Q1 2008: Timely cost measures supported UPM's profitability, Fibre costs effected the result

(UPM, Helsinki, April 24, 2008 at 12:00) – Interim Report January–March 2008:
- Earnings per share for the first quarter were EUR 0.20 (EUR 0.25 for the first quarter of 2007), excluding special items EUR 0.19 (0.25)
- Operating profit was EUR 193 million (221 million), excluding special items EUR 188 (221 million)
- Fibre costs and currencies effected the result

Jussi Pesonen, President and CEO, comments on the result of the first quarter of 2008:

"Our timely and continued cost savings measures were a good response to the heavy challenges posed by the steeply increasing cost of wood and the strengthening euro. On the positive side, the demand for most paper grades, particularly magazine paper, and plywood remained good. Our delivery volumes in paper were about the same as last year despite our considerable capacity reductions."

"The market balance in magazine papers improved and we could increase prices both in Europe and in the export markets. Unfortunately, the announced capacity closures in standard newsprint have materialized slowly in the industry and the market prices declined compared to last year. Our early measures to temporarily shut down newsprint capacity were correct and necessary in this situation."

"Our current order books in magazine paper, newsprint and fine papers are seasonally good. To address the poor profitability of certain businesses, we have decided on temporary shutdowns in our fine paper mills in Central Europe for one to three months."

"The profitability of the Label Division was disappointing. The label business is early cyclical to the weakening economy. UPM has already initiated measures to improve cost efficiency and increased prices to cope with the increased costs. I expect the situation to improve clearly once the ongoing investment programme is completed."

"In wood products, plywood continued its strong performance whereas in sawmilling there was a clear decline due to the market conditions."

"Wood fibre costs for 2008 are forecast to be higher than in the earlier forecast for the full year. However, the increase in the company's overall costs is still expected to be about 2%. This includes cost savings from the ongoing profitability programme," 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

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News conference and conference call information

A news conference on the Interim Report will be held today, April 24, 2008, at UPM's Head Office in Helsinki, Eteläesplanadi 2, at 14:00 Finnish time (12:00 UK time, 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 UK time, 10:00 EST). The conference call title is: "UPM-Kymmene Interim Review Q1 2008", access code: 42144989. A recording of the discussion can be heard until May 1, 2008 by calling +44 (0)1452 550 000, access code 42144989#.

In the United States and Canada, the Conference Call toll free number is +1 866 966 9439; UK free call number 0800 6940 257.

The recording can be heard at the toll free dial (USA and Canada) at the number +1 866 247 4222; UK free call 0800 953 1533;UK local call 0845 245 5205; access code: 42144989#.

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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 68–69 of the company's Annual Report 2007.