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UPM begins profit improvement program.

UPM BEGINS PROFIT IMPROVEMENT PROGRAM. UPM, Helsinki, Finland said it will embark on an extensive program to restore its profitability in the new business environment. The program will cover all the company's operations. UPM plans to close its least competitive paper capacity and to achieve a major improvement in the efficiency of all divisions, units and functions worldwide. In addition, the company will invest in the competitiveness of the units which are estimated to have the best prospects for profitable business in the future. Annualized cost saving after completion of the program is estimated to be approximately EUR 200 million. Furthermore, the program is expected to have a significant impact on UPM's profitability.

UPM is planning the following moves:

* the possible closure of Voikkaa paper mill during the third quarter of 2006. The mill's production capacity is 410,000 metric tons/yr of coated magazine paper;

* the possible closure Kymi PM 7 during the third quarter of 2006. The machine's production capacity is 150,000 metric tons/yr of coated fine paper;

* the possible closure of Tervasaari PM 6 and the old pulp line during the second quarter of 2007. The production capacity of the paper machine is 115,000 metric tons/yr of brown sack paper and that of the pulp line is 60,000 metric tons/yr of semi-alkaline pulp (SAP);

* to cease the production of coated magazine paper on Jamsankoski PM 4 during the first quarter in 2007 and to convert the machine to produce label papers starting during second quarter of 2007. The annual production capacity of the machine will remain at 120,000 metric tons.

All the above mills are located in Finland. Through the closures, UPM plans to reduce 17% of its coated magazine paper capacity in Europe and 12% of its coated fine paper capacity in Europe. The company will exit from the production of brown sack paper. After the restructuring, UPM's average paper machine capacity in Europe is 320,000 metric tons in coated magazine paper and 420,000 metric tons in coated fine paper.
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Title Annotation:INDUSTRY NEWS
Publication:Solutions - for People, Processes and Paper
Date:Apr 1, 2006
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