UPM's operating profit for 2008 impacted by high cost of wood and economic downturn. Restructuring measures implemented promptly to face a challenging year 2009

(UPM, Helsinki, 5 February 2009 at 9:30) – Financial review for 2008:
Earnings per share for 2008 were EUR -0.35 (EUR 0.16), excluding special items EUR 0.42 (EUR 1.00)
Operating profit for the year was EUR 24 million (EUR 483 million), excluding special items EUR 513 million (EUR 835 million)
Operating loss for the fourth quarter was EUR 286 million (profit of EUR 142 million), excluding special items a loss of EUR 46 million (profit of EUR 194 million).

Jussi Pesonen, UPM's President and CEO, comments on the financial review for 2008:

"The year was characterised by high wood costs and a quick deterioration of the economy, which affected all of UPM's businesses. Sales decreased across all of UPM's businesses and profitability declined from the level of 2007."

"UPM responded already in early September by announcing plans for permanent closures, streamlining of operations through a new business structure and introduction of a flexible way of working in production. The measures were implemented promptly in order to be ready to face the weaker demand and high raw material costs."

"As we headed towards a downturn we also wanted to preserve cash flow. Therefore we reduced our product inventories to a record low level. At the end of the year, our paper inventories were 200,000 tonnes lower than a year ago."

"In plywood and sawn timber, the markets have declined dramatically, and we need to continue with actions to improve profitability."

"Last year our internal efficiency improved and comparable fixed costs decreased by EUR 120 million. Unfortunately that was not enough. High wood and energy costs more than did away with the profit improvements in our operations. Adjusted by volume, wood costs increased by EUR 220 million, and energy costs by EUR 100 million.

"The operating environment will be difficult in 2009. It is crucial to ensure the implementation of our streamlined, flexible way of working so that we maintain a high level of customer service but at the same time save costs. This will also permit us to quickly restore activities when the business turns around again."

For more information please contact:
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001
Mr Jyrki Salo, CFO, UPM, tel. +358 204 15 0011

UPM, Corporate Communications
Media Desk, tel. +358 40 588 3284
communications@upm-kymmene.com

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News conference and conference call information

UPM's President and CEO Jussi Pesonen will present the financial review for 2008 in a press conference to be held at UPM Head Office in Helsinki (main entrance Eteläesplanadi 2) today on 5 February 2009 at 14:00 Finnish time (12:00 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 5 February 2009 at 17:00 Finnish time (15:00 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-Kymmene, Financial Review for 2008
Access code: 79589133
International dial-in: +44 (0) 1452 555 566
UK Free call: 0800 6940 257
UK Local call: 0844 493 3800
USA Free Call: 1866 966 9439

Dial-in numbers for replay, available until 11 February 2009:
Access code: 79589133#
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, 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. For more detailed information about risk factors, see pages 68–69 of the company's Annual Report 2007.