Estimated combined profit before extraordinary items and taxes for Repola Corporation and Kymmene Corporation in 1995 was around FIM 6 billion, almost twice as high as the previous year (FIM 3.1 billion). Two companies will merge to form UPM-Kymmene Corporation and have operated together since November 1995. Repola returned a profit of approximately FIM 3.7 billion (FIM 2.0 billion) and Kymmene a profit of around FIM 2.3 billion (FIM 1.1 billion). The good result for the year is attributable largely to higher sales prices and greater sales volumes for newsprint and magazine paper. There was also a clear improvement in profitability for fine paper and, in particular, for pulp. On the other hand, profitability for sawmilling and plywood production was weaker. Profit for September-December was around FIM 1.6 billion, less than the figure for the previous four month periods. This was due largely to cutbacks in production of fine paper and pulp. Profit for September-December was reduced by some FIM 350 million due to non-recurring expenditure items and exchange differences on foreign loans arising from the weakening of the Finnish markka in December. Demand for pulp and fine paper declined during the latter half of the year, largely because customers reduced their stocks. To stabilize the market fine paper production was curtailed and only around 70 per cent of capacity was in use during the final four months of the year. Capacity utilization rates were also low for production of packaging papers and board. The market for newsprint and magazine papers remained more stable. With the exception of newsprint, demand for paper, which is usually slack early in the year, did not allow the mills to operate at full capacity during January 1996. Production will continue to be curtailed, at least for fine paper and LWC paper. According to the present estimates, capacity utilization rates will return to normal after the first three months of this year.