UPM’s Interim Report for January - September 2004: Autumn price increases through as expected, cost effectiveness improved

Key figures Q3 (Q2):
Operating profit before non-recurring items EUR 140 million (91 million)
Earnings per share excluding non-recurring items EUR 0.19 (0.12)
Sales EUR 2,449 million (2,497 million)
Paper deliveries in January-September increased by 6% against 2003
Cash flow remained good, balance sheet strengthened

President and CEO Jussi Pesonen comments on the third quarter of 2004:

"The brisk increase in paper demand continued. Order books are strong and the capacity utilization rate is very high. Because of low prices and cost pressures profitability was again unsatisfactory, but improved year-on-year. For the first time in three years, our result showed an improvement on the corresponding quarter the previous year."

"The autumn price increases in our non-contractual business went through as anticipated. We raised prices not only in North America and Asia, but also in Europe. As expected we lost some orders, but in most cases the increases were successful."

"We are now operating more cost-effectively, but we still need further improvements to raise profitability. UPM is restructuring its operations e.g. in its wood products division and at the Miramichi mill in Canada."

"The market outlook for paper continues to be positive: demand continues strong and advertising is on the increase. The price increases announced in Europe and North America will become effective gradually. During the fourth quarter higher costs are likely to more than offset the price increases already introduced. In Europe, UPM aims to substantially increase next year's contract prices for papers."

"The markets for converted products will remain good. In the wood products business, plywood markets are firm, whereas the market for sawn timber will continue to be oversupplied," said Mr Pesonen.


For more information, please contact:
Mr Jussi Pesonen, President and CEO, tel. +358 203 15 0001
Mr Kari Toikka, Executive Vice President and CFO, tel. +358 204 15 0014

UPM
Corporate Communications
October 26, 2004