UPM-Kymmene Corporation  Interim report April 24, 2008 at 12:00 (Finnish time)

Earnings per share for the first quarter were EUR 0.20 (0 0.25 for the first 
quarter of 2007), excluding special items EUR 0.19 (0.25). Operating profit 
was EUR 193 million (221 million), excluding special items EUR 188 million 
(221 million). Fibre costs and currencies effected UPM's result. 

Key figures
                        Q1/    Q1/ Q1-Q4/
                       2008   2007   2007
                                         
                                       
Sales, EUR million    2,410  2,519 10,035
EBITDA, EUR million 1)  337    418  1,546
% of sales             14.0   16.6   15.4
Operating profit,       193    221    483
EUR million
excluding special       188    221    835
items, EUR million
Profit before tax,      134    177    292
EUR million
excluding special       129    177    644
items, EUR million
Net profit for the      103    131     81
period, EUR million
Earnings per share,    0.20   0.25   0.16
EUR 
excluding special      0.19   0.25   1.00
items, EUR
Diluted earnings       0.20   0.25   0.16
per share, EUR
Return on equity, %     6.2    7.3    1.2
excluding special       5.9    7.3    7.4
items, %
Return on capital       6.7    7.9    4.3
employed, %
excluding special       6.5    7.9    7.4
items, %
Gearing ratio at         64     57     59
end of period, %
Shareholders'         12.48  13.38  13.21
equity per share at 
end of period, EUR
Net interest-bearing  4,107  4,023  3,973
liabilities at end
of period, EUR million
Capital employed at  10,772 11,330 11,098
end of period, EUR million
Capital expenditure,    137    193    708
EUR million
Personnel at end of  25,841 28,578 26,352
period

1) EBITDA is operating profit before depreciation, amortisation and impairment 
charges, excluding the change in value of biological assets, the share of 
results of associated companies and joint ventures, and special items.


Results


Q1 of 2008 compared with Q1 of 2007

Sales for the first quarter of 2008 were EUR 2,410 million, 4% less than the 
EUR 2,519 million in the first quarter of 2007. Operating profit was EUR 193 
million (221 million), 8.0% (8.8%) of sales. Operating profit excluding special 
items was EUR 188 million (221 million).

Sales were unchanged when adjusted for the divested businesses. Delivery 
volumes were about the same as last year. The considerably weaker USD and GBP 
had an impact on sales and average prices in euros. The operating profit 
declined mainly due to the increased cost of wood and recycled fibre and the 
strengthened euro.

Delivery volumes of paper divisions remained about the same, despite reduction 
in capacity. The average paper price in euros for all paper deliveries remained 
about the same as last year. The profitability decreased due to the increased 
fibre costs.

Prices for magazine grades improved during the quarter, but were on average 
below the first quarter 2007 level. Standard newsprint prices declined and were 
5% lower than last year. The average price for fine and speciality papers was 
about the same as last year. The profitability of the label business for the 
period was weak. Prices were lower and the fixed costs increased. In North 
America, weakened economy resulted in contraction of demand.

The profitability of wood products decreased. While good profitability of 
plywood business was maintained, the sawmilling business weakened significantly 
as prices decreased and cost of wood raw material increased.

The increase in the fair value of biological assets, net of wood harvested, was 
EUR 28 million (decrease of EUR 3 million). The share of results of associated 
companies and joint ventures was EUR 22 million (21 million).

Profit before tax was EUR 134 million (177 million) and excluding special items 
EUR 129 million (177 million). Interest and other finance costs net were EUR 49 
million (49 million). Exchange rate and fair value gains and losses, and gains 
on available-for-sale investments, resulted in a loss of EUR 10 million (a gain 
of EUR 5 million).

Income taxes were EUR 31 million (46 million). The effective tax rate was 23% 
(26%).

Profit for the first quarter was EUR 103 million (131 million) and earnings per 
share were EUR 0.20 (0.25). Earnings per share excluding special items were EUR 
0.19 (0.25). Operating cash flow per share was EUR 0.10 (0.36).

Paper deliveries

Paper deliveries for the first three months were 2,753,000 tonnes, the same as 
in 2007. Magazine paper deliveries were 1,136,000 tonnes (1,155,000), newsprint 
636,000 tonnes (630,000), and fine and speciality papers 981,000 tonnes 
(968,000).

Financing

Cash flow from operating activities, before capital expenditure and financing, 
was EUR 50 million (187 million). The cash flow includes cash contribution in 
the UK pension plans, and settlement of the restructuring provisions related to 
the closure of the Miramichi paper mill in 2007. The increase in working 
capital amounted to EUR 106 million (145 million).

The gearing ratio as of 31 March was 64% (57% on 31 March 2007). Equity to 
assets ratio on 31 March was 46.2% (48.4%). Net interest-bearing liabilities at 
the end of the period increased to EUR 4,107 million (4,023 million).

Personnel

In the first quarter, UPM had an average of 25,971 employees (28,558). At the 
beginning of the year, the number of employees was 26,352 and at the end of the 
period 25,841. Since the first quarter of last year, the number of personnel 
decreased as a result of the measures related to the profitability programme, 
closure of the Miramichi paper mill, and divestments of port operators and 
Walki Wisa.

Capital expenditure

During the first three months, gross capital expenditure was EUR 137 million, 
5.7% of sales (193 million, 7.7% of sales).

The new self-adhesive label materials factory in Dixon, Illinois, in the 
USA, started operations in February. The total investment cost was USD 100 
million (EUR 70 million).

The largest ongoing investments are the rebuild of the recovery plant at the 
Kymi pulp mill, which is scheduled to start up during the second quarter of 
2008; the new label materials plant in Poland, scheduled for start-up in the 
fourth quarter of 2008; and a biomass boiler in the Caledonian paper mill, 
Scotland, that is scheduled to begin operation in 2009.

Shares

In the first quarter of 2008, UPM shares worth, in total, EUR 2,840 million 
were traded on the OMX Nordic Exchange Helsinki (4,267 million). The highest 
quotation was EUR 13.87 in January and the lowest EUR 10.52 in March.

The Annual General Meeting held on 26 March 2008 approved a proposal to 
authorise the Board of Directors to decide to buy back not more than 51,000,000 
own shares. The authorisation is valid for 18 months from the date of the 
decision.

On the basis of the decisions of the Annual General Meeting of 27 March, 2007, 
the Board has the authority to decide on a free issue of shares to the company 
itself so that the total number of shares to be issued to the company 
combined with the number of own shares bought back under the buyback 
authorisation may not exceed 1/10 of the total number of shares of the company. 
In addition, the Board has the authority to decide to issue shares and special 
rights entitling the holder to shares of the company. The number of new shares 
to be issued, including shares to be obtained under special rights, shall be no 
more than 250,000,000. Of that, the maximum number that can be issued to the 
company's shareholders based on their pre-emptive rights is 250,000,000 shares 
and the maximum amount that can be issued deviating from the shareholders' 
pre-emptive rights in a directed share issue is 100,000,000 shares. The maximum 
number of new shares to be issued as part of the company's incentive programmes 
is 5,000,000 shares. Furthermore, the Board is authorised to decide on the 
disposal of own shares. These authorisations of the 2007 Annual General Meeting 
will remain valid for no more than three years from the date of the decision.

In the first quarter of 2008, 23,000 shares were subscribed for through 
exercising of outstanding share options. The number of shares entered in the 
Trade Register as of 31 March 2008 was 512,592,320. Through the issuance 
authorisation and share options, the number of shares may increase to a maximum 
of 794,158,420.

At the end of the period, the company did not hold any of its own shares.

Apart from the above, the Board of Directors has no current authorisation to 
issue shares, convertible bonds or share options.

Dividend

The Annual General Meeting of 26 March 2008 approved the Board's proposal to 
pay a dividend of EUR 0.75 per share for the 2007 financial year. The dividend 
of EUR 384 million that was paid on 10 April 2008 is included in short-term 
non-interest-bearing liabilities at the end of March.

Company directors

The Annual General Meeting of 26 March 2008 decided that the Board of Directors 
is composed of 10 members. Mr Matti Alahuhta, President and CEO of KONE 
Corporation, and Mr Björn Wahlroos, President and CEO of Sampo plc, were 
elected to the Board of Directors as new members. In addition, Mr Michael C. 
Bottenheim, LLM, MBA; Mr Berndt Brunow, Board member of Oy Karl Fazer Ab; 
Mr Karl Grotenfelt, LLM, Chairman of the Board of Directors of Famigro Oy; 
Dr Georg Holzhey, former Executive Vice President of UPM and Director of G. 
Haindl'sche Papierfabriken KGaA; Ms Wendy E. Lane, Chairman of American 
investment firm Lane Holdings, Inc.; Mr Jussi Pesonen, President and CEO of 
UPM; Ms Ursula Ranin; LLM, B.Sc. (Econ.); and Mr Veli-Matti Reinikkala, 
President of ABB Process Automation Division, were re-elected as members of the 
Board of Directors. The term of office of the members of the Board of Directors 
lasts until the end of the next Annual General Meeting.

At the assembly meeting of the Board of Directors, Mr Björn Wahlroos was 
elected as Chairman, and Mr Berndt Brunow and Mr Georg Holzhey were elected as 
Vice Chairmen.

In addition, the Board of Directors elected from its members the Audit 
Committee with Mr Michael C. Bottenheim as Chairman, and Ms Wendy E. Lane and 
Mr Veli-Matti Reinikkala as members. The Human Resources Committee was elected, 
with Mr Berndt Brunow as Chairman, and Mr Georg Holzhey and Ms Ursula Ranin as 
members. Furthermore, the Nominating and Corporate Governance Committee was 
elected, with Mr Björn Wahlroos as Chairman, and the other members being Mr 
Matti Alahuhta and Mr Karl Grotenfelt.

Litigation

Certain competition authorities are continuing investigations into alleged 
antitrust activities with respect to various products of the company. The US 
Department of Justice, the EU authorities and the authorities in several EU 
Member States, Canada and certain other countries have granted UPM conditional 
full immunity with respect to certain conduct disclosed to them. The US and 
Canadian investigations are closed, and the European Commission has tentatively 
closed its investigation of the European fine paper, newsprint, magazine paper, 
label paper and self-adhesive labelstock markets.

UPM has been named as a defendant in multiple class-action lawsuits against 
labelstock and magazine paper manufacturers in the United States. UPM has 
agreed to settle the class-action lawsuits raised by direct purchasers of 
labelstock and magazine paper. Certain class-action lawsuits filed by indirect 
purchasers of labelstock and magazine paper continue to be pending.

The remaining litigation matters may last several years. No material provisions 
have been made in relation to these investigations.


Events after the balance sheet date

The Group's management is not aware of any significant events occurring after 
31 March 2008.

Risk factors

If implemented, the announced third increase in the export duty on Russian wood 
from the beginning of 2009 will make imports of round wood uneconomical. There 
is a high risk that these imports cannot be fully replaced in a financially 
sound manner. The uncertainty about the final outcome will reduce imports from 
Russia during the latter part of this year. This could result in reduction of 
production at some of the Finnish mills during the second half of 2008.

Outlook for the second quarter of 2008

Global demand for printing papers is forecast to grow somewhat from last year. 
In Europe, good demand is expected to continue especially in Eastern Europe. In 
North America, weakening demand trend is expected to continue. The highest 
growth in demand will be in China.

Current order books in printing papers are good. Due to capacity closures and 
temporary shut downs, UPM's paper deliveries for the full year 2008 are 
expected to be somewhat lower than last year. For the second quarter the 
Group's average paper price in euros is expected to be slightly higher than 
that of the first quarter 2008.

Demand for self-adhesive labelstock is forecast to grow in Europe and Asia but 
in North America growth in demand has come to a halt due to weak economy and 
subdued consumer demand. Self-adhesive labelstock prices in local currencies 
are expected to increase from the first quarter in all main markets.

In wood products, strong demand for birch plywood and stable demand for spruce 
plywood is expected to continue. In sawn timber outlook is cautious. Demand for 
both redwood and whitewood is expected to weaken and prices to be lower than in 
the beginning of the year.

Wood fibre costs for 2008 are forecast to be higher than in the earlier 
forecast for the full year. However, the increase in the company's overall
costs 
is still expected to be about 2%. This includes cost savings from the ongoing 
profitability programme.


Divisional reviews


Magazine Papers
                       Q1/   Q4/   Q3/   Q2/   Q1/ Q1-Q4/
                      2008  2007  2007  2007  2007   2007
Sales, EUR million     781   811   847   798   793  3,249
EBITDA, EUR million 1) 120    98   116   114   113    441
% of sales            15.4  12.1  13.7  14.3  14.2   13.6
Depreciation,          -76   -83   -82  -443   -86   -694
amortisation and 
impairment charges,
EUR million
Operating profit,       44   -62    34  -339    27   -340
EUR million
% of sales             5.6  -7.6   4.0 -42.5   3.4  -10.5
Special items, EUR       -   -77     -  -371     -   -448
million 2)
Operating profit        44    15    34    32    27    108
excl. special 
items, EUR million
% of sales             5.6   1.8   4.0   4.0   3.4    3.3
Deliveries, 1,000t   1,136 1,238 1,266 1,189 1,155  4,848

1) EBITDA is operating profit before depreciation, amortisation and impairment 
charges and excluding special items.
2) Special items for the second quarter of 2007 include a goodwill impairment 
charge of EUR 350 million, an impairment charge of EUR 22 million and personnel 
costs of EUR 10 million related to the Miramichi paper mill, and an income of 
EUR 11 million related to impairment reversals. For the fourth quarter, special 
items include personnel expenses of EUR 44 million and other costs of EUR 36 
million related to the Miramichi paper mill, and an income of EUR 3 million 
related to other restructuring measures.

Q1 of 2008 compared with Q1 of 2007

Operating profit, excluding special items, for Magazine Papers was EUR 44 
million (27 million). Sales declined slightly to EUR 781 million (793 million). 
Paper deliveries had a volume of 1,136,000 tonnes (1,155,000).

First-quarter profitability improved, as a result of better efficiency. Fibre 
costs increased from last year's level but fixed costs were lower. In export 
markets, the average prices in local currencies were clearly higher. Due to the 
strengthened euro against the USD and GBP, the average price for all magazine 
paper deliveries was about the same as a year ago. Deliveries were maintained, 
despite the closure of the Miramichi paper mill and the transfer of Jämsänkoski 
PM4 to Fine and Speciality Papers Division.

Market review

In the first three months of the year, magazine paper demand in Europe 
continued to be good. Coated magazine paper demand increased by about 2% and 
demand for uncoated magazine paper by about 1% in comparison with the same 
period in 2007. Export of magazine paper from Europe increased compared with 
the previous year. In North America, demand for both coated and uncoated 
magazine paper increased 4%. In Europe, prices increased from the beginning of 
the year, but the average market price was down from last year. In North 
America, prices increased from last year by about 15%.


Newsprint
                       Q1/   Q4/   Q3/   Q2/   Q1/ Q1-Q4/
                      2008  2007  2007  2007  2007   2007
Sales, EUR million     332   378   365   379   348  1,470
EBITDA, EUR million 1)  60    79    91   100    92    362
% of sales            18.1  20.9  24.9  26.4  26.4   24.6
Depreciation,          -46   -48   -47   -47   -48   -190
amortisation and 
impairment charges,
EUR million
Operating profit,       15    36    44    53    44    177
EUR million
% of sales             4.5   9.5  12.1  14.0  12.6   12.0
Special items, EUR       1     5     -     -     -      5
million 2)
Operating profit        14    31    44    53    44    172
excl. special 
items, EUR million
% of sales             4.2   8.2  12.1  14.0  12.6   11.7
Deliveries, 1,000t     636   702   667   683   630  2,682

1) EBITDA is operating profit before depreciation, amortisation and impairment 
charges and excluding special items.
2) Special items for the fourth quarter of 2007 include an income of EUR 5 
million related mainly to other restructuring measures.

Q1 of 2008 compared with Q1 of 2007

Operating profit, excluding special items, for Newsprint decreased from EUR 44 
million to EUR 14 million. Sales were EUR 332 million (348 million). Paper 
deliveries were 636,000 tonnes (630,000).

The main reasons for the decreased profitability were lower paper prices, the 
stronger euro against the GBP and USD, and higher cost of fibres. The average 
price for all newsprint deliveries when translated into euros was about 5% 
lower than in the corresponding period in 2007. Both recovered fibre and wood 
costs were higher. Operational efficiency improved. In February, the Kajaani 
PM4 was temporarily closed down for ten months.

Market review

In Europe, demand for standard and improved newsprint was approximately 2% 
lower than in the first quarter of last year. Net exports from Europe 
increased. In Europe, the average market price for standard newsprint was about 
3% down. In North America, average prices for standard newsprint were flat and 
demand decreased. In the other markets, prices increased in invoicing 
currencies.


Fine and Speciality Papers
                       Q1/   Q4/   Q3/   Q2/   Q1/ Q1-Q4/
                      2008  2007  2007  2007  2007   2007
Sales, EUR million     726   718   694   686   699  2,797
EBITDA, EUR million 1)  84    66    82    92    85    325
% of sales            11.6   9.2  11.8  13.4  12.2   11.6
Depreciation,          -53   -54   -53   -53   -53   -213
amortisation and 
impairment charges,
EUR million
Operating profit,       31    12    29    39    32    112
EUR million
% of sales             4.3   1.7   4.2   5.7   4.6    4.0
Special items, EUR       -     -     -     -     -      -
million
Operating profit        31    12    29    39    32    112
excl. special 
items, EUR million
% of sales             4.3   1.7   4.2   5.7   4.6    4.0
Deliveries, 1,000t     981   977   954   960   968  3,859

1) EBITDA is operating profit before depreciation, amortisation and impairment 
charges and excluding special items.

Q1 of 2008 compared with Q1 of 2007

Operating profit, excluding special items, for Fine and Speciality Papers was 
EUR 31 million (32 million). Sales increased from EUR 699 million to EUR 726 
million. Paper deliveries were 981,000 tonnes (968,000).

The profitability of the division remained about the same. Wood and pulp costs 
were markedly higher. This cost increase and the effect of the strengthened 
euro were mainly offset by improved operational efficiency. The average price 
for all fine and speciality paper deliveries, translated into euros, was about 
the same. Prices for uncoated fine papers were higher, but those for coated 
fine papers lower.

Market review

In Europe, demand for coated fine paper was unchanged when compared with that 
in the same period last year. Demand for uncoated fine paper decreased by about 
3%. Good demand for packaging papers continued, and demand for label papers 
improved slightly. In Europe, average market prices for coated fine paper were 
5% lower than in the first quarter of 2007. The average market price for 
uncoated fine papers increased about 3%. In Asia, demand and prices for fine 
paper increased from last year.


Label Materials
                       Q1/   Q4/   Q3/   Q2/   Q1/ Q1-Q4/
                      2008  2007  2007  2007  2007   2007
Sales, EUR million     249   249   252   260   261  1,022
EBITDA, EUR million 1)   9    15    18    21    26     80
% of sales             3.6   6.0   7.1   8.1  10.0    7.8
Depreciation,           -9    -9    -8    -8    -8    -33
amortisation and 
impairment charges,
EUR million
Operating profit,        0    10    10    13    18     51
EUR million
% of sales             0.0   4.0   4.0   5.0   6.9    5.0
Special items, EUR       -     4     -     -     -      4
million 2)
Operating profit         0     6    10    13    18     47
excl. special 
items, EUR million
% of sales             0.0   2.4   4.0   5.0   6.9    4.6

1) EBITDA is operating profit before depreciation, amortisation and impairment 
charges and excluding special items.
2) Special items in the fourth quarter of 2007 include an income of EUR 4 
million related to other restructuring measures.

Q1 of 2008 compared with Q1 of 2007

The Label Division did not make an operating profit for the period. Last year's 
operating profit, excluding special items, was EUR 18 million. Sales decreased 
to EUR 249 million (261 million).

The decrease in sales was due to lower prices, the strengthened euro and 
changes in market mix. In addition, the profitability of the division weakened 
due to increased fixed costs partly related to the ongoing investment 
programme, and due to higher raw material costs. The Label Division started to 
implement price increases in various markets. In the first quarter, prices were 
increased in North America, China and South Africa.

The Dixon, Illinois, factory project was completed in the quarter under review, 
and the ramp-up of the operation has proceeded smoothly.

Market review

Due to weak US economy and consumer demand, label material demand is estimated 
to have contracted during the first quarter in North America. In Europe, from 
the beginning of this year demand is estimated to have grown slightly slower 
than last year. In Asia, the strong increase in demand continued.


Wood Products
                       Q1/   Q4/   Q3/   Q2/   Q1/ Q1-Q4/
                      2008  2007  2007  2007  2007   2007
Sales, EUR million     298   297   262   326   314  1,199
EBITDA, EUR million 1)  19    26     8    51    42    127
% of sales             6.4   8.8   3.1  15.6  13.4   10.6
Depreciation,          -11   -11   -10   -11   -10    -42
amortisation and 
impairment charges,
EUR million
Operating profit,        8    21    -2    41    32     92
EUR million
% of sales             2.7   7.1  -0.8  12.6  10.2    7.7
Special items, EUR       -     6     -     -     -      6
million 2)
Operating profit         8    15    -2    41    32     86
excl. special 
items, EUR million
% of sales             2.7   5.1  -0.8  12.6  10.2    7.2
Deliveries, plywood    241   239   204   247   255    945
1,000 m3
Deliveries, sawn       560   520   480   637   587  2,224
timber 1,000 m3

1) EBITDA is operating profit before depreciation, amortisation and impairment 
charges and excluding special items.
2) Special items in the fourth quarter of 2007 include a gain of EUR 6 million 
on sale of estate assets.

Q1 of 2008 compared with Q1 of 2007

Operating profit, excluding special items, for Wood Products decreased from EUR 
32 million to EUR 8 million. Sales came to EUR 298 million (314 million). 
Plywood deliveries were 241,000 (255,000) cubic metres and sawn timber 
deliveries 560,000 (587,000) cubic metres.

The profitability of the division decreased mainly as a result of increased 
wood costs and weakened timber market. The prices of timber decreased and the 
profitability of sawmilling weakened further. The good profitability of plywood 
continued as the demand remained healthy. Birch log availability limited the 
production.

The closure of the Luumäki timber component and planing mill in Finland was 
announced in February. Timber production was curtailed due to slowdown of 
demand.

Market review

During the first quarter, plywood demand remained strong in all markets. Prices 
were higher than a year ago. The demand for both redwood and whitewood sawn 
timber was clearly weaker resulting in a decrease of prices. The supply of logs 
remained tight.


Other Operations
EUR million            Q1/   Q4/   Q3/   Q2/   Q1/ Q1-Q4/
                      2008  2007  2007  2007  2007   2007
Sales 1)               168   188   173   214   234    809
EBITDA 2)               45    67    51    32    60    210
Depreciation,           -4   -31    -6    -5   -10    -52
amortisation and 
impairment charges
Operating profit                                        
Forestry                37    61    43    34    28    166
Energy Department,      38    42    23    19    28    112
Finland
Other and               -2    20     -    59    -9     70
eliminations
Operating profit,       73   123    66   112    47    348
total
                                                        
Special items 3)         4    10     -    71     -     81
Operating profit,       69   113    66    41    47    267
excluding special items

1) Includes sales outside the Group.
2) EBITDA is operating profit before depreciation, amortisation and impairment 
charges, excluding the change in value of biological assets and special items.
3) Special items for the first quarter of 2008 include adjustment to sales of 
disposals in 2007. Special items for the second quarter of 2007 include capital 
gains of EUR 42 million related to the sale of UPM-Asunnot and EUR 29 million 
related to the sale of Walki Wisa. In the fourth quarter, special items include 
a capital gain of EUR 58 million on the sale of port operators Rauma 
Stevedoring and Botnia Shipping, a compensation charge of EUR 12 million 
related to class-action lawsuits in the US, impairment charges of EUR 31 
million related mainly to Miramichi's forestry and sawmilling operations, and 
other restructuring costs of EUR 5 million.

Q1 of 2008 compared with Q1 of 2007

Excluding special items, operating profit for Other Operations was EUR 69 
million (47 million). Sales decreased to EUR 168 million (234 million) due to 
sold businesses in 2007.

The operating profit of Forestry was EUR 37 million (28 million). The increase 
in the fair value of biological assets (growing trees) was EUR 41 million (23 
million). Fellings from the Group's own forests decreased from last year and 
the cost of wood raw material harvested from the Group's forests was EUR 13 
million (26 million).

The operating profit of the Energy Department in Finland was EUR 38 million (28 
million). Hydropower availability was very good, as the water reservoirs in the 
Nordic countries were higher than normal, reducing the average cost of energy 
generation and enabling increased sales outside the company. The Nord Pool 
price of electricity was significantly higher than in the corresponding period 
a year ago.


Associated companies and joint ventures


EUR million             Q1/   Q4/   Q3/   Q2/   Q1/ Q1-Q4/
                       2008  2007  2007  2007  2007   2007
Share of result                                         
after tax
Oy Metsä-Botnia Ab      26     6    19    12    21     58
Pohjolan Voima Oy       -5    -4    -5    -5     -    -14
Other                    1     -     -    -1     -     -1
Total                   22     2    14     6    21     43


Deliveries
                        Q1/    Q4/    Q3/    Q2/    Q1/ Q1-Q4/
                       2008   2007   2007   2007   2007   2007
Paper deliveries                                                    
Magazine papers,      1,136  1,238  1,266  1,189  1,155  4,848
1,000t
Newsprint, 1,000t       636    702    667    683    630  2,682
Fine and speciality     981    977    954    960    968  3,859
papers, 1,000t
Paper deliveries      2,753  2,917  2,887  2,832  2,753 11,389
total
                                                              
Wood products deliveries
Plywood, 1,000 m3       241    239    204    247    255    945
Sawn timber, 1,000 m3   573    537    505    666    617  2,325


Helsinki, 24 April 2008
UPM-Kymmene Corporation
Board of Directors


Financial information
This Interim Report is unaudited.

Consolidated income statement


EUR million                 Q1/        Q1/     Q1-Q4/
                           2008       2007       2007 
Sales                     2,410      2,519     10,035
Other operating income       40         18        200
Costs and expenses       -2,108     -2,119     -8,650
Change in fair               28         -3         79
value of biological assets
and wood harvested
Share of results of          22         21         43
associated companies and 
jointventures
Depreciation,              -199       -215     -1,224
amortisation and 
impairment charges
Operating profit            193        221        483
                                                     
Gains on                      -          2          2
available-for-sale 
investments, net
Exchange rate and fair      -10          3         -2
value gains and losses
Interest and other          -49        -49       -191
finance costs, net
Profit before tax           134        177        292
                                                     
Income taxes                -31        -46       -211
Profit for the period       103        131         81
                                                     
Attributable to:                                     
Equity holders of the       102        131         85
parent company
Minority interest             1          -         -4
                            103        131         81
                                                     
Earnings per share for profit 
attributable to the equity 
holders of the parent company
Basic earnings per         0.20       0.25       0.16
share, EUR
Diluted earnings           0.20       0.25       0.16
per share, EUR


Condensed consolidated balance sheet

EUR million                       31.03.08   31.03.07   31.12.07

ASSETS                                                          
Non-current assets                                              
Goodwill                             1,163      1,514      1,163
Other intangible assets                411        435        392
Property, plant and equipment        6,048      6,435      6,179
Biological assets                    1,121      1,027      1,095
Investments in associated            1,178      1,175      1,193
companies and joint ventures
Deferred tax assets                    252        360        284
Other non-current assets               442        281        333
                                    10,615     11,227     10,639
                                                                
Current assets                                                  
Inventories                          1,420      1,273      1,342
Trade and other receivables          1,791      1,699      1,735
Cash and cash equivalents               98        200        237
                                     3,309      3,172      3,314
                                                                
Assets held for sale                     -        157          -
Total assets                        13,924     14,556     13,953
                                                                
                                                                
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital                          890        890        890
Share premium reserve                    -        826          -
Fair value and other reserves          -53        178         35
Reserve for invested non-restricted  1,067          -      1,067
equity
Retained earnings                    4,492      5,106      4,778
                                     6,396      7,000      6,770
Minority interest                       13         18         13
Total equity                         6,409      7,018      6,783
                                                                
Non-current liabilities
Deferred tax liabilities               748        781        745
Non-current interest-bearing         3,368      3,238      3,384
liabilities
Other non-current liabilities          594        600        624
                                     4,710      4,619      4,753
                                                                
Current liabilities
Current interest-bearing               995      1,068        931
liabilities
Trade and other payables             1,810      1,809      1,486
                                     2,805      2,877      2,417 
Liabilities related to assets held       -         42          -
for sale                                                               
Total liabilities                    7,515      7,538      7,170
                                                                
Total equity and liabilities        13,924     14,556     13,953


Consolidated statement of changes in equity

                          Attributable to equity holders of the parent  
EUR million               Share      Share    Transl-       Fair    Reserve 
                        capital    premium      ation  value and        for    
                                                     reserve    differ-     
other   invested 
                                                ences   reserves       non-
                                                                 restricted
                                                                     equity
Balance at 1                890        826        -89        278          -
January 2007
                                                                           
Translation differences       -          -        -11          -          -
Other items                   -          -          -          -          -
Net investment hedge,         -          -          -          -          -
net of tax
Cash flow hedges                                                           
fair value gains/losses,      -          -          -          9          -
net of tax
transfers from equity,        -          -          -         -8          -
net of tax
Available-for-sale investments
fair value gains/losses,      -          -          -          -          -
net of tax
transfers to income           -          -          -         -2          -
statement, net of tax
Profit for the period         -          -          -          -          -
Total recognised income       -          -        -11         -1          -
and expense for the period
                                                                           
Share-based compensation,     -          -          -          1          -
net of tax
Dividend paid                 -          -          -          -          -
Business combinations         -          -          -          -          -
Total of other changes        -          -          -          1          -
in equity
Balance at 31 March 2007     890        826       -100        278          -
                                                                           
Balance at 1                 890          -       -158        193      1,067
January 2008
                                                                           
Translation differences        -          -       -144          -          -
Other items                    -          -          -          -          -
Net investment hedge,          -          -         35          -          -
net of tax
Cash flow hedges                                                           
fair value gains/losses,       -          -          -         38          -
net of tax
transfers from equity,         -          -          -        -18          -
net of tax
Available-for-sale investments
fair value gains/losses,       -          -          -          -          -
net of tax
transfers to income            -          -          -          -          -
statement, net of tax
Profit for the period          -          -          -          -          -
Total recognised income        -          -       -109         20          -
and expense for the period
                                                                           
Share-based compensation,      -          -          -          1          -
net of tax
Dividend paid                  -          -          -          -          -
Business combinations          -          -          -          -          -
combinations
Total of other                 -          -          -          1          -
changes in equity
Balance at 31 March 2008     890          -       -267        214      1,067


                 Attributable to 
               equity holders of 
                      the parent
EUR million             Retained      Total   Minority      Total
                        earnings              interest     equity
Balance at 1               5,366      7,271         18      7,289
January 2007
                                                                
Translation differences        -        -11          -        -11
Other items                    1          1          -          1
Net investment hedge,          -          -          -          -
net of tax
Cash flow hedges                                                
fair value gains/losses,       -          9          -          9
net of tax
transfers from equity,         -         -8          -         -8
net of tax
Available-for-sale investments
fair value gains/losses,       -          -          -          -
net of tax
transfers to income            -         -2          -         -2
statement, net of tax
Profit for the period        131        131          -        131
Total recognised income      132        120          -        120
and expense for the period
                                                                
Share-based compensation,      -          1          -          1
net of tax
Dividend paid               -392       -392          -       -392
Business combinations          -          -          -          -
Total of other changes      -392       -391          -       -391
in equity
Balance at 31 March 2007   5,106      7,000         18      7,018
                                                                
Balance at 1               4,778      6,770         13      6,783
January 2008
                                                                
Translation differences        -       -144          -       -144
Other items                   -4         -4          -         -4
Net investment hedge,          -         35          -         35
net of tax
Cash flow hedges                                                
fair value gains/losses,       -         38          -         38
net of tax
transfers from equity,         -        -18          -        -18
net of tax
Available-for-sale investments
fair value gains/losses,       -          -          -          -
net of tax
transfers to income            -          -          -          -
statement, net of tax
Profit for the period        102        102          1        103
Total recognised income       98          9          1         10
and expense for the period
                                                                
Share-based compensation,      -          1          -          1
net of tax
Dividend paid               -384       -384          -       -384
Business combinations          -          -         -1         -1
combinations
Total of other             -384       -383         -1       -384
changes in equity
Balance at 31 March 2008  4,492      6,396         13      6,409


Condensed consolidated cash flow statement


EUR million             Q1/    Q1/ Q1-Q4/
                       2008   2007   2007
                                         
                                         
Cash flow from operating activities
Profit for the period   103    131     81
Adjustments, total      152    273  1,390
Change in working      -106   -145   -204
capital
Cash generated from     149    259  1,267
operations
Finance costs, net      -59    -24   -236
Income taxes paid       -40    -48   -164
Net cash from            50    187    867
operating activities
                                         
Cash flow from investing activities
Acquisitions and         -5     -2    -25
share purchases
Purchases of           -175   -201   -673
intangible and 
tangible assets
Asset sales and other     9     21    273
investing cash flow
Net cash used in       -171   -182   -425
investing activities
                                         
Cash flow from financing activities
Change in loans and     -17     -3    -10
other financial items
Dividends paid            -      -   -392
Net cash used in        -17     -3   -402
financing activities
                                         
Change in cash and     -138      2     40
cash equivalents
                                         
Cash and cash           237    199    199
equivalents at 
beginning of period
Foreign exchange         -1      -     -2
effect on cash
Change in cash and     -138      2     40
cash equivalents
Cash and cash            98    201    237
equivalents at end 
of period
                                         
Operating cash flow    0.10   0.36   1.66
per share, EUR


Quarterly information


EUR million               Q1/08      Q4/07      Q3/07      Q2/07      Q1/07
Sales by segment                                                           
Magazine Papers             781        811        847        798        793
Newsprint                   332        378        365        379        348
Fine and Speciality Papers  726        718        694        686        699
Label Materials             249        249        252        260        261
Wood Products               298        297        262        326        314
Other Operations            168        188        173        214        234
Internal sales             -144       -129       -126       -126       -130
Sales, total              2,410      2,512      2,467      2,537      2,519
                                                                           
Operating profit by segment
Magazine Papers              44        -62         34       -339         27
Newsprint                    15         36         44         53         44
Fine and Speciality Papers   31         12         29         39         32
Label Materials               -         10         10         13         18
Wood Products                 8         21         -2         41         32
Other Operations             73        123         66        112         47
Share of results of          22          2         14          6         21
associated companies and 
joint ventures
Operating profit (loss),    193        142        195        -75        221
total
% of sales                  8.0        5.7        7.9       -3.0        8.8
Gains on available-for-sale   -          -          -          -          2
investments, net
Exchange rate and fair      -10         -4         -9          8          3
value gains and losses
Interest and other          -49        -46        -42        -54        -49
finance costs, net
Profit (loss) before tax    134         92        144       -121        177
Income taxes                -31        -63        -25        -77        -46
Profit (loss) for the       103         29        119       -198        131
period
                                                                           
Basic earnings per         0.20       0.06       0.23      -0.38       0.25
share, EUR
Diluted earnings           0.20       0.06       0.23      -0.38       0.25
per share, EUR
Average number of       512,581    514,085    527,012    527,111    523,261
shares, basic (1,000)
Average number of       513,412    515,322    529,530    530,980    527,086
shares, diluted (1,000)
                                                                           
Special items in operating profit 
Special items in operating profit are specified in the divisional reviews on 
pages 5-8.
Magazine Papers               -        -77          -       -371          -
Newsprint                     1          5          -          -          -
Fine and Speciality Papers    -          -          -          -          -
Label Materials               -          4          -          -          -
Wood Products                 -          6          -          -          -
Other Operations              4         10          -         71          -
Share of results of           -          -          -          -          -
associated companies and 
joint ventures
Special items in              5        -52          -       -300          -
operating profit, total
Special items reported        -          -          -          -          -
after operating profit
Special items reported        -        -39          -        -32          -
in taxes
Special items, total          5        -91          -       -332          -
                                                                           
Operating profit,           188        194        195        225        221
excl. special items
% of sales                  7.8        7.7        7.9        8.9        8.8
Profit before tax,          129        144        144        179        177
excl. special items
% of sales                  5.4        5.7        5.8        7.1        7.0
Earnings per share,        0.19       0.24       0.23       0.28       0.25
excl. special items, EUR
Return on equity,           5.9        7.1        6.9        8.5        7.3
excl. special items, %
Return on capital           6.5        6.9        6.8        8.3        7.9
employed, excl. special 
items, %

EUR million            Q1-Q4/
                         2007
Sales by segment             
Magazine Papers         3,249
Newsprint               1,470
Fine and Speciality     2,797
Papers
Label Materials         1,022
Wood Products           1,199
Other Operations          809
Internal sales           -511
Sales, total           10,035
                             
Operating profit by segment
Magazine Papers          -340
Newsprint                 177
Fine and Speciality       112
Papers
Label Materials            51
Wood Products              92
Other Operations          348
Share of results of        43
associated companies and 
joint ventures
Operating profit (loss),  483
total
% of sales                4.8
Gains on available-         2
for-sale investments, net
Exchange rate and fair     -2
value gains and losses
Interest and other       -191
finance costs, net
Profit (loss) before tax  292
Income taxes             -211
Profit (loss) for the      81
period
                             
Basic earnings per       0.16
share, EUR
Diluted earnings         0.16
per share, EUR
Average number of     522,867
shares, basic (1,000)
Average number of     525,729
shares, diluted (1,000)
                             
Special items in operating profit 
Special items in operating profit are specified in the divisional
reviews on pages 5-8.
Magazine Papers          -448
Newsprint                   5
Fine and Speciality         -
Papers
Label Materials             4
Wood Products               6
Other Operations           81
Share of results of         -
associated companies and 
joint ventures
Special items in         -352
operating profit, total
Special items reported      -
after operating profit
Special items reported    -71
in taxes
Special items, total     -423
                             
Operating profit,         835
excl. special items
% of sales                8.3
Profit before tax,        644
excl. special items
% of sales                6.4
Earnings per share,      1.00
excl. special items, EUR
Return on equity,         7.4
excl. special items, %
Return on capital         7.4
employed, excl. special 
items, %


Changes in property, plant and equipment

EUR million            Q1/   Q1/ Q1-Q4/
                      2008  2007   2007
Book value at        6,179 6,500  6,500
beginning of period
Capital expenditure    128   181    644
Decreases               -2   -12    -96
Depreciation          -183  -195   -752
Impairment charges       -     -    -42
Impairment reversal      -     -     12
Translation            -74   -39    -87
difference and 
other changes
Book value at end    6,048 6,435  6,179
of period


Commitments and contingencies

EUR million            31.03.08   31.03.07   31.12.07
Own commitments                                      
Mortgages                    89         94         90
                                                     
On behalf of associated companies and joint ventures
Guarantees for loans         10         11         10
loans
                                                     
On behalf of others
Guarantees for loans          -          1          -
Other guarantees              3          5          3
                                                     
Other own commitments
Leasing commitments          26         26         21
for the next 12 months
Leasing commitments for      86         94         99
subsequent periods
Other commitments            66         80         70


Capital commitments

EUR million          Completion   Total  By 31.12.     Q1/08      After
                                   cost       2007             31.03.08
Pulp mill rebuild,    June 2008     325        226        36         63
Kymi
New bioboiler,        Sep. 2009      75         11         5         59
Caledonian
New Poland factory,   Nov. 2008      90         23        11         56
UPM Raflatac
PM5 quality upgrade,   May 2008      38         14         7         17 
Jämsänkoski
New wood-plastic      Dec. 2008      12          -         -         12
composite mill, 
Germany


Notional amounts of derivative financial instruments

EUR million            31.03.08   31.03.07   31.12.07
Currency derivatives
Forward contracts         5,964      3,968      4,369
Options, bought             121          3         50
Options, written            174          3         60
Swaps                       511        565        529
                                                     
Interest rate derivatives
Forward contracts         4,639      2,851      3,642
Swaps                     2,148      2,542      2,383
                                                     
Other derivatives                                    
Forward contracts            18         12         12
Swaps                         2         12          3


Related party (associated companies and joint ventures) transactions and 
balances

EUR million            Q1/   Q1/ Q1-Q4/
                      2008  2007   2007
Sales to associated     26    15    130
companies
Purchases from         127   103    500
associated companies
Trade and other         26    14     29
receivables at end 
of period
Trade and other         25    28     42
payables at end of period


Key exchange rates for the euro at end of period

        31.03.08   31.12.07   30.09.07   30.06.07   31.03.07
USD       1.5812     1.4721     1.4179     1.3505     1.3318
CAD       1.6226     1.4449     1.4122     1.4245     1.5366
JPY       157.37     164.93     163.55     166.63     157.32
GBP       0.7958     0.7334     0.6968     0.6740     0.6798
SEK       9.3970     9.4415     9.2147     9.2525     9.3462


Basis of preparation

This unaudited financial report has been prepared in accordance with the 
accounting policies set forth in International Accounting Standard 34 on 
Interim Financial Reporting and in the Group's Consolidated Financial 
Statements for 2007. Income tax expense is recognised based on the best 
estimate of the weighted average annual income tax rate expected for the full 
financial year.

Calculation of key indicators

Return on equity, %:

Profit before tax - income taxes
divided by Shareholders' equity (average) 
x 100

Return on capital employed, %:

Profit before tax + interest expenses and other financial expenses
divided by 
Balance sheet total - non-interest-bearing liabilities (average)
x 100

Earnings per share:

Profit for the period attributable to equity holders of parent company
divided by 
Adjusted average number of shares during the period excluding own shares


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, 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. For more detailed information about risk 
factors, see pages 68-69 of the company's annual report 2007.


UPM-Kymmene Corporation

Pirkko Harrela
Executive Vice President, Corporate Communications

DISTRIBUTION
OMX Nordic Exchange Helsinki
Main media
www.upm-kymmene.com