Strong recovery in UPM's operating profit, Operating profit for the second half of the year expected to improve from the first half

UPM-Kymmene Corporation - Company Announcement
Strong recovery in UPM's operating profit, Operating profit for the second half of the year expected to improve from the first half
UPM-Kymmene Corporation   Stock exchange release  3 August 2010  at 09:55       

Strong recovery in UPM's operating profit, Operating profit for the second half 
of the year expected to improve from the first half                             

Interim Report for January-June 2010: Q2/2010: Earnings per share were EUR 0.33 
(-0.02), excluding special items EUR 0.29 (0.03). Operating profit excluding    
special items was EUR 199 million (EUR 31 million). Delivery volumes increased  
in all businesses - sales grew by 20%. Sales prices started to increase         
following increasing demand. Q1-Q2/2010: Earnings per share were EUR 0.46       
(-0.32), excluding special items EUR 0.44 (-0.24). Operating profit excluding   
special items was EUR 315 million (loss of EUR 47 million). Operating cash flow 
was EUR 311 million (EUR 580 million). Sales increased as economic activity     

Jussi Pesonen, UPM President and CEO, comments on the result for the second     
quarter of 2010:                                                                

"UPM's profit recovery in the second quarter was encouraging. Increased economic
activity improved all of our business. Demand continued to pick up, and our     
sales grew by 20% from last year. Our sales prices in most businesses were      
higher than in the first quarter of the year. We anticipate this positive       
development to continue in the second half of the year.                         

The EBITDA for the second quarter was significantly improved from the same      
period last year due to higher delivery volumes and the inclusion of the        
Uruguayan operations. When delivery volumes increase, we clearly see the        
benefits of the cost efficiency achieved in recent years.                       

However, in the second quarter, cost pressure started to intensify alongside the
increased economic activity. Costs of raw materials increased, resulting in     
higher variable costs. Cost pressure will continue in the second half of the    
year. Therefore, we must continue with tight cost control in all of our         

The Energy and Pulp businesses have developed well. We are satisfied with the   
current transparent structure of the Pulp business. Our cost competitive pulp   
mills in Uruguay and Finland have been able to benefit from the strong pulp     
market. In July, The Finnish parliament's ratification of the favourable        
decision-in-principle concerning the application by Teollisuuden Voima (TVO) to 
construct its fourth nuclear power plant unit, Olkiluoto 4, is a positive step  
for UPM. The decision opens up the possibility to increase the share of         
low-emission and cost efficient electricity.                                    

For Paper, deliveries increased in all markets, especially in Asia and North    
America. Despite of the good cost performance, the Paper business made an       
operating loss due to significantly higher fibre costs and lower prices than    
last year. To improve the profitability of Paper, we have increased prices      
practically in all new contracts.                                               

The profitability of Label business improved significantly from last year due to
increased deliveries especially in Asia and Eastern Europe. The current         
structure of the Label business area provides a good competitive edge in the    
market. In the second quarter, Label business was able to compensate with higher
prices for the considerable increase in raw material costs. In the second half  
of the year, prices are expected to be higher but intense cost pressure will    
challenge current sales margins.                                                

Despite the expected material increase in variable costs, we estimate the       
operating profit excluding special items for the second half of 2010 to be      
higher than in the first half of the year", says Pesonen.                       

For more information please contact:                                            
Mr Jussi Pesonen, President and CEO, UPM, tel. +358 204 15 0001                 
Mr Tapio Korpeinen, CFO, UPM, tel. +358 204 15 0004                             

UPM, Corporate Communications                                                   
Media Desk, tel. +358 40 588 3284                                                                                                

Conference call and press conference                                            

UPM's President and CEO Jussi Pesonen will present the Interim Report for       
January-June 2010 in a conference call and webcast for analysts and investors,  
held in English, on 3 August at 13:00 Finnish time (11:00 London time, 06:00    

Jussi Pesonen will also present the Interim Report for January-June 2010 in a   
press conference held in Finnish at UPM Group Head Office in Helsinki (main     
entrance, Eteläesplanadi 2) on 3 August 2010, at 14:15 Finnish time (12:15      
London time, 07:15 EST).                                                        

Conference call and webcast details:                                            

You can participate in the conference call either by dialling a number in the   
list below or following the webcast online at Only participants who
wish to ask questions in the conference call need to dial in. All participants  
can view the webcast presentation online.                                       

We recommend that participants start dialling in 5-10 minutes beforehand to     
ensure the conference starts on time.                                           

Conference call title: UPM-Kymmene Corporation Interim Report January-June 2010 
Conference ID: 870019                                                           

Phone numbers:                                                                  

Australia: +61 (0)28 2239 543                                                   
Austria: +43 (0)268 2205 6292                                                   
Hong Kong: +852 300 278 26                                                      
Belgium: +32 (0)2 290 14 07                                                     
Czech Republic: +420 (2)3900 0635                                               
Denmark: +45 3271 4607                                                          
Finland: +358 (0)9 2313 9201                                                    
France: +33 (0)1 7099 3208                                                      
Germany: +49 (0)695 8999 0507                                                   
Hungary: +36 (0)618 8932 15                                                     
India Freephone: 000 8001 0035 51                                               
Ireland: +353 (0)1 4364 106                                                     
Italy: +39 023 0350 9003                                                        
Luxembourg: +352 270 0073 408                                                   
Netherlands: +31 (0)20 7965 008                                                 
Norway: +47 2156 312 0                                                          
Singapore: +65 6823 2169                                                        
Spain: +34 9178 8989 6                                                          
Sweden: +46 (0)8 5052 0110                                                      
Switzerland (GE): +41 (0)2 2592 7007                                            
Switzerland (ZH): +41 (0)434 5692 61                                            
UK: +44 (0)20 7162 0077                                                         
US: +1 334 323 6201                                                             

The webcast can be replayed at for 12 months.                       

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, and 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.                                                 

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

NASDAQ OMX Helsinki Ltd                                                         
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