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UPM Plans to Restructure Operations in Finland

Helsinki, Finland, 11 April 2012 -- UPM is clarifying the strategy of its Timber and Living business areas and plans to restructure production operations in Finland. The plan includes a possible closing of the production of the Kajaani sawmill and the Heinola and Aureskoski further-processing plants by the end of 2012.

UPM will begin co-determination negotiations with the employees in Kajaani, Aureskoski, and Heinola, and later during April-May with the employees in the Finnish staff functions. Altogether, 275 employees are included in the negotiations. Sale is an alternative option for closure of the production units.

”The profitability of the sawmills and further processing units located furthest from our integrated mills has been weak for a long time and has not turned permanently profitable despite the earlier restructuring measures. High log price and over capacity in the end-product markets have weakened the situation,” said Heikki Vappula, president of UPM’s Energy and Pulp Business Group.

"Our plan is to continue sawmilling and further processing in Finland in four locations, Pietarsaari (Alholma), Pori (Seikku), Juupajoki (Korkeakoski) and Lappeenranta (Kaukas), which are close to our pulp and paper mills using big volumes of wood. Saw mills and further processing plants operating close to pulp and paper mills have a central role in UPM’s wood sourcing supply chain as their by-products are used in the production of pulp, paper, and energy,” Vappula said. 

”The Kajaani, Heinola, and Aureskoski production units have good foundations to succeed as independent units, [which] makes the sale of the units a considerable alternative,” Vappula said.

As part of the clarification of the Timber business strategy, UPM will assess the operational preconditions and role of the Pestovo saw mill and planing mill in Russia by the end of 2012.

The Aigrefeuille further processing plant in France and the Steyrermühl sawmill in Austria will continue their operations as before and are excluded from the plan.

The plans have no effect on UPM’s current customer commitments or other valid contracts.

In the second quarter of 2012, UPM will book impairment charges of approximately EUR 35 million and make a provision for restructuring costs of approximately EUR 10 million.

The strategy development of UPM Timber and Living business areas will proceed in UPM’s internal work groups. Anssi Klinga has been appointed the new head of the businesses, senior vice president, UPM Timber and Living Business Area. He has a long experience of international management positions and most recently held the position of the CEO of Vaahto Group.

UPM Living manufactures sustainable, beautiful, and recyclable wood-based products for consumers and industry. Manufactured from certified wood raw materials, the products can be used to create top-quality interior decoration solutions or build a high-quality garden or house. The seven UPM Living production facilities are located in Finland (Aureskoski, Heinola, Lappeenranta, Uusikaarlepyy, Pori), France (Aigrefeuille), and Russia (Pestovo). Additional information is available at www.upmliving.com.

UPM Timber manufactures top-class sawn pine and spruce timber for the construction and joinery industries. UPM Timber annually produces around 2.3 million cubic meters of timber from wood acquired from certified forests. UPM's seven sawmills are located in Finland, Austria, and Russia. In Finland, UPM operates five sawmills in Lappeenranta (Kaukas), Kajaani, Pietarsaari (Alholma), Korkeakoski and Pori (Seikku). Additional information is available at www.upmtimber.com.    

Kajaani sawmill employs 83 people and manufactures sawn pine and spruce timber and has an annual production capacity of 210,000 cubic meters.

Aureskoski further processing plant has 53 employees. The plant produces interior panels and floorings and has an annual production capacity of 130,000 cubic meters.

Heinola further processing plantemploys 46 people and produces laminated wood panels and has an annual production capacity of 20,000 cubic meters.

The UPM Timber and Living business area staff functions in Finland employ 90 people.


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