Feb 01, 2007. /Lesprom Network/. UPM’s president and CEO Jussi Pesonen comments on the financial review 2006: "UPM’s operating profit improved clearly over the last year and the profitability of all business areas developed well. In the spring, UPM launched a profitability programme that improved the company’s competitiveness in the paper industry and laid the foundation for sustainable profitability. In 2006, UPM Raflatac developed into a major global business and the reorganization of the wood products division had a positive impact on the business area’s profitability. UPM made good progress.” "The year was a turning point for UPM, but the ongoing industry transformation is not over. The forest industry’s business environment will continue to be challenging. Only efficient production and supply can guarantee future success. UPM got off to a good start in this race last year.” "What’s critical is that customer deliveries from the closed, unprofitable paper machines were successfully transferred to UPM’s other machines. During the year, mill productivity improved and we can use our own capacity more effectively and profitably than before,” says Mr. Pesonen. "We expect the group’s profits to grow this year. Despite the increase in wood, raw material and energy prices, the increase in the company's overall costs is expected to increase moderately, 1-2%. This year, the annual cost savings of the profitability programme are estimated to amount to Euro 110 million.” “Demand forecasts are largely positive across the board. Demand for printing papers is forecast to grow somewhat from last year. The strongest growth in demand will be in emerging markets. In North America, weak demand is expected to continue. We expect paper deliveries to increase over last year. Average paper price is slightly higher in the first quarter of 2007 than that of the fourth quarter of 2006.” “Demand for self-adhesive labelstock is expected to grow in all markets and prices are forecast to remain stable. Demand for industrial wrappings is also expected to grow slightly. In wood products demand for plywood and sawn timber will remain good,” says president and CEO Pesonen.