UPM’s Interim Report for January-June 2004

Paper markets positive, profitability still weak.

Key figures Q2 (Q1):

Operating profit before non-recurring items EUR 91 million (101 million)
Earnings per share excluding non-recurring items EUR 0.12 (0.09)
Turnover EUR 2,497 million (2,451 million)
Balance sheet remained strong, gearing ratio 76% at the end of June
Paper deliveries in January-June increased by 7% against 2003

President and CEO Jussi Pesonen comments on the first six months of 2004:

"UPM's profitability in main business areas remained weak. Although some price increases materialised in Europe, the paper prices continued to be very low. The results for Converting division as well as pulp and energy operations have improved. UPM's operational efficiency is now at a good level. The EUR 200 million cost savings programme has proceeded well and is ahead of schedule."

"Demand for paper continued to grow and deliveries clearly increased during the first six months. Magazine paper deliveries grew by 6% and newsprint by 7%. Deliveries for fine and speciality papers increased by 9%. Order stock was further strengthened and operating rates will be high in the coming months."

"In particular magazine paper markets are expected to be tight during the autumn when demand reaches its seasonal peak."

"In line with the expected high demand UPM is to increase the prices for magazine and graphic fine paper grades in Europe by 5-8% as of September. The increases will apply to all non-contractual and quarterly agreed business. We also anticipate further price increases in North America and Asia, in addition to those already implemented."

"The market forecast is good for converted products. In wood products the oversupply in sawn timber will persist, but the outlook for plywood is improving", said Mr Pesonen.


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

UPM-Kymmene Corporation
Corporate Communications
July 27, 2004


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Webcasting and Conference Call Information

The news conference regarding the Interim Report will be broadcast on-line at UPM's website www.upm-kymmene.com today at 13:30 Finnish time (11:30 GMT). The reply of the news conference will be available for next 3 months.

To participate in the UPM Conference Call, please dial +44 (0) 1452 542 300 at 17:00 (Finnish time) (15:00 GMT) on July 27, 2004. Call title: UPM-Kymmene Q2 Interim Review Conference Call. The Conference Call reply will be available until August 3, 2004 at the following phone number: +44 (0) 1452 55 00 00, access code: 1465368#.

In the United States and Canada the Conference Call number is +1 866 220 1452. The reply will be heard at the following number +1 866 247 4222, access code: 1465368#.