UPM-Kymmene's Interim Review for January-June 2003: UPM-Kymmene's profitability on par with the previous quarter

Key figures for January-June 2003:
- Profit before extraordinary and non-recurring items EUR 247 million (1-6/2002: 410)
- Earnings per share excluding non-recurring items EUR 0.30 (0.55) and including non-recurring items EUR 0.25 (0.54)
- Turnover EUR 4,959 million (5,245)
- Return on capital employed excluding non-recurring items 5.9% (8.8)

President and CEO Juha Niemelä comments on the second quarter of the year:

"UPM-Kymmene's profitability and earnings per share during the second quarter remained on the same level as during the first quarter, but were well below the company's targets. The primary reason for our weak profitability is continuing low paper prices. The strengthening of the euro has intensified competition in Europe, and the profitability of the US dollar and the British pound denominated exports has weakened. On the other hand, we have been able to lower our costs. The demand for paper in the company's main markets continues to grow slowly, and we do not foresee a significant market turnaround this year."

"The company's cost savings campaign is proceeding as planned, with the target of saving EUR 200 million by the beginning of 2005. During the year the company has taken steps to streamline operations and improve cost-efficiency, including selling and closing unprofitable businesses. In addition, the company has optimized paper production e.g. by focusing annual summer shutdowns to fewer production sites. The cost savings are also focused on fixed costs, raw materials procurement and logistics."
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"Even during these challenging economic times the company continues to have a strong balance sheet and a good cash flow and thus has the resources to develop the operations even during the slow growth period."

"The economic outlook for the near future, particularly in Europe, is still uncertain. During the third quarter of this year, we do not anticipate any profit improvement. We don't project any major changes in European publication paper prices during the coming months, even if price pressure continues in some paper grades. On a positive note, we have been able to implement more than half of the previously announced North American price increases for LWC."

"The Changshu fine paper machine investment in China, which was temporarily halted during the SARS epidemic, now will continue as previously planned. The machine is scheduled to start up in the summer of 2005," concludes Mr Niemelä.

For more information, please contact:
Mr Juha Niemelä, President and CEO, UPM-Kymmene Corporation, tel. +358 203 15 0001
Mr Kari Toikka, Executive Vice President and CFO, tel. +358 204 15 0014


UPM-Kymmene Corporation
Corporate Communications
July 17, 2003


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Webcasting and Conference Call Information

The news conference regarding the Interim Review will be broadcast on-line at UPM-Kymmene's website www.upm-kymmene.com today at 13:30 Finnish time (11:30 GMT, 6:30 EST). The reply of the news conference will be available until July 31, 2003.

To participate in the UPM-Kymmene Conference Call, please dial +44 (0)20 7162 0184
at 17:00 (Finnish time) (15:00 GMT, 10:00 EST) on July 17, 2003. The access code:
UPM-Kymmene. Conference Call can be listened to until July 21, 2003 at the following phone number: +44 (0)20 8288 4459, access code: 437 772.

In the United States and Canada the Conference Call number is +1 334 323 6203, password: UPM-Kymmene. The reply will be heard at the following number +1 334 323 6222, access code: 437 772.