UPM’s profitability suffered from lower demand across all businesses

(UPM, Helsinki, 29 April 2009 at 09:30) – Interim report January–March 2009:
• Earnings per share for the first quarter were EUR -0.30 (EUR 0.20), and excluding special items EUR -0.27 (EUR 0.19)
• Operating loss was EUR 95 million (profit of EUR 193 million), and excluding special items operating loss was EUR 78 million (profit of EUR 188 million)
• Operating cash flow was EUR 274 million (EUR 50 million).

Jussi Pesonen, UPM’s President and CEO, comments on the result of the first quarter of 2009:

“Sales for the first quarter were 23% lower than a year ago. Demand for papers, labels, plywood and sawn timber dropped and we had significantly lower deliveries across all of UPM’s businesses. Thus our profitability declined markedly and we made an operating loss.”

“Operating in these extreme circumstances has been challenging. Despite this, the EBITDA margin of our Paper business improved. Paper has managed the situation by maintaining higher prices, streamlining operations and adjusting production to demand. We also paid particular attention to the market and customer mix.”

“The focus has been on cash preservation and cost savings. The operating cash flow was good. Thanks to permanent cost saving measures and temporary layoffs we lowered fixed costs by EUR 70 million compared to last year. High wood and energy costs continue to remain a challenge.”

“During the past three years UPM has restructured production significantly and renewed the operating mode of the whole company. We now have an efficient portfolio of assets and a fit-for-purpose organisation which works well also in the current environment of slow growth.”

“This year we do not expect economic activity to pick up in a way that would have a substantial impact on the demand for our main products. This means markedly lower deliveries than last year and temporary production downtimes in most of our product lines.”

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

UPM’s President and CEO Jussi Pesonen will present the Interim Report for January–March 2009 in a press conference to be held at the UPM Head Office in Helsinki (main entrance Eteläesplanadi 2) today on 29 April 2009 at 14:00 Finnish time (11:00 GMT, 07:00 EST).

The joint press conference for media and financial analysts can be listened online at www.upm-kymmene.com. The on-demand version of the audio cast will be available online for three months.

A conference call for analysts and investors, hosted by UPM’s President and CEO Jussi Pesonen, will take place today on 29 April 2009 at 17:00 Finnish time (14:00 GMT, 10:00 EST, please see dial-in details below). Participants are registered by the operator before the start of the conference call. In order to ensure a timely conference start, please dial in 10 minutes before the conference start time.

Dial-in numbers for conference call:
Call title: UPM Interim Review Q1 2009
Access code: 95347986
International dial-in: +44 (0) 1452 555 566
UK free call: 0800 694 0257
UK local call: 0844 493 3800
USA free call: 1866 966 9439

Dial-in numbers for replay, available until 5 May 2009:
Access code: 95347986#
International dial-in: +44 (0) 1452 550 000
UK free dial-in: 0800 953 1533
UK local dial-in: 0845 245 5205
USA free dial-in: 1866 247 4222

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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, and 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.