Apr 25, 2006. /Lesprom Network/. UPM-Kymmene, Finland, reported first-quarter earnings per share of Euro 0.19 (0.39 for the first quarter of 2005), excluding non-recurring items Euro 0.21 (0.20). First-quarter operating profit was Euro 170 million (down by 16.26% compared to 203 million in Q1 2005) excluding non-recurring items Euro 185 million (191 million in Q1 2005). Paper deliveries were 6% up from the same quarter last year (2,633,000 tonnes and 2,478,000 tonnes respectively). Sales were Euro 2,460 million up by 8% compared to 2,278 million in 2005. UPM’s President and CEO Jussi Pesonen comments on the first quarter of 2006: "UPM's result was still weak. High self-sufficiency in resources brought us competitive advantage but the rise in production costs has offset the increase in paper prices. The result, therefore, remained modest. The results of magazine paper and fine paper declined compared to the first quarter last year. The implementation of the three-year profitability programme has started throughout UPM, and this quarter's result confirms our view on the necessity of the programme." "Negotiations with employees related to the profitability programme have started in various UPM locations. The negotiations have commenced in a serious but constructive atmosphere. After negotiations are completed, we will make decisions based on business criteria considering ideas presented in the negotiations. We are preparing for the forthcoming decisions by reviewing alternatives for supporting retraining and re-employment." "Paper demand has developed positively except for the United States. In Europe, growth in demand has been very good. Growth is particularly strong in the emerging markets. In spite of good demand, there continues to be significant overcapacity in coated papers. Average prices are somewhat higher than last year. Price development has been positive particularly in newsprint. However, price development in coated magazine and fine papers has been clearly disappointing." "Second quarter paper deliveries are forecast to increase from the first quarter. The markets for converted products will remain good. In the wood products business, plywood markets continue to be firm whereas the markets for sawn timber, especially whitewood, continue to be oversupplied. The profit for the second quarter is expected to be impacted by planned non- recurring charges related to the programme to restore profitability," says Pesonen. UPM is one of the world's leading producers of printing papers. The company's businesses focus on magazine papers, newsprint, fine and speciality papers, converting materials and wood products. The company has production in 15 countries and an extensive sales network comprising over 170 sales and distribution companies.