UPM-KYMMENE INTERIM REVIEW 1 JANUARY 31 MARCH 2001

U P M - K y m m e n e I N T E R I M R E V I E W 1 3 / 2 0 0 1

UPM-KYMMENE INTERIM REVIEW 1 JANUARY 31 MARCH 2001 Profit before extraordinary items and capital gains EUR 351 million (331 million for 1 3/2000). Earnings per share, excluding capital gains, improved to EUR 1.10 (0.92). Turnover up 11% to EUR 2,488 million. Buying back of own shares continued. Earnings Operating profit for the first quarter was EUR 400 million, compared with EUR 701 million for this period last year. The figure for last year includes EUR 344 million in capital gains from the sale of shares and business operations, whereas there were no such gains for the review period. Excluding net capital gains, operating profit showed an improvement of 12% on last year s corresponding figure of EUR 357 million. Operating profit was improved by higher prices for the company s main products. On the other hand, capacity utilization rates were down on last year due to poorer demand. Operating profit was 16.1% of turnover, the same as for this period last year, excluding net capital gains, and marginally higher than for the last quarter of 2000. The Publication Papers division and chemical pulp produced for internal use improved their operating profits from last year. In both cases the reason was higher sales prices. Operating profit for the Fine Papers division was down due to the higher cost of market pulp and lower capacity utilization rates at the mills. Operating profit for the Converting Materials division was unchanged, but that for the Wood Products division was down due to the fall in prices for sawn timber and the higher cost of logs. Profit before extraordinary items and capital gains was EUR 351 million (331 million, including capital gains 675 million). Financial expenses, net, were EUR 49 million (26 million) and include EUR 21 million (15 million) in dividend income. Earnings per share were EUR 1.10. Return on equity was 18.9% and return on capital employed 16.2%. The corresponding figures last year, excluding net capital gains, were EUR 0.92, 17.8% and 16.8%. Production, deliveries and turnover Paper production by the UPM-Kymmene Group for the first quarter was up 9% at 2,176,000 tonnes (2,003,000). The growth is attributable to the acquisition towards the end of last year of the Miramichi and Changshu paper mills. The average capacity utilization rate was 93% (95). Sawn timber production also showed an increase in the first quarter, reaching 554,000 cubic metres (523,000). The increase is due to the acquisition of the Aureskoski sawmill last August. Plywood production was 211,000 cubic metres (208,000). Deliveries of newsprint and magazine paper totalled 1,328,000 tonnes, up 2% on the first quarter last year. Fine paper deliveries were 3% down at 456,000 tonnes. Turnover was EUR 2,488 million, 11% up on last year s figure of EUR 2,237 million. Personnel The average number of employees for the period was 32,898 (31,113). The number at the end of March was 33,378 (31,234). Capital expenditure and restructuring Gross capital expenditure excluding acquisitions was EUR 244 million (149 million). Share purchases and acquisitions were EUR 149 million ( ). The biggest ongoing investment is the rebuild of PM 8 and construction of a coating line at the Kymi fine paper mill. The project will be completed this autumn at a cost of around EUR 280 million. Lohjan Paperi, which is part of the Converting Materials division, bought Rexam PLC s siliconizing business Rexam Release, which is included in the consolidated figures from 1 March 2001. The acquisition, which cost USD 123 million, comprises three plants in the United States and one in the Netherlands. Last year Rexam Release had a turnover of roughly USD 180 million and a workforce of 600. The Lohjan Paperi group s name was changed to Loparex on 1 April 2001. At the end of the review period UPM-Kymmene bought a sawmill in the province of New Brunswick, Canada. The sawmill s capacity is around 72,000 cubic metres a year. The sawmill supplies wood raw material for the Miramichi mills. Financing The Group s equity to assets ratio at the end of March was 42.2% (47.5) and the gearing ratio 78% (54). Net interest-bearing liabilities increased by EUR 1,465 million to EUR 4,414 million (2,949 million). The increase is due largely to company acquisitions at the end of last year and the beginning of this year. The average rate of interest on the Group s loans was 5.7% (5.2). The net cash flow from operations, before capital expenditure and financing, was EUR 265 million (342 million).

UPM-KYMMENE INTERIM REVIEW 1 3/2001 3 Shares UPM-Kymmene Corporation shares to a value of EUR 1,596 million (2,165 million) were traded on the Helsinki Exchanges during the first quarter. The corresponding figure for the New York Stock Exchange was EUR 40 million (55 million). The highest quotation was EUR 36.80 in January and the lowest EUR 27.99 in March. During the review period a total of 65,598 shares were subscribed under the FIM 960 million convertible bond issue of 1994. The total number of shares in issue at the end of March was 247,138,717. Share subscriptions under convertible bonds and options offered to key personnel could raise the number of shares to a maximum of 256,833,109. By 27 February 2001, 12.9 million own shares, this being the maximum number permitted by decision of the Extraordinary General Meeting of 13 June 2000, had been bought back for EUR 394.0 million, at an average price per share of EUR 30.54. The Annual General Meeting held on 22 March 2001 approved a proposal to lower the company s share capital by invalidating these 12.9 million shares. The meeting also approved a proposal for a new share buy-back programme covering a maximum of 12.3 million shares. In accordance with this decision, by the end of March a total of 244,600 shares had been bought back for EUR 7.8 million, at an average price per share of EUR 31.74. By 9 April 2001, the number of shares bought back had reached 1,175,398, at a total cost of EUR 37.6 million and an average price of EUR 32.03 per share. In February, the Board of Directors decided to apply for a listing on the Helsinki Exchanges for the company s Class A share option warrants issued in 1998. The Class A warrants, total 1,897,500, have been traded since 2 April 2001. Dividend The Annual General Meeting of 22 March 2001 approved the Board of Directors proposal for a dividend of EUR 1.50 per share. The dividend was paid on 3 April 2001. The EUR 371 million paid out as dividend is entered under current liabilities at the end of March. Board of Directors The Annual General Meeting elected Donna Kaufman, a Canadian lawyer, and Michael Bottenheim, former Managing Director of Lazard Brothers, as new members of the Board of Directors. The board s chairman Tauno Matomäki and members Matti Kavetvuo and Jouko K. Leskinen stepped down. At its first meeting, the board elected as its chairman Vesa Vainio, who is Chairman of Nordea Plc, and as its vice chairmen Gustaf Serlachius, Chairman of the Board of the Gösta Serlachius Fine Arts Foundation, and Carl H. Amon III, a partner in the international law firm White & Case LLP. Litigation In March 1999, the European Commission presented UPM- Kymmene with a Statement of Objection alleging participation by the company s predecessors in a price cartel concerning newsprint during the period 1989 1995. The company s response to the allegation is still being considered by the Commission. No provision has been made in this respect. The company has no other significant matters of litigation. Market outlook Economic growth in the United States began to slow down towards the end of last year and this trend continued during the review period. Economic growth in Europe, the company s main market, is, however, expected to continue at a reasonable level, maintaining conditions for satisfactory demand for the company s main products. Prices for magazine papers and newsprint rose in Western Europe at the turn of the year, and long-term delivery contracts will add stability to earnings. The fall in market pulp prices is putting pressure on fine paper prices. Bringing supply into line with demand will require further production cut-backs, particularly for fine paper but also for coated magazine paper. For converting materials, deliveries and sales prices are forecast to remain more or less unchanged. Prices for sawn timber have continued to fall as a result of over-supply, but the prospects on the plywood market are expected to remain good.

4 UPM-KYMMENE INTERIM REVIEW 1 3/2001 Turnover and operating profit by division T u r n o v e r Operating profit 1) 1 3/2001 1 3/2000 Change 1 12/2000 1 3/2001 1 3/2000 Change 1 12/2000 M M % M M % M % M M % Publication Papers 1,071 916 16.9 4,132 164 15.3 126 13.8 38 560 13.6 Fine Papers 424 390 8.7 1,617 43 10.1 56 15.8 13 201 13.4 Converting Materials 506 475 6.5 1,940 36 7.1 37 7.8 1 132 6.8 Wood Products 380 354 7.3 1,490 16 4.2 24 6.8 8 75 5.0 Resources Chemical pulp 184 163 12.9 731 130 47.8 105 36.8 25 480 42.3 Forest 334 308 8.4 1,148 9 2.7 11 3.6 2 55 4.8 Energy 106 92 15.2 352 30 28.3 14 15.2 16 69 19.6 Other 88 94 6.4 354 28 16 12 12 Internal sales 605 555 9.0 2,181 Total 2,488 2,237 11.2 9,583 400 16.1 357 16.0 43 1,560 16.3 Capital gains, net 344 344 300 Operating profit, total 400 16.1 701 31.3 301 1,860 19.4 Contributions from internal sales Chemical pulp 145 122 539 Forest 279 257 955 Energy 82 75 290 1) Calculation of divisional operating profit percentages does not include results of associated companies. DIVISIONAL REVIEWS Publication Papers The division s turnover was up 17% on the first quarter last year. Deliveries rose by 2% and the capacity utilization rate was 94% (94). Operating profit was 30% higher than for this period last year and was also better than the last quarter of 2000. Operating profit benefited from price rises for products at the turn of the year but was adversely affected by lower capacity utilization rates for coated magazine paper, particularly at the company s mills in North America. Demand in Western Europe grew by 3% for coated magazine paper and by 2% for uncoated. In the United States, demand for magazine paper declined by about 1%. Demand for newsprint in Western Europe fell by 1%. Sales prices for the division s products were almost 10% higher than this period last year in Western Europe, while in the United States magazine paper prices were about 5% higher. Prices for newsprint and magazine papers in Europe have been agreed largely at present levels up to the end of the year. Fine Papers First-quarter turnover was 9% up on last year. Deliveries were 3% down and the capacity utilization rate was 88% (97). Operating profit was smaller than for this period last year, mainly because of the higher cost of chemical pulp and curtailment of production in response to the market. Profitability was about the same as for the final quarter of last year. The order backlogs in Western Europe for both coated and uncoated fine papers were unsatisfactory during the review period and production has had to be curtailed. It has not been necessary to restrict production at the mill in China. In Western Europe demand for uncoated fine paper declined by 2% and for coated by 4%. Prices for both coated and uncoated fine papers held up well during the period, although there has been pressure to lower prices. Prices in Asia are strengthening. Compared with the first quarter last year, prices for uncoated fine paper in Western Europe were 19% higher and for coated fine paper 9% higher.

UPM-KYMMENE INTERIM REVIEW 1 3/2001 5 Converting Materials The division s turnover was up by 7%. Profitability was the same as for this period last year but much better than for the last quarter of 2000. Growth in demand for self-adhesive labelstock was sluggish in Western Europe and the United States but has remained good in the Asia-Pacific region. Demand for label papers has been steady. Siliconized papers have continued to be in good demand in Western Europe, but in the United States the market is weak. Order stocks for packaging papers and materials have remained strong and prices steady, but demand and prices for envelope papers are weaker. Wood Products Turnover was up 7%, largely due to company acquisitions. Operating profit, however, was down by a third due to lower sawn timber prices and the higher cost of logs. European timber markets are affected by over-supply due to increased production, despite the fact that building activity, particularly structural repairs, has remained brisk. For plywood, supply was in line with demand during the period. Good profitability was maintained by raising both efficiency levels and product prices. Business in wood-based building supplies was good. Timber deliveries from the sawmills were up 12% and plywood deliveries up 4%. Resources Chemical pulp, Forest, Energy The average price of long-fibre market pulp fell from USD 710/ tonne during the final quarter last year to USD 660 during the review period. This compares with USD 630 for the first quarter of last year. Since the end of the review period, the price has fallen to under USD 600/tonne. Both suppliers and buyers stocks have fallen; however, with suppliers stocks still high, pulp prices are under pressure. UPM-Kymmene s own pulp production was 554,000 tonnes (499,000). The average capacity utilization rate was 98% (98). The increase in production is attributable to the Miramichi mill. Miramichi s 55,000 tonnes of pulp ( ) is included in the Publication Papers division. A further 122,000 tonnes of pulp (123,000) is included in the Fine Papers division and 97,000 tonnes (53,000) in the Converting Materials division. Operating profit for pulp production other than that for the divisions was EUR 130 million (105 million), which includes EUR 42 million (45 million) in profit attributable to associated companies. Almost all this chemical pulp and that obtained through associated companies is supplied to the Group s own paper mills at market price. The volume of wood purchased from private forests in Finland was 4% higher than in the first quarter last year. Wood deliveries to the mills during the period totalled 6.2 million cubic metres. The cost of logs was higher than at this time last year, but pulpwood prices have remained unchanged. The Group s electricity consumption in Finland rose by 1%. Occasional sales of electrical power on the Nordic electricity exchange had a positive impact on profitability. Helsinki, 24 April 2001 Board of Directors 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, 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.

6 UPM-KYMMENE INTERIM REVIEW 1 3/2001 This Interim Review is unaudited Earnings EUR million 1 3/2001 1 3/2000 Change 1 12/2000 Turnover... 2,488 2,237 251 9,583 Other operating income... 6 351 345 539 Costs and expenses... 1,963 1,780 183 7,741 Share of results of associated companies... 47 42 5 153 Depreciation and value adjustments... 178 149 29 674 Operating profit... 400 701 301 1,860 % of turnover... 16.1 31.3 15.2 19.4 % of turnover, excluding net capital gains... 16.1 16.0 0.1 16.3 Financial income and expenses... 49 26 23 143 Profit before extraordinary items... 351 675 324 1,717 % of turnover... 14.1 30.2 16.1 17.9 Extraordinary income... 230 Extraordinary expenses... 30 Income tax on extraordinary items... 58 Profit after extraordinary items... 351 675 324 1,859 Income taxes... 77 192 115 494 Minority interest... 1 Profit for the period... 274 483 209 1,366 Balance sheet EUR million 31.03.2001 31.03.2000 Change 31.12.2000 Intangible assets... 177 100 77 156 Goodwill on consolidation... 588 214 374 548 Tangible assets... 7,767 6,585 1,182 7,561 Investments held as non-current assets... 1,603 1,666 63 1,619 Own shares... 8 236 228 279 Non-current assets, total... 10,143 8,801 1,342 10,163 Stocks... 1,355 1,099 256 1,184 Receivables... 1,720 1,621 99 1,538 Cash in hand and at bank... 300 319 19 228 Total assets... 13,518 11,840 1,678 13,113 Shareholders equity... 5,679 5,712 33 6,156 Minority interest... 20 20 0 19 Provisions... 146 118 28 130 Deferred tax liability... 725 831 106 732 Non-current liabilities... 4,156 2,898 1,258 3,702 Current liabilities... 2,792 2,261 531 2,374 Total equity and liabilities... 13,518 11,840 1,678 13,113 Key figures 1) 1 3/2001 1 3/2000 Change 1 12/2000 Earnings per share, EUR... 1.10 1.86 0.76 4.77 Diluted earnings per share, EUR... 1.09 1.83 0.74 4.70 Cash flow from operations per share, EUR... 1.07 1.32 0.25 6.38 Return on equity, %... 18.9 35.9 17.0 21.9 Return on capital employed, %... 16.2 32.0 15.8 20.2 Equity to assets ratio at end of period, %... 42.2 47.5 5.3 46.0 Gearing ratio at end of period, %... 78 54 24 69 Equity per share at end of period, EUR... 22.97 21.11 1.86 23.45 Net interest-bearing liabilities at end of period, EUR million... 4,414 2,949 1,465 4,071 Gross capital expenditure, incl. acquisitions, EUR million... 393 149 244 2,175 % of turnover... 15.8 6.7 9.1 22.7 Gross capital expenditure, excl. acquisitions, EUR million... 244 149 95 571 % of turnover... 9.8 6.7 3.1 6.0 Personnel at end of period... 33,378 31,234 2,144 32,755 No. of shares, average (1,000)... 248,464 259,414 10,950 256,817 No. of shares at end of period (1,000)... 246,894 259,478 12,584 250,647 1) For purposes of calculating key figures, own shares have been eliminated from shareholders equity and the numbers of shares.

UPM-KYMMENE INTERIM REVIEW 1 3/2001 7 This Interim Review is unaudited Cash flow EUR million 1 3/2001 1 3/2000 Change 1 12/2000 Operating profit... 400 701 301 1,860 Capital gains and other adjustments to operating profit... 134 231 365 153 Change in working capital... 235 109 126 13 Financial income and expenses and direct taxes paid... 34 19 15 361 Cash from operating activities... 265 342 77 1,639 Company acquisitions... 126 126 281 Other investments and purchases of tangible and intangible assets... 255 147 108 592 Asset sales and decrease in non-current receivables... 21 216 195 401 Termination of Champion agreement... 143 Cash provided by (used in) investing activities... 360 69 429 329 Cash flow before financing activities... 95 411 506 1,310 Dividends paid... 304 304 557 Purchases of own shares... 115 115 279 Change in loans and other financial items... 280 110 390 562 Cash provided by (used in) financing activities... 165 414 579 1,398 Change in cash and cash equivalents... 70 3 73 88 Contingent liabilities EUR million 31.3.2001 31.3.2000 Change 31.12.2000 On own behalf... 938 545 393 1,073 On behalf of associated companies... 71 77 6 73 On behalf of others... 7 7 8 Pension liabilities... 3 8 5 3 Leasing commitments... 71 77 6 80 Values of open derivative agreements Currency derivatives Market value Market value Nominal value Nominal value EUR million 31.3.2001 31.3.2000 31.3.2001 31.3.2000 Forward contracts... 19 62 2,541 1,267 Options, bought... 1 3 42 119 Options, written... 4 95 179 Swaps... 19 39 312 340 Interest rate derivatives Market value Market value Nominal value Nominal value EUR million 31.3.2001 31.3.2000 31.3.2001 31.3.2000 Forward contracts... 7 4 6,407 3,234 Options, bought... 0 0 Options, written... 0 0 Swaps... 34 80 2,393 2,924 Other derivatives 1) Market value Market value Nominal value Nominal value EUR million 31.3.2001 31.3.2000 31.3.2001 31.3.2000 Forward contracts... 5 1 78 10 1) Other derivatives include pulp, paper and electricity derivatives.

8 UPM-KYMMENE INTERIM REVIEW 1 3/2001 This Interim Review is unaudited Quarterly figures EUR million I/2001 IV/2000 III/2000 II/2000 I/2000 Turnover Publication Papers... 1,071 1,234 1,022 960 916 Fine Papers... 424 426 430 371 390 Converting Materials... 506 485 495 485 475 Wood Products... 380 390 351 395 354 Resources Chemical pulp... 184 204 198 166 163 Forest... 334 309 267 264 308 Energy... 106 96 84 80 92 Other... 88 74 91 95 94 Internal sales... 605 586 540 500 555 Turnover, total... 2,488 2,632 2,398 2,316 2,237 Operating profit Publication Papers... 164 145 1) 163 126 126 Fine Papers... 43 34 1) 64 47 56 Converting Materials... 36 19 45 31 37 Wood Products... 16 11 1) 11 29 24 Resources Chemical pulp 2)... 130 139 140 96 105 Forest... 9 16 17 11 11 Energy... 30 23 18 14 14 Other... 28 20 10 26 16 Total, excluding net capital gains... 400 407 468 328 357 % of turnover... 16.1 15.5 19.5 14.2 16.0 Capital gains, net... 7 29 8 344 Operating profit, total... 400 400 439 320 701 Dividend income... 21 1 34 15 Other financial income and expenses... 70 79 39 34 41 Profit before extraordinary items... 351 322 400 320 675 Extraordinary items... 142 Profit after extraordinary items... 351 322 400 462 675 Income taxes... 77 108 97 97 192 Minority interest... 0 1 0 0 0 Profit for the period... 274 215 303 365 483 1) Includes non-recurring charges of EUR 13 million for the Publication Papers division, EUR 14 million for the Fine Papers division, and EUR 9 million for the Wood Products division. 2) Includes the Group s share of the results of associated companies... 42 46 52 28 45 Earnings per share, EUR... 1.10 0.88 1.17 0.86 1.86 Earnings per share excluding capital gains, EUR... 1.10 1.03 1.25 0.88 0.92 Deliveries and production I/2001 IV/2000 III/2000 II/2000 I/2000 Deliveries Publication Papers (1,000 t)... 1,328 1,584 1,363 1,299 1,299 Fine Papers (1,000 t)... 456 456 466 438 470 Production Paper (1,000 t)... 2,176 2,222 2,163 1,897 2,003 Sawn timber (1,000 m 3 )... 554 594 470 530 523 Plywood (1,000 m 3 )... 211 218 165 202 208 Chemical pulp (1,000 t)... 555 527 524 415 499 Key exchange rates for the euro I/2001 IV/2000 III/2000 II/2000 I/2000 USD... 0.8832 0.9305 0.8765 0.9556 0.9553 CAD... 1.3904 1.3965 1.3198 1.4157 1.3879 JPY... 110.74 106.92 94.94 100.57 98.53 GBP... 0.6192 0.6241 0.5967 0.6323 0.5985 SEK... 9.1570 8.8313 8.5265 8.4210 8.2825 Paper: NOVAtech Premium Silk 135 g/m 2 produced by Nordland Papier AG, a member of the UPM-Kymmene Group UPM-Kymmene Corporation, P.O. Box 380, 00101 Helsinki, Finland. Tel. +358 204 15 111, fax +358 204 15 0308, 204 15 110, http://www.upm-kymmene.com