UPM estimates weakening profitability for its sawn timber business; UPM plans closing of its Leivonmäki sawmill in Finland

(UPM, Helsinki, 12 June, 2008 at 14:00) – UPM estimates the result for its sawn timber business will be weaker than forecast in the second quarter of 2008. Also the full year profitability outlook for the sawn timber business within the Wood Products Division is expected to further weaken markedly.

UPM will start employee negotiations for the possible closure of Leivonmäki sawmill in Finland. The Leivonmäki sawmill has generated constant losses. The continued strongly weakening market situation and the uncertainty related to raw material supply have further complicated the situation.

UPM has already during spring and summer responded to the weaker markets and reduced its sawmilling by temporarily limiting production at the all of the company's seven sawmills in Finland.

Leivonmäki sawmill employs 63 people. The sawmill, located in Central Finland, produces spruce sawn timber and its annual production capacity is 80,000 cubic metres. The sawmill uses annually some 200,000 cubic metres of spruce logs. Leivonmäki sawmill was founded in 1960.

UPM Timber supplies sawn timber and further processed timber products to the building, construction and joinery industries. Annual production capacity is 2.2 million cubic metres of WISA timber products. UPM Timber has 15 production units in Austria, Finland, France and Russia. In Finland, UPM operates seven sawmills which are located in Lappeenranta, Kajaani, Pietarsaari, Korkeakoski, Heinola, Pori and Leivonmäki. UPM Timber employs 1,450 people.

For further information, please contact:
Mr Tuomo Visanko, Senior Vice President, UPM Timber, tel. +358 400 352 990 (after 14:30 hours)
Mr Olavi Kauppila, Senior Vice President, Investor Relations, tel. +358 204 15 0658