UPM-Kymmene Oyj - UPM Financial Review for 2009

UPM-Kymmene Corporation Financial Review 2009 2 February 2010 at 09:30

UPM Financial Review for 2009

Q4/2009: Earnings per share were EUR 0.57 (-0.56), excluding special items EUR
0.21
(-0.19). Operating profit excluding special items was EUR 186 million (loss of
EUR 46
million). Stringent cost control contributed to profit improvement, EBITDA
margin was
17.2%. Demand has started to improve.

Q1-Q4/2009: Earnings per share were EUR 0.33 (-0.35), excluding special items
EUR 0.11
(0.42). Operating profit excluding special items was EUR 270 million (513
million).
Strong operating cash flow EUR 1,259 million, net debt reduced by EUR 591
million.
Fixed cost savings worth EUR 300 million.

Key figures
                                                                       Q4/         Q4/    Q1-Q4/  Q1-Q4/
                                                                    2009      2008      2009      2008

Sales, EUR million                                2,108     2,315      7,719    9,461
EBITDA, EUR million 1)                           362         178      1,062    1,206
% of sales                                                 17.2           7.7        13.8      12.7
Operating profit (loss), EUR                   126        -286         135          24
million
excluding special items, EUR                186          -46          270       513
million
% of sales                                                    8.8        -2.0            3.5        5.4
Profit (loss) before tax, EUR                    311      -360           187     -201
million
excluding special items, EUR                 156      -120           107      282
million
Net profit (loss) for the                               295      -286          169      -180
period, EUR million
Earnings per share, EUR                         0.57     -0.56         0.33    -0.35
excluding special items, EUR                  0.21     -0.19        0.11      0.42
Diluted earnings per share,                      0.57     -0.56        0.33    -0.35
EUR
Return on equity, %                                    19.4       neg.          2.8      neg.
excluding special items, %                         7.4        neg.         1.0       3.4
Return on capital employed, %                13.2        neg.         3.2       0.2
excluding special items, %                         7.2         neg.        2.5       4.6
Operating cash flow per                            0.71        0.69       2.42     1.21
share, EUR
Shareholders' equity per                         12.67     11.74     12.67   11.74
share at end of period, EUR
Gearing ratio at end of                                   56           71          56         71
period, %
Net interest-bearing                                  3,730     4,321    3,730    4,321
liabilities at end of
period, EUR million
Capital employed at end of                    11,066  11,193  11,066 11,193
period, EUR million
Capital expenditure, EUR million                741       113       913       551
Capital expenditure excluding                        58       102       229       532
acquisitions and shares
Personnel at end of period                     23,213  24,983 23,213  24,983

1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets, excluding the
share of results of associated companies and joint ventures, and special items.

The market in 2009

The global economy experienced a severe recession in 2009 as the financial
crisis
spread into the real economy. Consumer confidence bottomed out at a historic
low level both in Europe and in the US. Declining demand led to lower
industrial production, exports and investments. The global economy showed
signals of stabilisation in the third quarter of 2009 supported by rebounding
confidence and a pickup in global trade. This was partly driven by China, which
performed exceptionally well during the recession in comparison with any other
major country.

The euro strengthened against the US dollar from February onwards and weakened
the competitiveness of euro-area industries.

The UK pound, the Russian rouble and the Swedish crown also weakened against
the euro.

Prices for commodities and raw materials were declining most of the year but
started to increase in the late autumn as the economy started to stabilise.

Demand for wood raw material decreased from the previous year due to
exceptionally low industrial production and high wood inventories in the
beginning of the year. Average market prices in Finland declined from peak
years of 2007-2007.

Demand for chemical pulp declined in the first half of the year, but a rebound
took place in the second half of the year due to strong demand in China.
Chemical pulp market prices started to increase after the second quarter of the
year.

Global advertising expenditure plummeted under the global economic downturn. In
Europe, total advertising expenditure fell more than 10% in 2009 while the
print media spend declined by some 15%. Although print advertising lost some of
its share, it held its place as the largest media in Europe and as the second
largest media globally after television. Global direct mail expenditure held up
better than total advertising, declining by 4% from the previous year.

As a consequence of the decline in print advertising, the demand for graphic
papers in Europe and North America declined. Market balance remained weak
throughout the year.

The retail sector both in Europe and in the US suffered from the low level of
private consumption. The demand shifted towards discount stores at the expense
of branded products and affected the demand for packaging materials as well as
the advertising focus of the retail sector.

Exceptionally low construction activity in 2009 decreased demand for building
materials, including wood-based materials. The construction confidence
indicator started to improve in late 2009, but still remained at a very low
level.

Results

Q4 of 2009 compared with Q4 of 2008

Sales for the fourth quarter of 2009 were EUR 2,108 million, 9% lower than the
EUR 2,315 million in the fourth quarter of 2008. Sales decreased mainly due to
lower sales prices in most of UPM's business areas.

Operating profit was EUR 126 million, 6.0% of sales (loss of EUR 286 million,
-12.4% of sales). The operating profit excluding special items was EUR 186
million, 8.8% of sales (loss of EUR 46 million, -2.0% of sales). Operating
profit includes net charges of EUR 60 million as special items, including
restructuring charges of EUR 44 million in Timber and Plywood operations in
Finland.

Operating profit excluding special items was clearly better than in the same
quarter last year. The comparison period was exceptionally weak, as it included
a wood inventory write down and extensive production downtime in paper, pulp
and plywood mills and sawmills.

The improvement in profitability was mainly driven by lower variable and fixed
costs. Wood costs declined by EUR 80 million from the previous year. Other
variable costs also decreased clearly, including EUR 25 million saved in lower
energy costs.

Cost-saving measures reduced the company's fixed costs by EUR 60 million in
comparison with the same period last year. As part of the measures, UPM
initiated a flexible operating mode in the beginning of 2009, using temporary
capacity shutdowns to adjust production to the low demand.

Changes in sales prices in euro terms reduced operating profit by about EUR 160
million. The average paper price in euros decreased by approximately 8% from
the same period last year. The average price for label materials in local
currencies was about the same. Timber and plywood prices fell substantially.

The increase in the fair value of biological assets net of wood harvested was
EUR 9 million compared to a decrease of EUR 2 million a year before.

The share of results of associated companies and joint ventures was EUR 1
million (16 million negative). The accounting treatment of the associated
company Metsä-Botnia was changed as of 30 June 2009. As of December 2009,
Metsä-Botnia no longer is UPM's associated company (see Pulp business area
footnote 3).

Profit before tax was EUR 311 million (loss of EUR 360 million) and excluding
special items EUR 156 million (loss of EUR 120 million). Special items of EUR
215 million reported in financial items include a capital gain of EUR 220
million on the sales of the approximately 30% share in Metsä-Botnia and a
capital loss of EUR 5 million related to investments in development units.
Interest and other finance costs, excluding special items, were EUR 30 million
(60 million) net. Exchange rate and fair value gains and losses were
EUR 0 million (loss of EUR 14 million).

Income taxes were EUR 16 million (74 million positive). The impact on taxes
from special items was EUR 28 million positive (51 million positive).

Profit for the fourth quarter was EUR 295 million (loss of EUR 286 million) and
earnings per share were EUR 0.57 (-0.56). Earnings per share excluding special
items were EUR 0.21 (-0.19).

2009 compared with 2008

Sales for 2009 were EUR 7,719 million, 18% lower than the EUR 9,461 million in
2008. Sales decreased mainly due to lower deliveries across all of UPM's
business areas.

Operating profit was EUR 135 million, 1.7% of sales (24 million, 0.3% of
sales). The operating profit excluding special items was EUR 270 million, 3.5%
of sales (513 million, 5.4% of sales). Operating profit includes net charges of
EUR 135 million as special items. UPM sold assets related to the former
Miramichi paper mill in Canada and recorded an income of EUR 21 million.
Restructuring measures resulted in net special charges of EUR 109 million
including impairment charges of EUR 18 million. The share of the results of
associated companies includes special charges of EUR 47 million.

Operating profit declined clearly from the previous year. The main reason for
weaker profitability was significantly lower deliveries in all of UPM's
business areas. Lower sales prices also impacted operating profit negatively.

Changes in sales prices in euro terms reduced operating profit by about EUR 260
million. The average paper price in euros decreased by approximately 3% from
last year. The average price for label materials increased. Timber and plywood
prices fell substantially.

UPM responded to lower demand with a flexible way of operating in all of its
business areas, using temporary capacity shutdowns to adjust production to the
low demand. Due to cost saving measures, the company's fixed costs decreased by
EUR 300 million from the previous year.

Wood costs decreased from their earlier peak levels. Compared with last year,
wood costs decreased by EUR 190 million. Energy costs increased slightly.

The increase in the fair value of biological assets net of wood harvested was
EUR 17 million compared to EUR 50 million a year before.

The share of results of associated companies and joint ventures was EUR 95
million negative (62 million positive). The result includes special charges of
EUR 29 million from Metsä-Botnia's Kaskinen pulp mill closure, and impairment
charges of EUR 18 million related to Pohjolan Voima's two power plants. The
accounting treatment of the associated company Metsä-Botnia was changed as of
30 June 2009. As of December 2009, Metsä-Botnia no longer is UPM's associated
company (see Pulp business area footnote 3).

Profit before tax was EUR 187 million (loss of EUR 201 million). Profit before
tax excluding special items was EUR 107 million (282 million). Special items of
EUR 215 million reported in financial items include a capital gain of EUR 220
million on the sales of the approximately 30% share in Metsä-Botnia and a
capital loss of EUR 5 million related to investments in development units.
Interest and other finance costs, excluding special items, were EUR 153 million
(202 million) net. Exchange rate and fair value gains and losses resulted in a
loss of EUR 9 million (25 million).

Income taxes were EUR 18 million (21 million positive). The impact on taxes
from special items was EUR 31 million positive (86 million positive).

Profit for the period was EUR 169 million (loss of EUR 180 million) and
earnings per share were EUR 0.33 (-0.35). Earnings per share excluding special
items were EUR 0.11 (0.42). Operating cash flow per share was EUR 2.42 (1.21).

Financing

In 2009, cash flow from operating activities before capital expenditure and
financing, was EUR 1,259 million (628 million). Net working capital decreased
by EUR 532 million during the period (increased by EUR 132 million).

The gearing ratio as of 31 December 2009 was 56% (71%). Net interest-bearing
liabilities at the end of the period came to EUR 3,730 million (4,321 million).
This includes the consolidated debt from the acquired Fray Bentos pulp mill and
Forestal Oriental plantation forestry company.

In March 2009, UPM replaced the EUR 1.5 billion credit facility that was to
mature in 2010 with a new EUR 825 million credit facility, maturing in 2012.

On 31 December 2009, UPM's cash funds and unused committed credit facilities
totalled EUR 2.2 billion.

Personnel

In 2009, UPM had an average of 23,618 employees (26,017). At the beginning of
the year, the number of employees was 24,983 and at the end of the year it was
23,213. The reduction of 2,294 employees, excluding the impact of Uruguay,
is mostly attributable to ongoing restructuring. The acquisition of the
Fray Bentos pulp mill and Forestal Oriental plantation forestry
company added 524 employees.

Capital expenditure

In 2009, capital expenditure was EUR 913 million, 11.8% of sales (EUR 551
million, 5.8% of sales) and excluding acquisitions and share purchases, EUR 229
million, 3.0% of sales (EUR 532 million, 5.6% of sales). Acquisition of
Metsä-Botnia's Uruguayan operations amounted to EUR 602 million. Operational
capital expenditure totalled EUR 148 million (235 million).

The new renewable energy power plant at the Caledonian mill in Irvine, Scotland
was started in June. The total investment cost was GBP 68 million.

UPM continued its tight investment discipline during 2009. Only few new
investment decisions were made. The largest ongoing project is now the rebuild
of the debarking plant at the Pietarsaari mill in Finland. The total investment
cost is estimated to be EUR 30 million.

In December 2009, UPM made a decision to invest GBP 17 million in a materials
recovery facility at its Shotton paper mill in North Wales. Construction of the
facility will be completed by January 2011.

The ownership of Botnia and its assets in Uruguay

On 8 December, UPM, Metsäliitto Cooperative, M-real Corporation and Oy
Metsä-Botnia Ab (Botnia) completed a transaction whereby Metsäliitto's and
Botnia's shares of the Fray Bentos pulp mill and the eucalyptus plantation
forestry company Forestal Oriental in Uruguay were acquired by UPM and UPM sold
approximately 30% in Botnia to Metsäliitto. In addition UPM acquired 1.2% of
the energy company Pohjolan Voima Oy from Botnia. The companies signed an
agreement concerning the transaction on 22 October 2009.

Following the transaction, UPM has a 91% ownership of common shares in the Fray
Bentos pulp mill, 100% in Forestal Oriental and 17% in Botnia. As of December
2009, Botnia no longer is UPM's associated company but accounted for as an
available-for-sale investment. Consequently, UPM's own annual pulp production
capacity increased from 2.1 million tonnes to 3.2 million tonnes a year and
UPM's share of Botnia's capacity was reduced to 400,000 tonnes. UPM's total
pulp production capacity including its entitlement to Botnia's capacity is 3.6
million tonnes a year.

UPM recorded a EUR 220 million capital gain on the sale of Botnia's shares.
UPM's assets increased by EUR 1,209 million and interest-bearing net debt by
EUR 370 million. In addition, the changes in fair values of the previous
holding increased UPM's equity by EUR 443 million.

Pro forma financial information

If the Botnia transaction had occurred on 1 January 2009,
UPM's sales would have been EUR 7,923 million, operating profit EUR 202
million, and operating profit excluding special items EUR 308 million. Profit
for the period would have been EUR 219 million.

Pro forma key figures

EUR million                            Reported 2009           Pro forma 1)             Pro forma 2)
                                                                                        adjustments                  2009
Sales                                                 7,719                          204                          7,923
EBITDA                                             1,062                             92                          1,154
Operating profit                                  135                             67                              202
excluding special items                   270                             38                              308
Profit before tax                                  187                             52                              239
excluding special items                   107                             23                              130
Profit for the period                           169                              50                              219

1) Sales total of EUR 350 million include sales of EUR 146 million
to UPM's units. Adjustments, among others, include reversal of
special items of EUR 29 million related to the closure of
the Kaskinen mill.

Pulp business area pro forma key figures

EUR million                               Reported 2009             Pro forma                 Pro forma 2)
                                                                                           adjustments                   2009
Sales                                                    653                               350                         1,003
EBITDA                                                  -18                                 92                              74
Operating profit                                  -156                                 67                            -89
excluding special items                   -127                                 38                            -89

2)Reported 2009 includes December 2009, and the pro forma adjustments
January-November of the Uruguayan operations.

Restructuring

The Kajaani paper mill and Tervasaari pulp mill closures were completed at the
end of 2008. Due to the reduced demand for paper and pulp, the closures had
only minor impact on UPM's paper or pulp deliveries.

The Label business restructured its European operations in 2009. The plan was
announced in November 2008. UPM Raflatac permanently closed a number of
self-adhesive labelstock production lines and reduced slitting capacity in the
United Kingdom, France, Germany, Hungary and Finland. One slitting terminal was
also closed in the United States. The restructuring was completed by the end of
the third quarter of 2009.

In November 2009, UPM announced a plan to improve the plywood and timber
businesses' long term cost competitiveness and increase added value in birch
plywood production in Finland. Decisions on the plan were announced in January
2010. UPM will permanently close the plywood mill and sawmill in Heinola, the
Kaukas plywood mill in Lappeenranta, and the further processing mill in Parkano
during the first half of 2010. These measures will decrease the number of UPM
employees by approximately 830.

As part of the restructuring, UPM will invest approximately EUR 25 million in
the expansion of the Savonlinna plywood mill and the development of production
at the Kaukas sawmill and the Aureskoski further processing mill.

The Lahti plywood processing mill was closed in October and its production was
moved to other mills.

In Forest and timber, a further processing mill in Boulogne in France was
closed in August and the operations were centralised to the Aigrefeuille mill.

Restructuring has been necessary to improve cost competitiveness. The measures
taken in 2009, together with measures initiated in previous years, reduced the
number of employees by 2,300 from the end of 2008. Out of these, 620 were due
to closures of production. The annualised employee-related cost savings are
about EUR 115 million.

Shares

UPM shares worth EUR 5,691 million (10,549 million) in total were traded on the
NASDAQ OMX Helsinki stock exchange during 2009. The highest quotation was EUR
9.78 in January and the lowest EUR 4.33 in April.

The company's ADSs are traded on the US over-the-counter (OTC) market under a
Level 1 sponsored American Depositary Receipt programme.

The Annual General Meeting held on 25 March 2009 approved a proposal by the
Board of Directors to authorise the Board of Directors to decide on the
buy-back of not more than 51,000,000 of the company's own shares. The
authorisation is valid for 18 months from the date of the decision.

The Annual General Meeting of 27 March 2007 authorised the Board to decide on a
free issue of shares to the company itself so that the total number of shares
to be issued to the company combined with the number of its own shares bought
back under the buy-back authorisation may not exceed 1/10 of the total number
of shares in the company.

In addition, the Board has the authority to decide to issue shares and special
rights entitling the holder to shares of the company. The number of new shares
to be issued, including shares to be obtained under special rights, shall be no
more than 250,000,000. Of that, the maximum number that can be issued to the
company's shareholders based on their pre-emptive rights is 250,000,000 shares
and the maximum number that can be issued deviating from the shareholders'
pre-emptive rights in a directed share issue is 100,000,000 shares. The maximum
number of new shares to be issued as part of the company's incentive programmes
is 5,000,000. Furthermore, the Board is authorised to decide on the disposal of
the company's own shares. To date, this authorisation has not been used. These
authorisations of the Annual General Meeting 2007 will remain valid for no more
than three years from the date of the decision.

The Annual General Meeting of 27 March 2007 also decided to grant share options
in connection with the company's share-based incentive plans. In option
programmes 2007A, 2007B and 2007C, the total number of share options is no more
than 15,000,000 and they will entitle the holders to subscribe for a total of
no more than 15,000,000 new shares in the company.

The Annual General Meeting of 2005 decided to grant a total of 9,000,000 share
options of which the total number of share options designated as 2005H was not
more than 3,000,000, and would entitle the holders to subscribe for a total of
no more than 3,000,000 new shares. The share options designated as 2005H are
outstanding as at 31 December 2009. The share options designated as 2005G
expired at the end of October 2009. No shares were subscribed with share
options 2005G.

Apart from the above, the Board of Directors has no current authorisation to
issue shares, convertible bonds or share options.

The number of shares entered in the Trade Register on 31 December 2009 was
519,970,088. Through the issuance authorisation and share options, the number
of shares may increase to a maximum of 787,970,088.

At the end of the year the company did not hold any of its own shares.

The company has received the following notifications from shareholders:
BlackRock Inc. on 8 December 2009 held 5.36% of UPM's shares and voting rights.
Franklin Templeton on 27 July 2009 announced its ownership in UPM had declined
below 5% of the company's shares and voting rights.

Company directors

At the Annual General Meeting nine members were elected to the Board of
Directors. Mr Matti Alahuhta, President and CEO of KONE Corporation, Mr Berndt
Brunow, Board member of Oy Karl Fazer Ab, Mr Karl Grotenfelt, Chairman of the
Board of Directors of Famigro Oy, Dr. Georg Holzhey, former Executive Vice
President of UPM and Director of G. Haindl'sche Papierfabriken KGaA, Ms Wendy
E. Lane, Chairman of the American investment firm Lane Holdings, Inc., Mr Jussi
Pesonen, President and CEO of UPM, Ms Ursula Ranin, Board member of Finnair
plc, Mr Veli-Matti Reinikkala, President of ABB Process Automation Division and
Mr Björn Wahlroos, Chairman of the Board of Sampo plc were re-elected as
members of the Board of Directors.

The term of office of the members of the Board of Directors lasts until the end
of the next Annual General Meeting.

At the assembly meeting of the Board of Directors, Mr Björn Wahlroos was
re-elected as Chairman, and Mr Berndt Brunow and Dr. Georg Holzhey were
re-elected as Vice Chairmen.

In addition, the Board of Directors appointed from among its members an Audit
Committee with Mr Karl Grotenfelt as Chairman, and Ms Wendy E. Lane and Mr
Veli-Matti Reinikkala as members. A Human Resources Committee was appointed
with Mr Berndt Brunow as Chairman, and Dr. Georg Holzhey and Ms Ursula Ranin as
members. Furthermore, a Nomination and Corporate Governance Committee was
appointed with Mr Björn Wahlroos as Chairman, and Mr Matti Alahuhta and Mr Karl
Grotenfelt as members.

Litigation and other legal actions

The investigations of certain competition authorities into alleged antitrust
activities with respect to various UPM products, as well as litigation arising
therefrom, have ended in all material respects.

In Finland, UPM is participating in the building project of a new nuclear power
plant, Olkiluoto 3, through its associated company Pohjolan Voima Oy. Pohjolan
Voima Oy is a majority shareholder of Teollisuuden Voima Oy ("TVO") with 58.12%
of shares. UPM's indirect share of the capacity of the Olkiluoto 3 is
approximately 29 %. The original agreed timetable for the start up was summer
2009 but the construction of the unit is delayed. The latest anticipated
start-up time is after June 2012. TVO has requested the plant supplier, the
consortium AREVA-Siemens, to provide a re-analysis of the anticipated start-up
time.

TVO has informed UPM that the arbitration filed in December 2008 by
AREVA-Siemens, concerning the delay at Olkiluoto 3 and related costs, amounted
to EUR 1.0 billion. In response, TVO filed a counter-claim in April 2009 for
costs and losses that TVO is incurring due to the delay and other defaults on
the part of the supplier. The value of TVO's counterclaim was approximately EUR
1.4 billion.

Events after the balance sheet date

The Group's management is not aware of any significant events occurring after
31 December 2009.

Risk factors

UPM has increased its ownership interest in the Fray Bentos pulp mill in
Uruguay to 91% as a result of the acqusition of Metsäliitto Cooperative's and
Oy Metsä-Botnia Ab's shares in the Fray Bentos pulp mill in December 2009.
There are three separate litigations pending against the government of Uruguay
related to the Fray Bentos pulp mill, and one litigation directly against the
company operating the pulp mill. All of these litigations have been commenced
before the pulp mill started its operations in November 2007 and may last
several years.

Outlook for 2010

Recovery in UPM's main markets is expected to be slow and differ country by
country. Demand for consumer goods is forecast to improve, but advertising
expenditure in print media and demand for graphic papers are expected to
improve with some delay. Investment activity, including construction, has shown
only weak signs of recovery and this will delay pick up in demand for
construction materials such as timber and plywood. In Asia growth is expected
to continue especially in China.

Low capacity utilisation rates of the company's timber, plywood and European
paper mills will continue. Necessary production curtailments will require
continuation of a flexible way of working in these operations.

Electricity generation volume will be about the same as last year. This is
assuming that lower than average hydrological balance continues in Finland.
Based on current forward sale agreements and Nordpool forward prices, average
sales price for electricity is estimated to be about the same as last year.

Chemical pulp deliveries, on a comparable basis, are expected to be higher than
last year. Current prices for both hardwood and softwood pulp are higher than
last year.

Paper demand in Europe is forecast to increase from 2009 and thus UPM's paper
deliveries for 2010 are expected to be higher than last year. However, in
Europe negotiations for 2010 deliveries of publication papers are still ongoing
and there is a severe price pressure especially for newsprint deliveries. Price
outlook for fine and speciality papers is more positive due to better market
balance and increased cost of chemical pulp. Current estimate is that average
price for UPM's all paper deliveries for the year will be clearly lower than
last year. Order intake for the first quarter deliveries has been better than a
year ago but average price for these deliveries is clearly lower than last
year.

Demand for self-adhesive labelstock is estimated to improve from the last year
in all main markets. There are cost pressures especially from oil based raw
materials but on average prices are expected to increase to compensate at least
part of such cost increases.

The operating profit (excluding special items) for the year 2010 is not
expected to change materially from the last year. The first quarter is expected
to be seasonally the weakest quarter.

Capital expenditure for 2010 is forecast to be about EUR 300 million.

Dividend for 2009

The Board of Directors will propose to the Annual General Meeting to be held on
22 March 2010 that a dividend of EUR 0.45 per share be paid in respect of the
2009 financial year (EUR 0.40). It is proposed that the dividend be paid on 7
April 2010.

Financial information in 2010

The Annual Report for 2009 will be published on the company's website
www.upm-kymmene.com on 23 February 2010. The printed Annual Report will be
available on 15 March 2010.

Interim Report January-March 2010: 28 April 2010
Interim Report January-June 2010: 3 August 2010
Interim Report January-September 2010: 28 October 2010


Business area reviews

Energy
                                                                       Q4/     Q3/      Q2/      Q1/      Q4/      Q3/      Q2/
                                                                   2009   2009   2009   2009   2008   2008   2008

Sales, EUR million                                   128     108     100     136      141     129     103
EBITDA, EUR million 1)                             57       35        41       57         76       58       34
% of sales                                                 44.5    32.4     41.0   41.9      53.9   45.0    33.0
Share of results of                                       -8      -24         -4        -4        -11       -8         -2
associated companies and
joint ventures, EUR million
Depreciation, amortisation                        -2        -1          -1       -2          -3        -1         -1
and impairment charges, EUR million
Operating profit, EUR million                    47      10          36     51         62        49       31
% of sales                                                 36.7     9.3       36.0   37.5     44.0    38.0    30.1
Special items, EUR million 2)                   -1     -17             -        -             -          -          -
Operating profit excl.                                   48      27          36      51         62       49       31
special items, EUR million
% of sales                                                 37.5   25.0       36.0   37.5     44.0    38.0   30.1
Electricity deliveries, 1,000                   2,277 2,103    1,999 2,486  2,731 2,653 2,344
MWh
                                                                          Q1/ Q1-Q4/ Q1-Q4/
                                                                      2008   2009   2008

Sales, EUR million                                      105     472     478
EBITDA, EUR million 1)                                39     190     207
% of sales                                                    37.1    40.3    43.3
Share of results of                                          -5      -40      -26
associated companies and
joint ventures, EUR million
Depreciation, amortisation                            -1       -6        -6
and impairment charges, EUR
million
Operating profit, EUR million                        33     144      175
% of sales                                                     31.4    30.5     36.6
Special items, EUR million 2)                        -        -18          -
Operating profit excl.                                      33      162      175
special items, EUR million
% of sales                                                    31.4     34.3     36.6
Electricity deliveries, 1,000                     2,439   8,865 10,167
MWh
Capital employed (average),                                   870      951
EUR million
ROCE (excl. special items), %                               18.6    18.4

1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In 2009, special items relate to impairments of associated company Pohjolan
Voima's two power plants.

Q4 of 2009 compared with Q4 of 2008

Operating profit excluding special items was EUR 48 million, EUR 14 million
lower than last year (62 million). Sales decreased by 9% to EUR 128 million
(141 million). External sales was EUR 38 million (57 million). The total
electricity sales volume was 2.3 TWh in the quarter (2.7 TWh).

Profitability weakened mainly due to lower sales volumes. The hydropower volume
was 38% lower in comparison with the previous year.

2009 compared with 2008

Operating profit excluding special items was EUR 162 million (175 million).
Sales decreased slightly to EUR 472 million (478 million). External sales was
EUR 135 million (137 million). The electricity deliveries were 8.9 TWh (10.2
TWh).

Profitability weakened in comparison with the previous year due to lower sales
volumes as the annual volume of hydropower was almost 32% lower than last year.

The average electricity sales price increased by 17% to EUR 43.8/MWh (37.5/
MWh) mainly due to long-term market-based pricing formula. The average
cost of procured electricity increased due to the lower share of hydro power
volumes.

The share of results of associated companies includes asset write-downs of EUR
18 million related to Pohjolan Voima's two power plants.

Market review

In 2009, the average spot electricity price in the Nordic electricity exchange
decreased 22% from the previous year to EUR 35.0/MWh (44.7/MWh). The
consumption of electricity in the Nordic area decreased due to low industrial
activity.

The Nordic water reservoirs were 10% below the long term average level. The
average price for EUA CO2 emission allowances was EUR 13.8/t, almost 41% lower
than in the previous year. After a substantial decline in the market
prices of oil and coal during the second half of 2008, coal market prices
remained fairly stable in 2009. During 2009, oil market prices
increased from about USD 46/barrel to about USD 78/barrel.

The one-year forward electricity price in the Nordic electricity exchange was
EUR 42.5/MWh at the end of 2009, 12% higher than the one year forward price at
the end of 2008 (37.9/MWh).

Pulp
                                                               Q4/     Q3/      Q2/      Q1/      Q4/      Q3/      Q2/      Q1/
                                                           2009   2009   2009   2009   2008   2008   2008   2008

Sales, EUR million                           226     156     132     139     200      228     247     269
EBITDA, EUR million 1)                     53          8      -24      -55          9        38       35        57
% of sales                                         23.5       5.1    -18.2  -39.6      4.5    16.7    14.2    21.2
Change in fair value of                        -1           -           -         -            -          -          -           -
biological assets and wood
harvested, EUR million
Share of results of                                 7          4       -16     -47         -4       44      20        26
associated companies and
joint ventures, EUR million 3)
Depreciation, amortisation               -24      -21       -20     -20       -73     -22     -17       -16
and impairment charges, EUR million
Operating profit, EUR million             35        -9       -60   -122       -76      60      38        67
% of sales                                          15.5     -5.8   -45.5   -87.8   -38.0   26.3   15.4    24.9
Special items, EUR million 2)              -          -           -       -29       -59         -         -           -
Operating profit excl.                            35        -9       -60     -93       -17       60      38       67
special items, EUR million
% of sales                                          15.5     -5.8    -45.5  -66.9     -8.5    26.3   15.4    24.9
Pulp deliveries, 1,000 t                     550     446      391     372     421     480    527    554

                                                               Q1-Q4/   Q1-Q4/
                                                                 2009      2008

Sales, EUR million                                653        944
EBITDA, EUR million 1)                         -18        139
% of sales                                               -2.8       14.7
Change in fair value of                             -1            -
biological assets and wood
harvested, EUR million
Share of results of                                   -52          86
associated companies and
joint ventures, EUR million 3)
Depreciation, amortisation                    -85       -128
and impairment charges, EUR
million
Operating profit, EUR million               -156         89
% of sales                                               -23.9        9.4
Special items, EUR million 2)                -29       -59
Operating profit excl.                              -127       148
special items, EUR million
% of sales                                               -19.4      15.7
Pulp deliveries, 1,000 t                        1,759    1,982
Capital employed (average),              1,668    1,674
EUR million
ROCE (excl. special items), %              -7.6        8.8

1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In 2009, special items of EUR 29 million relate to the associated company
Metsä-Botnia's Kaskinen pulp mill closure. In 2008, special items of EUR 59
million relate to the closure of the Tervasaari pulp mill.
3) In the balance sheet in the interim report for January-June, on 30 June
2009, UPM has regrouped the 30% transferable share of Botnia's book value as
assets held for sale. Consequently, from July 2009, UPM has not included the
share of the transferable Botnia operations in the share of results of
associated companies.

Q4 of 2009 compared with Q4 of 2008

Operating profit excluding special items was EUR 35 million (loss of EUR 17
million). The sales from UPM's own pulp mills increased by 13% to EUR 226
million (200 million) and deliveries by 31% to 550,000 tonnes (421,000) mainly
attributed to the newly acquired Fray Bentos mill.

The share of results of the associated company Metsä-Botnia was profit of EUR 7
million (loss of EUR 4 million).

Profitability improved in comparison with the previous year due to lower wood
and energy costs. The sales price was lower.

The Fray Bentos mill and Forestal Oriental eucalyptus plantation forestry
company are included in the Pulp business area as of December 2009.
Consequently, Oy Metsä-Botnia Ab is no longer an associated company of UPM and
therefore is not reported on in the Pulp business area.

2009 compared with 2008

Operating loss excluding special items was EUR 127 million (profit of EUR 148
million). The sales from UPM's own pulp mills decreased by 31% to EUR 653
million (944 million) and deliveries by 11% to 1,759,000 tonnes (1,982,000).

Due to reduced internal consumption, the Tervasaari pulp mill closure at the
end of 2008 did not have a notable impact on deliveries.

Profitability weakened from last year mainly due to an approximately 23% lower
average pulp price and lower deliveries. Wood costs were at a high level until
autumn but started to decline towards the end of the year.

Chemical pulp inventories decreased from the beginning of the year and remained
low in the latter part of the year.

The share of results of the associated company Metsä-Botnia was loss of EUR 52
million (profit of EUR 86 million). The result includes special charges of EUR
29 million from Metsä-Botnia's Kaskinen mill closure.

The Fray Bentos mill and Forestal Oriental eucalyptus plantation forestry
company are included in the Pulp business area as of December 2009. As of the
same date, Oy Metsä-Botnia Ab is no longer an associated company of UPM and
therefore is not reported in the Pulp business area.

Market review

Annual shipments of global chemical market pulp increased almost 2% from the
previous year. In the first half of 2009, shipments declined from the
comparison period, but in the second part of the year, shipments increased due
to strong demand in China. Chemical pulp producer inventories declined from the
high level of the beginning of the year due to extensive production
curtailments and strong demand in China.

Chemical pulp market prices declined in the first half of the year but started
to increase during the second half. The average softwood pulp (NBSK) market
price in euro terms, at EUR 471/tonne, was 19% lower than in last year (EUR
582/tonne). The bottom market price during the period was EUR 421/tonne. At the
end of the year, the NBSK market price was EUR 555/ tonne.

The average hardwood pulp (BHKP) market price in euro terms also decreased by
25% from last year to EUR 402/tonne (EUR 539/tonne). The bottom market price
during the period was EUR 352/tonne. At the end of the year the BHKP market
price was EUR 486/tonne.

Forest and timber
                                                                    Q4/     Q3/      Q2/      Q1/      Q4/      Q3/     Q2/      Q1/
                                                                2009   2009   2009   2009   2008   2008   2008   2008

Sales, EUR million                                348     295     309     385      419     475     518     508
EBITDA, EUR million 1)                          30       24      -15      -15       -52         -4         4          4
% of sales                                                8.6      8.1     -4.9     -3.9    -12.4      -0.8     0.8       0.8
Change in fair value of                            10     -13       10        11         -2           4       20       28
biological assets and wood
harvested, EUR million
Share of results of                                      1       -1         1           1         -1             -         -         1
associated companies and
joint ventures, EUR million
Depreciation, amortisation                   -11       -4      -14         -5         -6         -36       -7       -7
and impairment charges, EUR million
Operating profit, EUR million                 21        6      -18       -18      -63         -38      17      25
% of sales                                                 6.0    2.0     -5.8      -4.7   -15.0        -8.0     3.3     4.9
Special items, EUR million 2)              -14       1         -8       -10         -2         -33        -        -1
Operating profit excl.                                35       5       -10         -8       -61           -5      17      26
special items, EUR million
% of sales                                               10.1   1.7      -3.2      -2.1    -14.6       -1.1     3.3     5.1
Sawn timber deliveries, 1,000              413 355      366      363      421       510    628    573
m3
                                                                       Q1-Q4/    Q1-Q4/
                                                                         2009        2008

Sales, EUR million                                     1,337       1,920
EBITDA, EUR million 1)                                  24            -48
% of sales                                                        1.8           -2.5
Change in fair value of                                    18             50
biological assets and wood
harvested, EUR million
Share of results of                                              2               -
associated companies and
joint ventures, EUR million
Depreciation, amortisation                            -34           -56
and impairment charges, EUR million
Operating profit, EUR million                          -9            -59
% of sales                                                       -0.7           -3.1
Special items, EUR million 2)                      -31            -36
Operating profit excl.                                        22            -23
special items, EUR million
% of sales                                                         1.6           -1.2
Sawn timber deliveries, 1,000                  1,497       2,132
m3

Capital employed (average),                     1,717      1,878
EUR million
ROCE (excl. special items), %                      1.3         -1.2

1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.

2) Special items of EUR 14 million including impairment charges of
EUR 5 million, in the fourth quarter of 2009 relate to restructuring
of Timber operations in Finland. Special items for the second
quarter of 2009 include impairment charges of EUR 7 million related
to wood procurement operations. In the first quarter of 2009, special
items of EUR 10 million relate to the sales loss of Miramichi's forestry
and sawmilling operations' assets. Special items in 2008
include an impairment charge of EUR 31 million related to fixed assets of
the Finnish sawmills.

Q4 of 2009 compared with Q4 of 2008

Operating profit excluding special items was EUR 35 million (loss of EUR 61
million). Sales declined by 17% to EUR 348 million (419 million). Sawn timber
deliveries decreased by 2% to 413,000 cubic metres (421,000).

The increase in the fair value of biological assets (growing trees) was EUR 52
million (12 million). The cost of wood raw material harvested from the Group's
own forests was EUR 42 million (14 million). The net effect was EUR 10 million
positive (2 million negative).

2009 compared with 2008

Operating profit excluding special items was EUR 22 million (loss of EUR 23
million). Sales declined by 30% to EUR 1,337 million (1,920 million). Sawn
timber deliveries decreased by 30% to 1,497,000 cubic metres (2,132,000).

Comparison period included a wood inventory write down of EUR 36 million, which
was booked at the end of year 2008.

The average price of delivered timber goods decreased by 7%.

Wood inventories decreased significantly from the beginning of the year and
released working capital.

The increase in the fair value of biological assets (growing trees) was EUR 98
million (138 million). The cost of wood raw material harvested from the Group's
own forests was EUR 80 million (88 million). The net effect was EUR 18 million
positive (50 million positive).

In November 2009, UPM announced restructuring plans to improve the
competitiveness of its Timber operations in Finland. UPM will permanently close
the sawmill in Heinola and the further processing mill in Parkano during the
first half of 2010.

Market review

Wood purchases in the Finnish wood market were 45% lower compared to the
previous year. However, market activity started to recover slightly towards the
end of the year.

Lower industrial production and high wood inventories at the beginning of the
year were the main reasons for lower purchases. Wood market prices declined by
an average of almost 20% compared to the previous year.

In 2009, demand for both redwood and whitewood sawn timber in Europe declined
substantially in comparison with the previous year. The weak market balance
resulted in lower prices.

Paper
                                                                Q4/      Q3/     Q2/      Q1/       Q4/     Q3/      Q2/
                                                            2009   2009   2009   2009   2008   2008   2008

Sales, EUR million                        1,558  1,454  1,388  1,367  1,750  1,761  1,727
EBITDA, EUR million 1)                   221      274     247     187      189     271     216
% of sales                                         14.2     18.8    17.8    13.7     10.8    15.4    12.5
Share of results of                                 1          -         -1        -1           1          -          -
associated companies and
joint ventures, EUR million
Depreciation, amortisation            -140     -142    -147  -149     -264   -388    -156
and impairment charges, EUR million
Operating profit, EUR million            74      126        85     60      -126  -114        60
% of sales                                            4.7       8.7       6.1    4.4       -7.2    -6.5       3.5
Special items, EUR million 2)            -8         -6       -10    23      -153   -227         -
Operating profit excl.                           82      132        95     37         27    113        60
special items, EUR million
% of sales                                            5.3       9.1       6.8    2.7        1.5     6.4       3.5
Deliveries, publication                   1,576  1,464  1,323 1,304 1,809 1,760   1,749
papers, 1,000 t
Deliveries, fine and                            945     872     813    724     784    863      923
speciality papers, 1,000 t
Paper deliveries total, 1,000         2,521  2,336 2,136 2,028 2,593 2,623   2,672
t

                                                                                      Q1/   Q1-Q4/  Q1-Q4/
                                                                                  2008      2009      2008

Sales, EUR million                                              1,773      5,767    7,011
EBITDA, EUR million 1)                                         209         929        885
% of sales                                                               11.8        16.1       12.6
Share of results of                                                     -               -1            1
associated companies and
joint ventures, EUR million
Depreciation, amortisation                                  -159        -578      -967
and impairment charges, EUR million
Operating profit, EUR million                                  51         345      -129
% of sales                                                                  2.9          6.0       -1.8
Special items, EUR million 2)                                   1            -1      -379
Operating profit excl.                                                 50         346       250
special items, EUR million
% of sales                                                                  2.8          6.0        3.6
Deliveries, publication                                        1,772      5,667    7,090
papers, 1,000 t
Deliveries, fine and                                                 981     3,354     3,551
speciality papers, 1,000 t
Paper deliveries total, 1,000 t                            2,753     9,021   10,641
Capital employed (average),                                             5,714     6,503
EUR million
ROCE (excl. special items), %                                              6.1         3.8

1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In the fourth and third quarter of 2009, special items of EUR 8 million
and EUR 6 million relate to restructuring charges. Special items for
the second quarter of 2009 include charges of EUR 9 million related to
personnel reduction in Nordland mill, impairment reversals of EUR 4 million
and other restructuring charges of EUR 5 million. In the first
quarter of 2009, special items include an income of EUR 31 million
related to the sale of the assets of the former Miramichi paper mill and
charges of EUR 8 million related to restructuring measures. In 2008,
special items include the goodwill impairment charge of EUR 230 million,
impairment charges of EUR 101 million and other restructuring costs
of EUR 42 million related to the closure of the Kajaani paper mill,
and other restructuring costs, net of EUR 6 million.

Q4 of 2009 compared with Q4 of 2008

Operating profit excluding special items was EUR 82 million, EUR 55 million
higher than a year ago (27 million). Sales were EUR 1,558 million (1,750
million). Paper deliveries decreased by 3% to 2,521,000 tonnes (2,593,000).
Publication paper deliveries (magazine papers and newsprint) decreased by 13%.
Fine and speciality paper deliveries increased by 21% from the previous year,
driven especially by the recovery of fine paper demand in China.

Profitability improved from the comparison period. Lower paper prices had a
significant negative impact on profitability, but this was more than offset by
lower fibre and other variable costs, and decreased fixed costs.

The average price for all paper deliveries when translated into euros was 8%
lower than in the fourth quarter of 2008.

2009 compared with 2008

Operating profit excluding special items was EUR 346 million, EUR 96 million
higher than a year ago (250 million). Sales were EUR 5,767 million (7,011
million). Paper deliveries decreased by 15% to 9,021,000 tonnes (10,641,000).
Publication paper deliveries (magazine papers and newsprint) decreased by 20%
and fine and speciality paper deliveries by 6% from the previous year.

The Kajaani paper mill was closed at the end of 2008. Due to reduced demand,
the closure had only a minor impact on UPM's paper deliveries.

Profitability improved from the corresponding period last year. Lower
deliveries and sales prices had a significant negative impact on profitability,
but this was more than offset by lower costs for fibre, mainly for chemical
pulp, and decreased fixed costs.

The average price for all paper deliveries when translated into euros was 3%
lower than last year.

Market review

In Europe in 2009, demand for both publication papers and fine papers was 16%
lower than a year ago. In North America, demand for publication papers
continued to decline and was 22% down from last year. In Asia, however, demand
for fine papers grew.

In Europe, paper prices decreased in the fourth quarter of 2009 from the
previous quarter. For magazine papers, prices decreased by about 3% from the
third quarter and for newsprint by about 2%. Coated and uncoated fine paper
prices decreased by about 2%. In 2009, average prices decreased by 1% for
magazine papers and by 8% for uncoated fine paper, but increased by 2% for
newsprint. Coated fine paper prices remained unchanged from the previous year.

In North America, the average US dollar price for magazine papers was 13% lower
in 2009 than in 2008. In Asia, market prices for fine papers decreased from
last year, but increased in the second half of 2009 from the first half. In the
fourth quarter, prices had risen higher than in the same period last year.

Label
                                                                    Q4/      Q3/     Q2/       Q1/      Q4/      Q3/      Q2/      Q1/
                                                                 2009   2009   2009   2009   2008   2008   2008   2008

Sales, EUR million                                252      242     226     223      233     239      245    242
EBITDA, EUR million 1)                          25         29       18          6         -1          9        15      11
% of sales                                                9.9      12.0      8.0       2.7     -0.4       3.8       6.1     4.5
Depreciation, amortisation                     -8          -9      -11        -9       -16         -8         -7       -8
and impairment charges, EUR million
Operating profit, EUR million                16         18         4         -3       -38          1          8        3
% of sales                                                6.3        7.4      1.8     -1.3    -16.3      0.4       3.3     1.2
Special items, EUR million 2)                -1         -2        -5          -        -28          -            -         -
Operating profit excl.                               17         20         9         -3       -10         1           8        3
special items, EUR million
% of sales                                                6.7        8.3      4.0     -1.3      -4.3      0.4       3.3     1.2

                                                                       Q1-Q4/  Q1-Q4/
                                                                         2009      2008

Sales, EUR million                                        943        959
EBITDA, EUR million 1)                                  78          34
% of sales                                                        8.3         3.5
Depreciation, amortisation                           -37         -39
and impairment charges, EUR million
Operating profit, EUR million                        35         -26
% of sales                                                        3.7        -2.7
Special items, EUR million 2)                       -8         -28
Operating profit excl.                                       43            2
special items, EUR million
% of sales                                                        4.6         0.2
Capital employed (average),                       503        510
EUR million
ROCE (excl. special items), %                     8.5         0.4

1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In the fourth and third quarter of 2009, special items relate to
restructuring charges. In the second quarter of 2009, special items include
impairment charges of EUR 2 million and other restructuring charges of
EUR 3 million. In 2008, special items of EUR 28 million relate to
measures to reduce coating capacity and close two
slitting terminals in Europe.

Q4 of 2009 compared with Q4 of 2008

Operating profit excluding special items was EUR 17 million (loss of EUR 10
million). Sales were EUR 252 million (233 million).

Profitability improved clearly from the same period last year. Delivery volumes
of self-adhesive label materials grew from the previous year. Raw material
costs
were lower than last year. Fixed costs decreased. Average sales prices in local
currencies were on about the same level.

2009 compared with 2008

Operating profit excluding special items was EUR 43 million (2 million). Sales
were EUR 943 million (959 million).

Profitability improved from the same period last year due to decreased costs
and increased prices. Fixed costs decreased substantially and raw material
costs were lower than in the previous year. Average sales prices both in local
currency and converted to euros increased from last year.

Delivery volumes of self-adhesive label materials declined from last year,
driven by lower economic activity.

The restructuring of European operations was completed as planned by the end of
the third quarter. The restructuring, combined with the new plant in Wroclaw
that started up in November 2008, has improved the competitiveness of European
operations.

Market review

During the first half of the year, demand for self-adhesive label materials
declined in all markets from last year as demand for consumer products and
shipments of goods slowed down. Demand started to improve in the third quarter,
and in the fourth quarter it is estimated to have grown compared with the same
period last year.

Plywood
                                                                    Q4/     Q3/      Q2/      Q1/      Q4/      Q3/      Q2/      Q1/
                                                                2009   2009   2009   2009   2008   2008   2008   2008

Sales, EUR million                                  81       73        77        75     102      121    150      157
EBITDA, EUR million 1)                            3        -5         -5       -23        -5           3      22        26
% of sales                                                3.7     -6.8     -6.5    -30.7     -4.9       2.5   14.7     16.6
Depreciation, amortisation                   -12        -5        -5          -5        -5          -5       -6         -5
and impairment charges, EUR million
Operating profit, EUR million                -33     -10     -10        -29      -10          -2      19        21
% of sales                                             -40.7  -13.7  -13.0    -38.7     -9.8       -1.7   12.7    13.4
Special items, EUR million 2)              -30         -         -           -1          -              -        3           -
Operating profit excl.                                 -3      -10     -10       -28      -10           -2     16         21
special items, EUR million
% of sales                                               -3.7   -13.7  -13.0   -37.3     -9.8         -1.7 10.7    13.4
Deliveries, plywood, 1,000 m3           150      143    141     133     160         188  227      231

                                                                        Q1-Q4/  Q1-Q4/
                                                                         2009       2008

Sales, EUR million                                        306         530
EBITDA, EUR million 1)                                 -30           46
% of sales                                                       -9.8          8.7
Depreciation, amortisation                           -27         -21
and impairment charges, EUR million
Operating profit, EUR million                       -82           28
% of sales                                                    -26.8          5.3
Special items, EUR million 2)                     -31             3
Operating profit excl.                                      -51          25
special items, EUR million
% of sales                                                     -16.7         4.7
Deliveries, plywood, 1,000 m3                    567        806
Capital employed (average),                       266        307
EUR million
ROCE (excl. special items), %                 -19.2         8.1

1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) Special items in the fourth quarter of 2009 include impairment charges of
E 6 million and other restructuring charges of E 24 million. Special items in
2008 include reversals of provisions related to the disposed Kuopio plywood
mill.

Q4 of 2009 compared with Q4 of 2008

Operating loss excluding special items was EUR 3 million (loss of EUR 10
million). Sales decreased by 21% to EUR 81 million (102 million). Plywood
deliveries declined by 6% to 150,000 cubic metres (160,000).

Plywood reported a smaller operating loss, than in the comparison period due to
decreased fixed costs and lower wood costs. Lower sales prices had a negative
impact on the results.

2009 compared with 2008

Operating loss excluding special items was EUR 51 million (profit of EUR 25
million). Sales decreased by 42% to EUR 306 million (530 million). Plywood
deliveries declined by 30% to 567,000 cubic metres (806,000).

Plywood reported an operating loss due to significantly lower delivery volumes
and sales prices than in the comparison period. Weak market demand led to
extensive production downtime at all mills. Material fixed cost reductions were
achieved throughout the organisation, but these could not compensate for the
adverse impact of lower deliveries and prices.

In November 2009, UPM announced a plan to improve the plywood businesses' long
term cost competitiveness and increase added value in birch plywood production
in Finland.

UPM will rebuild the Savonlinna plywood mill and permanently close the Heinola
and Kaukas mills. The Heinola mill was temporarily shut down from January 2009
onwards. The Kaukas plywood mill was temporarily shut down from May onwards.

At the Kalso veneer mill, a production automation project was completed in May
2009.

The Lahti plywood processing mill was closed in October 2009 and its production
was moved to other mills.

Market review

In Europe, plywood demand declined substantially from last year due to record
low construction activity and low demand for engineered end products in
transportation and other industrial end uses. Declined demand in Europe has
left much idle capacity.

Inventories were reduced in all parts of the supply chain in the first half of
the year. This inventory reduction came to an end in the third quarter. The
market prices of plywood declined from the previous year.

Other operations
                                                                 Q4/      Q3/      Q2/      Q1/      Q4/      Q3/     Q2/       Q1/
                                                              2009   2009   2009   2009   2008   2008   2008   2008

Sales, EUR million                               35         21       21        34       34        52        66       48
EBITDA, EUR million 1)                      -27       -31      -24       -29     -38          3       -13        -9
Share of results of                                  -            -         -2          -2       -1         -1           3          -
associated companies and
joint ventures, EUR million
Depreciation, amortisation                 -3          -3        -3          -3         2         -2          -5       -3
and impairment charges, EUR million
Operating profit, EUR million           -34        -45     -29       -34      -35          4        -16       -7
Special items, EUR million 2)            -6        -11        -             -          2          4          -1        5
Operating profit excl.                          -28        -34     -29       -34      -37          0        -15    -12
special items, EUR million

                                                                 Q1-Q4/  Q1-Q4/
                                                                   2009      2008

Sales, EUR million                                  111        200
EBITDA, EUR million 1)                         -111        -57
Share of results of                                       -4           1
associated companies and
joint ventures, EUR million
Depreciation, amortisation                     -12          -8
and impairment charges, EUR million
Operating profit, EUR million               -142        -54
Special items, EUR million 2)               -17          10
Operating profit excl.                             -125         -64
special items, EUR million

Capital employed (average),                141        137
EUR million
ROCE (excl. special items), %           -88.7     -46.7

1) EBITDA is operating profit before depreciation, amortisation and impairment
charges, excluding the change in value of biological assets and wood harvested,
the share of results of associated companies and joint ventures, and special
items.
2) In 2009, special items in the fourth quarter include impairment charges of
EUR 2 million and other charges of EUR 4 million both relating to terminated
activities. Special items of EUR 11 million in the third quarter
of 2009 relate mainly to estates of closed industrial sites in Finland.
In 2008, special items include an adjustment of EUR 5 million to sales
of disposals of 2007 and other restructuring income net of EUR 5 million.

Other operations include development units (RFID tags, the wood plastic
composite unit UPM ProFi and biofuels), logistic services and corporate
administration.

Q4 of 2009 compared with Q4 of 2008

Operating loss excluding special items was EUR 28 million (37 million).
Sales amounted to EUR 35 million (34 million).

Hedging resulted in a profit of EUR 2 million (profit of EUR 2 million). The
development units continued to incur an operating loss.

2009 compared with 2008

Operating loss excluding special items was EUR 125 million (loss of EUR 64
million). Sales amounted to EUR 111 million (200 million).

The operating loss was greater than in the comparison period, mainly due to
hedging losses of EUR 23 million (profit of EUR 24 million). The development
units continued to incur an operating loss.

Helsinki, 2 February 2010
UPM-Kymmene Corporation
Board of Directors


Financial information
This financial review is unaudited

Consolidated income statement

EUR million                                                        Q4/       Q4/ Q1-Q4/ Q1-Q4/
                                                                           2009    2008    2009    2008

Sales                                                               2,108   2,315   7,719   9,461
Other operating income                                    18           9         47        83
Costs and expenses                                  -1,810 -2,227  -6,774  -8,407
Change in fair value of                                        9          -2         17        50
biological assets and wood harvested
Share of results of                                               1        -16        -95       62
associated companies and joint ventures
Depreciation, amortisation                          -200      -365     -779 -1,225
and impairment charges
Operating profit (loss)                                    126      -286      135        24

Gains on available-for-sale                               -             -          -1          2
investments, net
Exchange rate and fair value                             -         -14         -9       -25
gains and losses
Interest and other finance                             185        -60        62     -202
costs, net
Profit (loss) before tax                                    311     -360      187     -201
Income taxes                                                    -16         74      -18          21
Profit (loss) for the period                             295      -286     169      -180

Attributable to:
Equity holders of the parent                         295      -287     169      -179
company
Minority interest                                                   -            1          -            -1
                                                                           295      -286     169      -180
Earnings per share for profit (loss) attributable to the
equity holders of the parent company

Basic earnings per share, EUR                 0.57     -0.56    0.33    -0.35
Diluted earnings per share, EUR              0.57     -0.56     0.33    -0.35

Statement of comprehensive income

EUR million                                                    Q4/      Q4/   Q1-Q4/Q1-Q4/
                                                                      2009    2008    2009    2008

Profit (loss) for the period                          295     -286      169     -180
Other comprehensive income
for the period, after tax:
Translation differences                              115     -195      165     -206
Net investment hedge                                 -19        61       -56         56
Cash flow hedges                                       -13        18          -4       -33
Available-for-sale                                          21          -           21          -
investments
Share of other comprehensive                   40       -11         30          1
income of associated companies
Other comprehensive income                 144      -127      156     -182
for the period, net of tax
Total comprehensive income                  439      -413      325     -362
for the period

Total comprehensive income attributable to:
Equity holders of the parent                      439     -414      325     -361
company
Minority interest                                               -             1           -          -1
                                                                       439      -413      325     -362

Consolidated balance sheet

EUR million                                                      31.12.2009       31.12.2008
ASSETS
Non-current assets
Goodwill                                                                      1,017                    933
Other intangible assets                                              423                     403
Property, plant and equipment                               6,192                 5,688
Investment property                                                        22                      19
Biological assets                                                      1,293                 1,133
Investments in associated                                         553                 1,263
companies and joint ventures
Available-for-sale                                                         320                    116
investments
Non-current financial assets                                     263                    361
Deferred tax assets                                                     287                    258
Other non-current assets                                           211                    201
                                                                                   10,581               10,375
Current assets
Inventories                                                                 1,112                 1,354
Trade and other receivables                                  1,446                 1,686
Income tax receivables                                                 28                      24
Cash and cash equivalents                                      438                    330
                                                                                     3,024                 3,394
Assets classified as held for sale                               -                        12
Total assets                                                            13,605               13,781

EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital                                                                890                     890
Translation differences                                            -164                    -295
Fair value and other reserves                                  141                     130
Reserve for invested                                              1,145                  1,145
non-restricted equity
Retained earnings                                                 4,574                  4,236
                                                                                   6,586                  6,106
Minority interest                                                            16                        14
Total equity                                                              6,602                   6,120

Non-current liabilities
Deferred tax liabilities                                               608                      658
Retirement benefit obligations                               418                      408
Provisions                                                                   191                      191
Interest-bearing liabilities                                     4,164                  4,534
Other liabilities                                                              51                       25
                                                                                    5,432                 5,816
Current liabilities
Current interest-bearing liabilities                           300                    537
Trade and other payables                                      1,206                1,258
Income tax payables                                                     65                      33
                                                                                    1,571                 1,828
Liabilities related to assets                                          -                        17
classified as held for sale
Total liabilities                                                          7,003                 7,661
Total equity and liabilities                                    13,605               13,781

Consolidated cash flow statement
Year ended 31 December
EUR million                                                               2009                  2008
Cash flow from operating activities
Profit (loss) for the period                                          169                  -180
Adjustments to profit (loss) for the period              772                1,232
Interest received                                                               6                       9
Interest paid                                                                -163                 -202
Dividends received                                                        24                     18
Other financial items, net                                            -50                   -41
Income taxes paid                                                        -31                   -76
Change in working capital                                         532                 -132
Net cash generated from                                        1,259                  628
operating activities

Cash flow from investing activities
Acquisition of subsidiaries,                                      -508                       -
net of cash acquired
Acquisition of shares in associated companies    -78                   -19
Capital expenditure                                                    -236                 -558
Proceeds from disposal of subsidiary shares,
net of cash                                                                         -                        6
Proceeds from disposal of                                        565                       4
shares in associated companies
Proceeds from disposal of                                            -                         2
available-for-sale investments
Proceeds from sale of                                                 46                      33
tangible and intangible assets
Increase in non-current receivables                          -3                        -
Net cash used in investing activities                     -214                 -532

Cash flow from financing activities
Proceeds from non-current liabilities                     325                1,083
Payments of non-current liabilities                     -1,051                 -624
Payments of current liabilities, net                             -6                  -153
Share options exercised                                               -                       78
Dividends paid                                                          -208                  -384
Other financing cash flow                                             -                        -1
Net cash used in financing activities                   -940                        -1
Change in cash and cash equivalents                 105                      95

Cash and cash equivalents at                               330                    237
the beginning of year
Foreign exchange effect on cash                               3                       -2
Change in cash and cash equivalents                105                       95
Cash and cash equivalents at year-end              438                     330

Consolidated statement of changes in equity

Attributable to equity holders of the parent company

EUR million                                                          Share       Translation       Fair value and 
                                                                                capital       differences      other reserves
Balance at 1 January 2008                                     890                  -158                          193
Changes in equity for 2008
Share options exercised                                              -                         -                               -
Share-based compensation, net of tax                     -                         -                           -29
Dividend paid                                                                 -                         -                               -
Acquisitions and disposals                                         -                         -                              -
Other items                                                                     -                         -                             -1
Total comprehensive income                                     -                   -137                          -33
for the period
Balance at 31 December 2008                             890                  -295                         130

Balance at 1 January 2009                                    890                  -295                         130
Changes in equity for 2009
Share-based compensation, net of tax                   -                          -                            -6
Dividend paid                                                               -                          -                              -
Acquisitions and disposals                                      -                          -                              -
Other items                                                                   -                          -                              -
Total comprehensive income                                    -                      131                         17
for the period
Balance at 31 December 2009                              890                  -164                       141

EUR million                                                     Reserve for                Retained           Total
                                                                               invested                  earnings 
                                                                           non-restricted
                                                                                   equity
Balance at 1 January 2008                                   1,067                       4,778            6,770
Changes in equity for 2008
Share options exercised                                            78                               -                   78
Share-based compensation, net of tax                    -                               33                    4
Dividend paid                                                                 -                           -384              -384
Acquisitions and disposals                                        -                                 -                     -
Other items                                                                     -                                 -                   -1
Total comprehensive income                                     -                           -191              -361
for the period
Balance at 31 December 2008                            1,145                       4,236           6,106

Balance at 1 January 2009                                    1,145                      4,236           6,106
Changes in equity for 2009
Share-based compensation, net of tax                      -                              12                   6
Dividend paid                                                                  -                           -208             -208
Acquisitions and disposals                                          -                            358              358
Other items                                                                      -                               -1                  -1
Total comprehensive income                                       -                            177              325
for the period
Balance at 31 December 2009 1,145 4,574 6,586

EUR million                                                             Minority                 Total 
                                                                                   interest                 equity
Balance at 1 January 2008                                      13                       6,783
Changes in equity for 2008
Share options exercised                                             -                            78
Share-based compensation, net of tax                    -                              4
Dividend paid                                                                -                        -384
Acquisitions and disposals                                       2                             2
Other items                                                                    -                            -1
Total comprehensive income                                   -1                       -362
for the period
Balance at 31 December 2008                                14                     6,120

Balance at 1 January 2009                                       14                     6,120
Changes in equity for 2009
Share-based compensation, net of tax                     -                             6
Dividend paid                                                                 -                       -208
Acquisitions and disposals                                        2                        360
Other items                                                                     -                           -1
Total comprehensive income                                     -                        325
for the period
Balance at 31 December 2009                               16                    6,602


Quarterly information
EUR million                                                        Q4/     Q3/      Q2/      Q1/      Q4/       Q3/
                                                                          2009   2009   2009   2009   2008   2008

Sales                                                              2,108  1,913  1,841  1,857  2,315  2,358
Other operating income                                   18          5          7        17          9       23
Costs and expenses                                 -1,810 -1,603 -1,627 -1,734 -2,227 -1,998
Change in fair value of                                       9       -13        10       11          -2        4
biological assets and wood harvested
Share of results of                                              1       -21       -22      -53       -16      35
associated companies and joint ventures
Depreciation, amortisation                         -200    -185     -201    -193     -365  -462
and impairment charges
Operating profit (loss)                                   126       96            8      -95     -286    -40
Gains on available-for-sale                              -         -1             -          -           -         -
investments, net
Exchange rate and fair value                            -         -3             3        -9      -14        -
gains and losses
Interest and other finance                            185      -28         -37      -58      -60    -50
costs, net
Profit (loss) before tax                                   311       64         -26    -162    -360    -90
Income taxes                                                    -16     -24          18          4        74       3
Profit (loss) for the period                             295       40           -8    -158     -286   -87
Attributable to:
Equity holders of the parent                         295       40           -8    -158     -287   -86
company
Minority interest                                                  -           -               -         -            1     -1
                                                                           295       40            -8   -158     -286  -87
Basic earnings per share, EUR                 0.57    0.08      -0.02  -0.30    -0.56 -0.17
Diluted earnings per share, EUR              0.57    0.08      -0.02  -0.30    -0.56 -0.17
Earnings per share, excluding                   0.21    0.14       0.03   -0.27   -0.19  0.25
special items, EUR
Average number of shares                  519,958 519,954 519,954 519,954 519,979 519,999
basic (1,000)
Average number of shares                  518,876 521,036 519,954 519,954 519,979 519,999
diluted (1,000)
Special items in operating                            -60       -35        -23     -17    -240  -256
profit (loss)
Operating profit (loss),                                  186      131         31     -78      -46    216
excl. special items
% of sales                                                        8.8        6.8        1.7    -4.2     -2.0     9.2
Special items before tax                              155        -35        -23     -17    -240  -250
Profit (loss) before tax,                                 156         99          -3   -145    -120    160
excl. special items
% of sales                                                       7.4        5.2       -0.2     -7.8     -5.2     6.8
Return on equity, excl.                                   7.4        5.0        0.8     neg.    neg.    7.8
special items, %
Return on capital employed,                        7.2       4.9        1.3      neg.    neg.    7.7
excl. special items, %
EBITDA                                                            362     334       238      128     178    378
% of sales                                                      17.2    17.5      12.9       6.9      7.7    16.0

Share of results of associated companies and
joint ventures
Energy                                                                 -8     -24           -4         -4      -11       -8
Pulp                                                                       7        4         -16       -47        -4      44
Forest and timber                                               1       -1            1           1        -1         -
Paper                                                                    1         -           -1          -1         1         -
Other operations                                                 -         -            -2          -2       -1       -1
Total                                                                      1     -21          -22       -53    -16       35

EUR million                                                        Q2/       Q1/  Q1-Q4 / Q1-Q4 /
                                                                           2008    2008    2009    2008

Sales                                                                2,378  2,410   7,719    9,461
Other operating income                                     11        40        47          83
Costs and expenses                                   -2,074 -2,108 -6,774    -8,407
Change in fair value of                                       20        28        17          50
biological assets and wood harvested
Share of results of                                              21        22       -95          62
associated companies and joint ventures
Depreciation, amortisation                           -199    -199     -779    -1,225
and impairment charges
Operating profit (loss)                                     157     193      135           24
Gains on available-for-sale                                2         -           -1             2
investments, net
Exchange rate and fair value                             -1     -10          -9          -25
gains and losses
Interest and other finance                                -43     -49        62        -202
costs, net
Profit (loss) before tax                                       115  134       187        -201
Income taxes                                                       -25    -31       -18            21
Profit (loss) for the period                                   90   103      169        -180
Attributable to:
Equity holders of the parent                               92   102      169       -179
company
Minority interest                                                      -2       1         -              -1
                                                                                 90   103    169         -180
Basic earnings per share, EUR                     0.18  0.20    0.33       -0.35
Diluted earnings per share, EUR                  0.18  0.20    0.33       -0.35
Earnings per share, excluding                       0.17  0.19    0.11        0.42
special items, EUR
Average number of shares                       517,622 512,581 519,955 517,545
basic (1,000)
Average number of shares                       516,791 513,412 519,955 517,545
diluted (1,000)
Special items in operating                                     2          5      -135     -489
profit (loss)
Operating profit (loss),                                       155     188       270       513
excl. special items
% of sales                                                             6.5       7.8        3.5        5.4
Special items before tax                                        2          5         80      -483
Profit (loss) before tax,                                      113      129      107       282
excl. special items
% of sales                                                             4.8       5.4       1.4         3.0
Return on equity, excl.                                         5.4       5.9       1.0         3.4
special items, %
Return on capital employed,                              5.7      6.5       2.5         4.6
excl. special items, %
EBITDA                                                                 313     337   1,062    1,206
% of sales                                                           13.2    14.0     13.8      12.7

Share of results of associated companies and
joint ventures
Energy                                                                      -2        -5       -40         -26
Pulp                                                                         20        26      -52           86
Forest and timber                                                   -           1          2             -
Paper                                                                        -             -        -1             1
Other operations                                                     3           -         -4            1
Total                                                                         21        22      -95          62

Deliveries
                                                               Q4/      Q3/      Q2/      Q1/     Q4/      Q3/      Q2/
                                                           2009   2009   2009   2009   2008   2008   2008

Electricity, 1,000 MWh                   2,277  2,103 1,999   2,486 2,731  2,653  2,344
Pulp, 1,000 t                                       550     446     391      372     421     480     527
Sawn timber, 1,000 m3                   413     355     366      363     421     510     628
Publication papers, 1,000 t         1,576  1,464  1,323  1,304  1,809  1,760 1,749
Fine and speciality papers,            945      872    813      724     784     863     923
1,000 t
Paper deliveries total, 1,000t       2,521  2,336  2,136 2,028 2,593  2,623  2,672
Plywood, 1,000 m3                           150     143      141    133     160     188     227

                                                                       Q1/  Q1-Q4/  Q1-Q4/
                                                                   2008     2009     2008

Electricity, 1,000 MWh                           2,439    8,865 10,167
Pulp, 1,000 t                                               554    1,759   1,982
Sawn timber, 1,000 m3                           573    1,497   2,132
Publication papers, 1,000 t                 1,772    5,667   7,090
Fine and speciality papers,                    981    3,354   3,551
1,000 t
Paper deliveries total, 1,000t              2,753    9,021 10,641
Plywood, 1,000 m3                                  231       567       806


Quarterly segment information
EUR million                                    Q4/      Q3/      Q2/     Q1/      Q4/      Q3/      Q2/
                                                      2009   2009   2009   2009   2008   2008   2008
Sales
Energy                                           128      108     100      136     141     129     103
Pulp                                               226      156     132      139      200    228     247
Forest and timber                       348      295     309      385      419    475     518
Paper                                         1,558   1,454 1,388   1,367   1,750  1,761 1,727
Label                                             252      242    226      223       233     239     245
Plywood                                          81        73       77        75       102     121     150
Other operations                           35       21       21        34          34       52       66
Internal sales                             -520    -436   -412    -502      -564    -647   -678
Sales, total                               2,108   1,913 1,841 1,857     2,315 2,358  2,378

EBITDA
Energy                                            57         35       41       57         76        58      34
Pulp                                                53           8      -24      -55           9        38      35
Forest and timber                        30         24      -15      -15       -52         -4        4
Paper                                           221      274      247     187      189     271    216
Label                                              25        29        18         6          -1          9       15
Plywood                                           3         -5         -5      -23          -5         3        22
Other operations                         -27      -31      -24      -29        -38         3      -13
EBITDA, total                               362     334     238     128       178     378     313

Operating profit (loss)
Energy                                            47       10        36       51        62        49        31
Pulp                                                35        -9       -60   -122       -76        60        38
Forest and timber                        21         6       -18      -18       -63      -38        17
Paper                                             74     126        85       60     -126    -114        60
Label                                             16        18          4        -3        -38         1          8
Plywood                                       -33      -10       -10     -29        -10        -2        19
Other operations                       -34       -45      -29     -34         -35         4       -16
Operating profit (loss),            126        96          8     -95       -286     -40      157
total
% of sales                                   6.0       5.0      0.4     -5.1     -12.4    -1.7       6.6

Special items in operating profit
Energy                                            -1        -17         -          -             -           -         -
Pulp                                                  -            -           -      -29        -59          -         -
Forest and timber                      -14           1        -8      -10          -2       -33        -
Paper                                              -8          -6      -10       23     -153     -227       -
Label                                              -1          -2         -5         -         -28          -         -
Plywood                                       -30            -           -        -1            -           -        3
Other operations                          -6         -11          -         -            2          4      -1
Special items in operating       -60        -35       -23    -17      -240    -256       2
profit, total

Operating profit (loss) excl.special items
Energy                                            48         27        36       51        62        49     31
Pulp                                                35          -9       -60      -93       -17       60     38
Forest and timber                        35           5       -10         -8      -61        -5      17
Paper                                             82       132        95        37       27     113      60
Label                                             17          20          9         -3       -10        1         8
Plywood                                         -3         -10      -10       -28       -10       -2      16
Other operations                        -28        -34      -29       -34       -37         -     -15
Operating profit (loss) excl.     186       131       31       -78       -46     216   155
special items, total
% of sales                                    8.8        6.8       1.7      -4.2      -2.0     9.2     6.5

External sales
Energy                                            38        24        24         49         57     45      20
Pulp                                                34           9        10        10           6      17      18
Forest and timber                      171      145      150     152       199   197    240
Paper                                        1,500   1,409   1,355  1,327   1,701 1,699 1,657
Label                                            252      243       225     222      233    238    244
Plywood                                         77        69          73       72        94     111    139
Other operations                          36       14             4       25        25       51       60
External sales, total               2,108   1,913    1,841 1,857  2,315  2,358 2,378

Internal sales
Energy                                            90        84          76      87        84        84       83
Pulp                                              192      147       122    129      194      211    229
Forest and timber                      177      150       159    233      220      278    278
Paper                                              58        45         33      40         49        62      70
Label                                                -           -1          1         1            -           1         1
Plywood                                          4            4          4         3            8         10      11
Other operations                          -1            7       17         9            9           1        6
Internal sales, total                   520       436     412    502       564       647   678

EUR million                              Q1/  Q1-Q4/ Q1-Q4/
                                                 2008    2009     2008
Sales
Energy                                       105      472      478
Pulp                                           269      653      944
Forest and timber                   508   1,337   1,920
Paper                                     1,773   5,767   7,011
Label                                         242      943      959
Plywood                                    157      306      530
Other operations                       48      111      200
Internal sales                          -692 -1,870 -2,581
Sales, total                             2,410  7,719  9,461

EBITDA
Energy                                          39     190      207
Pulp                                              57      -18      139
Forest and timber                        4        24      -48
Paper                                         209     929      885
Label                                            11       78        34
Plywood                                       26      -30        46
Other operations                        -9    -111      -57
EBITDA, total                            337 1,062   1,206

Operating profit (loss)
Energy                                          33   144      175
Pulp                                              67  -156        89
Forest and timber                      25       -9       -59
Paper                                           51    345    -129
Label                                              3      35      -26
Plywood                                        21   -82        28
Other operations                         -7  -142      -54
Operating profit (loss),           193    135       24
total
% of sales                                  8.0    1.7      0.3

Special items in operating profit
Energy                                           -      -18         -
Pulp                                               -      -29      -59
Forest and timber                     -1      -31      -36
Paper                                            1        -1    -379
Label                                             -         -8      -28
Plywood                                        -       -31         3
Other operations                        5       -17       10
Special items in operating       5     -135   -489
profit, total

Operating profit (loss) excl.special items
Energy                                         33     162     175
Pulp                                             67    -127     148
Forest and timber                     26       22      -23
Paper                                          50      346     250
Label                                             3        43         2
Plywood                                      21       -51      25
Other operations                     -12     -125     -64
Operating profit (loss) excl.  188      270    513
special items, total
% of sales                                 7.8     3.5       5.4

External sales
Energy                                        15    135      137
Pulp                                            22      63         63
Forest and timber                  233    618      869
Paper                                    1,704 5,591  6,761
Label                                        241    942     956
Plywood                                   147    291     491
Other operations                      48      79     184
External sales, total           2,410 7,719 9,461

Internal sales
Energy                                        90   337     341
Pulp                                          247   590     881
Forest and timber                  275   719  1,051
Paper                                         69    176     250
Label                                            1        1          3
Plywood                                     10      15       39
Other operations                        -       32       16
Internal sales, total               692 1,870 2,581

Business combinations

On 8 December 2009, UPM, Metsäliitto Cooperative, M-Real corporation and Oy
Metsä-Botnia Ab (Botnia) completed a transaction whereby UPM acquired
Botnia's and Metsäliitto's shares of the Uruguayan Fray Bentos pulp mill and
the forestry company Forestal Oriental, and whereby UPM sold approximately 30%
of shares in Oy Metsä-Botnia Ab. If the transaction had occurred on
1 January 2009, UPM's sales would have been EUR 7,923 million
and profit for the period EUR 219 million.

Purchase consideration
EUR million 2009

Cash paid 597
Transaction costs 5
Total purchase consideration 602

The assets and liabilities as of 8 December 2009
arising from the acquisition are as follows:

EUR million                                    Fair value         Fair value          Acquired
                                                       of net assets   adjustments        carrying 
                                                           acquired                                      amount
Cash and cash equivalents                94                      -                        94
Goodwill                                                    -                   -43                        43
Other intangible assets                         4                       -                          4
Customer relationships and              43                    43                          -
other intangible assets
Property, plant and equipment      1,013                  227                      786
Biological assets                                 150                      -                       150
Investment in associated companies  3                      -                            3
Inventories                                             121                    11                      110
Trade and other receivables                75                      -                          75
Trade and other payables                   -68                      -                         -68
Interest-bearing liabilities                 -359                      -                       -359
Deferred income taxes                        -12                   -10                          -2
Total identifiable net assets           1,064                  228                      836
Minority interests                                     -2
Asset valuation surplus and            -542
cost of the prior ownership
Total acquired net assets                  520

Goodwill                                                  82
Total purchase consideration          602

Purchase consideration                    602
settled in cash
Cash and cash equivalents in          -94
subsidiary acquired
Cash outflow on acquisition             508

The fair value of the acquired net assets is provisional pending
on the final valuations.


Notes to the consolidated cash flow statement

Adjustments to net profit (loss)
Year ended 31 December
EUR million                                                      2009            2008
Taxes                                                                      18               -21
Depreciation, amortisation                              779           1,225
and impairment charges
Share of results in                                               95                -62
associated companies and joint ventures
Capital gains on sale of                                  -235               -30
non-current assets, net
Finance costs, net                                             167               227
Settlement of restructuring                               -43                -56
charges
One-time contributions to                                     -                 -85
pension funds
Other adjustments                                               -9                  34
Total                                                                     772            1,232

Change in working capital
Inventories                                                          400                 -55
Current receivables                                          156                138
Current non-interest bearing                           -24               -215
liabilities
Total                                                                     532               -132

Changes in property, plant and equipment

EUR million                                                      Q1-Q4/        Q1-Q4/
                                                                              2009            2008

Book value at beginning of                              5,688          6,179
period
Capital expenditure                                              181              471
Companies acquired                                       1,013                   -
Decreases                                                              -20              -24
Depreciation                                                         -696            -748
Impairment charges                                              -14            -182
Impairment reversal                                                  5                  -
Translation difference and                                     35                -8
other changes
Book value at end of period                              6,192          5,688


Commitments and contingencies

EUR million                                          31.12.2009         31.12.2008
Own commitments
Mortgages and pledges 1)                           1,043                      787
On behalf of associated companies
and joint ventures
Guarantees for loans                                             8                       10
On behalf of others
Other guarantees                                                    1                         2

Other own commitments
Leasing commitments for the                            24                       17
next 12 months
Leasing commitments for                                   60                       56
subsequent periods
Other commitments                                              69                       62

1) Mortgages and pledges relate mainly to Uruguayan operations, and to giving
mandatory security for borrowing from Finnish pension insurance companies.


Capital commitments
EUR million                                        Completion        Total cost             By 31.12.2008
Materials recovery facility              January 2011                19                                -
(MRF), Shotton
Waste water treatment plant, September 2010                19                                -
Blandin
Plywood development              December 2011                 18                               -
Rebuild of debarking plant,          October 2010                 30                               1
Wisaforest
Energy saving TMP plant,             January 2011                 16                                -
Steyrermühl

EUR million                                             Q1-Q4/                   After
                                                                     2009                31.12.2009
Materials recovery facility                            -                           19
(MRF), Shotton
Waste water treatment plant,                     -                           19
Blandin
Plywood development                                 -                           18
Rebuild of debarking plant,                     13                           16
Wisaforest
Energy saving TMP plant,                           -                            16
Steyrermühl


Notional amounts of derivative financial instruments

EUR million                                       31.12.2009              31.12.2008

Currency derivatives
Forward contracts                                        3,791                       4,598
Options, bought                                                 20                               -
Options, written                                                  20                               -
Swaps                                                               514                          508

Interest rate derivatives
Forward contracts                                        3,259                      2,668
Swaps                                                            2,701                      2,833

Other derivatives
Forward contracts                                              25                        172
Options, bought                                                  73                            -
Options, written                                                   73                         78
Swaps                                                                    4                            8

Related party (associated companies and joint ventures)
transactions and balances

EUR million                               Q1-Q4/          Q1-Q4/
                                                       2009              2008
Sales to associated                     114                138
companies
Purchases from associated       560                592
companies
Non-current receivables at              2                     -
end of period
Trade and other receivables         23                  37
at end of period
Trade and other payables at         32                  27
end of period


Basis of preparation

This unaudited financial report has been prepared in accordance with the
accounting policies set out in International Accounting Standard 34 on Interim
Financial Reporting and in the Group's Consolidated Financial Statements for
2008. Income tax expense is recognised based on the best estimate of the
weighted average annual income tax rate expected for the full financial year.

The Group has adopted the following standard:

IAS 1 (Revised) Presentation of Financial Statements became effective 1 January
2009. The revised standard prohibits the presentation of items of income and
expenses (that is, 'non-owner changes in equity') in the statement of changes
in equity, requiring 'non-owner changes in equity' to be presented separately
from owner changes in equity. Entities can choose whether to present one
performance statement (the statement of comprehensive income) or two statements
(the income statement and statement of comprehensive income). Where entities
restate or reclassify comparative information, they will be required to present
a restated balance sheet as at the beginning comparative period in addition to
the current requirement to present balance sheets at the end of the current
period and comparative period. Following the adoption of the revised standard
the Group will present two separate statements (a separate income statement
followed by a statement of comprehensive income).


Calculation of key indicators


Return on equity, %:
(Profit before tax - income taxes)/ Total equity (average) x 100

Return on capital employed, %:
(Profit before tax + interest expenses and other financial expenses)/
(Total equity + interest-bearing liabilities (average)) x 100

Earnings per share:
Profit for the period attributable to equity holders of the parent company/
Adjusted average number of shares during the period excluding treasury shares


Key exchange rates for the euro at end of period
                         31.12.2009      30.09.2009      30.06.2009
USD                        1.4406              1.4643              1.4134
CAD                        1.5128               1.5709             1.6275
JPY                          133.16              131.07              135.51
GBP                        0.8881               0.9093              0.8521
SEK                       10.2520            10.2320           10.8125

                          31.03.2009      31.12.2008     30.09.2008
USD                         1.3308              1.3917             1.4303
CAD                          1.6685             1.6998             1.4961
JPY                            131.17             126.14             150.47
GBP                          0.9308              0.9525            0.7903
SEK                        10.9400            10.8700            9.7943

                           30.06.2008      31.03.2008
USD                          1.5764              1.5812
CAD                          1.5942              1.6226
JPY                           166.44              157.37
GBP                          0.7923              0.7958
SEK                          9.4703              9.3970

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 71-73 of the company's annual report 2008

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

UPM-Kymmene Corporation
Pirkko Harrela
Executive Vice President, Corporate Communications

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