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Helsinki, Finland, 24 July 2008 – UPM re[prted second quarter (January–June 2008) earnings per share or EUR 0.18 (EUR -0.38 for the second quarter of 2007), excluding special items EUR 0.17 (0.28). The company also reported an operating profit of EUR 157 million (a loss of 75 million), excluding special items EUR 155 million (225 million); an increase of overall costs for the full year is still expected to be about 2%

"Regrettably UPM's result for the second quarter was weak," said Jussi Pesonen, UPM's president and CEO. "While our internal cost efficiency improved, our result was hit by the high wood and recovered paper costs as well as significantly lower market prices for sawn timber. Neither did the exchange rates work in our favour. On the positive side, we were able to increase magazine paper prices and the average price of paper was slightly higher than last year. Also the turnaround measures of the Label Division got off to a good start," he said.

"The demand outlook of our businesses has weakened since the beginning of the year, and our operative profitability for the full year 2008 is expected to be lower than that of last year," Pesonen continued. "With this in mind, we are currently assessing the market potential of different businesses, price and availability of raw materials, as well as the cost competitiveness of our various units. This review may result in permanent or temporary closures," he said.

"In Finland, it is clear that we can only develop our Finnish units in the long term providing that low cost Finnish wood is available. This is something we will take into consideration in our assessment. We will make our plans based on the assumption that the Russian export duty on wood will be implemented in the beginning of 2009," Pesonen said. "Due to cost savings from the ongoing profitability actions, the increase in the company’s overall costs for the full year is still expected to be about 2%," says Pesonen.

Remarks by Pesonen can be listened to online at www.upm-kymmene.com.

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