Paper Maker UPM Posts Profit, Plans Price Hike

HELSINKI (AP) -- UPM-Kymmene Corp., the world's largest magazine paper maker, on Wednesday reported a first quarter net profit of euro70 million ($93 million), compared with a year-earlier loss, as sales rose 10 percent.

The net loss in the January through March period of 2009 was euro158 million. Revenue climbed to euro2.04 billion from euro1.8 billion a year earlier, the company said.

UPM said it was emerging from the recession and would raise paper prices as demand and profits grow.

"The average price in euros for all paper deliveries for the second quarter is expected to improve slightly from the first quarter of this year," UPM-Kymmene said. "UPM's target is to increase prices in all new sales agreements."

The company's share price was up 1 percent at euro10.74 ($14.27) in afternoon trading in Helsinki.

CEO Jussi Pesonen gave a mixed review of the company's first quarter performance.

"We seem to have passed the bottom of demand and price cycle in our businesses. Therefore, we expect the operating profit for 2010 to improve clearly from last year. Paper demand in Europe is forecast to recover from 2009 and our paper deliveries are expected to be higher than last year," Pesonen said. "Our profitability continues to be unsatisfactory and everyday efforts to improve the situation will continue."

Like other paper makers in the downturn, UPM has been plagued by tough competition, overcapacity and weakening demand. It has closed plants, cut capacity and laid off more than 1,000 workers in Finland as part of cost-cutting measures that include 1,600 job cuts worldwide.

UPM was also hit by a two-week Finnish stevedores' strike in March that halted most exports as ports closed, costing the company some euro20 million in lost orders and revenue, the company said.

Helsinki-based UPM-Kymmene, one of Europe's largest forest products companies, has 64 plants in 14 countries. It employs 22,800 -- down from 24,000 a year earlier.

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