, especially the US dollar. Due to the
impairment, deferred tax liabilities will be decreased by approximately EUR 25
million. 

The total amount of the Magazine Papers' goodwill at the end of December 2006
was EUR 915 million, out of which EUR 492 million related to the company's
North American acquisitions. 

As the profitability of the Miramichi mill has continued to be unsatisfactory,
UPM has today announced of the decision to shut down the mill for 9 to 12
months and to write off the remaining carrying value, approximately EUR 20
million, of the paper mill's production facilities. 

Due to the weakening of the Miramichi mill's prospected financial development,
all of the deferred tax assets cannot be carried in the balance sheet according
to the IAS 12. Consequently, UPM will write down approximately EUR 40 million
of deferred tax assets. 

Summary of the estimated bookings in the second quarter with no cash effect:

Write-off of the production facilities of the Miramichi paper mill: EUR -20
million 
Write-down of the deferred tax asset in Canada: EUR -40 million
Impairment of Magazine papers' goodwill: EUR -350 million
Decrease of deferred tax liabilities: EUR 25 million

Total: EUR -385 million

Included in operating profit: EUR -370 million
Included in income taxes: EUR -15 million

For further information please contact:
Mr Jyrki Salo, Executive Vice President and CFO, UPM, tel. +358 2041 50011

UPM-Kymmene Corporation


Pirkko Harrela
Executive Vice President, Corporate Communications

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