UPM-Kymmene's Interim Review for January-September 2003

Efficiency improvements and cost savings supported UPM's result - Stable profitability, strong cash flow



Key figures for July-September 2003 4-6/2003
Earnings per share excluding non-recurring items, EUR 0.16 0.15
Operating profit excluding non-recurring items, EUR million 179 179
Turnover, EUR million 2,437 2,501
Operating cash flow per share, EUR 0.81 0.35
Return on capital employed excluding non-recurring items 6.0 % 6.2 %


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

"UPM-Kymmene's profitability and earnings per share remained on the same level as during the second quarter. The main reason for the continuing weak profitability is the low price level in the paper markets. The company's cash flow was strong and the balance sheet improved. Net interest-bearing liabilities were decreased by slightly over EUR 300 million in the third quarter."

"We have succeeded in compensating part of the decrease in paper prices through improvements in efficiency and saving costs during the year. The cost savings programme is proceeding as planned and we have reached more than one third of the EUR 200 million savings target."

"In Europe, there are some positive but still rather weak signals pointing to improving growth. In North America, economic recovery appears more likely. 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 announced price increases in magazine papers in North America and United Kingdom are being implemented. The decrease in paper prices that has continued for a long time appears to have ceased also in continental Europe. Compared to last autumn, the situation has improved; now, we discuss with customers how and when prices will be increased. The fine paper market remains challenging."

"Profitability in Converting Industry improved in the third quarter, but the market conditions are not expected to improve in the near future. The earnings in Wood Products Industry dropped partly due to seasonal variation and the oversupply is not expected to ease up during the rest of this year", Mr Niemelä concludes.

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
October 23, 2003