UPM's Financial Review for 2003: Operational profit weakened, strong cash flow and balance sheet

Key figures for January 1 to December 31, 2003

Profit before extraordinary items EUR 559 million (789) and excluding non-recurring items EUR 457 million (835)
Earnings per share EUR 0.70 (1.06)
Cash flow from operations per share EUR 2.42 (2.75)
Turnover EUR 9,948 million (10,475)
Gearing ratio 67% (76%)
Return on equity 5.3% (8.0%)
Board of Directors' dividend proposal EUR 0.75 ( 0.75)


Mr Jussi Pesonen, UPM's President and CEO appointed today, comments on the Financial Review for 2003:

"As a result of the weak market situation for the third year in a row, UPM's profitability in 2003 was unsatisfactory. Demand started to recover in many paper grades, but the price competition was further tightened. In these circumstances, making profit was very challenging. However, we were successful in keeping the cash flow strong and in decreasing debt."

"Furthermore, the depreciation of the US dollar weakened the company's profitability. The continued weakness of the US dollar began to cause changes in the paper trade flow. Many European producers have cut down their exports to outside of Europe while many producers from outside Western Europe have increased their imports into Europe. As a result, the supply and the number of competitors have increased in the markets. The paper price increase in the UK and the USA materialised only partially which was disappointing for us."

"However, the growth in demand for paper has been positive. In some paper grades, the growth was very strong, especially towards the end of the year. Consequently, we were able to increase our paper deliveries by 400,000 tonnes. In addition, the order backlogs were strengthened towards the end of the year. We can also be very satisfied with the intensity which the company's various units have taken the challenge to develop cost efficiency. We have already achieved more than two thirds of the EUR 200 million savings target."

"The general economic situation has shown signs of recovery in the main markets. However, the operating profit for the first-quarter of 2004 is estimated to be lower than that of last year due to the current price level and the strengthened euro. As demand rises, the company is in a good position to improve its financial performance", Mr Pesonen concludes.

For more information, please contact:
Mr Jussi Pesonen, President and CEO, UPM-Kymmene Corporation, tel. +358 203 15 0582
Mr Kari Toikka, Executive Vice President and CFO, tel. +358 204 15 0014


UPM-Kymmene Corporation
Corporate Communications
January 29, 2004