UPM President & CEO Jussi Pesonen comments on the 2004 accounts

Key figures for January 1 to December 31, 2004:

- Earnings per share for 2004 were EUR 1.83 (1-12/2003: 0.61), and excluding non-recurring items EUR 0.52 (0.50).
- Profit before tax was EUR 600 (1-12/2003: 438) million, and excluding non-recurring items EUR 359 (363) million.
- Fourth quarter profit before tax and excluding non-recurring items was EUR 80 (10-12 /2003: 19) million, and earnings per share EUR 0.12 (0.05).
- Gearing ratio was 61% (2003: 69)
- Sales 2004 were EUR 9,820 (2003: 9,787) million
- Board of Directors' dividend proposal is EUR 0.75 (0.75)

UPM President & CEO Jussi Pesonen comments on the 2004 accounts:

“UPM’s result improved during the second half of last year. However, the result was weak, although the delivery volumes were good. The result was weakened by low average prices for paper and increasing costs. The depreciation of export currencies also adversely affected the result. The balance sheet further strengthened and the cash flow remained strong. Considering these factors, the Board of Directors decided to propose unchanged dividend."

“The decline in paper prices came to an end in 2004. We also succeeded in improving cost-effectiveness and production efficiency. Demand developed positively throughout the year, which meant improved supply/demand balance."

“During the year, UPM introduced number of measures that will influence our profitability and future competitiveness. We embarked on restructurings and made several investments, and results from some of these will already be visible this year. "

“We expect profitability in 2005 to be better than that for last year. The order inflow was strong in January, and paper deliveries are forecast to grow further."

“Sales prices are higher than at the end of last year and, in export markets, price increases exceed losses caused by the recent weakening of invoicing currencies. We started price negotiations for paper in good time last summer and succeeded in raising contract prices early this year. Average prices for newsprint rise by somewhat below 10 per cent and, for magazine papers and coated fine papers, by about half of that.

“Financial results from our converting business, notably Raflatac, made good progress. Demand for converted products is expected to grow on all markets. The Wood Products Division’s plywood and sawn timber continue to be in good demand, although sawn timber markets are still oversupplied.

“The existing cost saving programmes are continuing, and we expect the rise in costs to be moderate. Capital expenditure will be somewhat higher than last year, but will remain below depreciation”, says Pesonen.

For more information, please contact:
Mr Jussi Pesonen, President and CEO, tel. +358 204 15 0001
Mr Kari Toikka, Executive Vice President and CFO, tel. +358 204 15 0014

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News Conference and Conference Call Information

A news conference regarding the Financial Review will be held at UPM's head office today at 13:30 Finnish time (11:30 GMT, 06:30 EST). It will also be broadcast on-line at the company's website www.upm-kymmene.com. The reply from the news conference will be available for the next 3 months.

To participate in the UPM Conference Call, please dial +44 (0) 1452 542 300 at 17:00 (Finnish time) (15:00 GMT, 10:00 EST) on February 1, 2005. The Conference Call reply will be available until February 8, 2005 at the following phone number: +44 (0) 1452 550 000, access code: 246 9711#.

In the United States and Canada the Conference Call number is +1 866 220 1452. The reply will be heard at the following number +1 866 247 4222, access code: 246 9711#.

UPM
Corporate Communications
February 1, 2005