UPM Intends To Invest Strongly in Second Generation Bio-Diesel

Helsinki, Finland, 31 October 2006 –- UPM will strongly increase its stake in second generation bio-diesel in the next few years and as it prepares to become a significant producer of bio-fuels.

Currently, UPM is developing the business concept and the respective technical solutions. Decisions to invest in the first commercial scale production plant can be expected within the next few years, rather sooner than later. The plant will be located adjacent to one of UPM's paper mill sites in Finland, France, Germany, or the United Kingdom.

"Investments in development of concepts and plants will be significant. The production of bio-fuel is a good fit for UPM since its core business is to add value to the wood raw material. Our aim is to maximise the gain from the biomass-based raw material," states Jussi Pesonen, president and CEO. "The importance of renewable fuels is increasing, and we consider this an opportunity to further utilise our existing value chain and be part of the future development."

The main raw material used in bio-diesel production will be wood-based biomass. UPM is already making versatile use of the wood and uses it efficiently in production of products and energy generation. The bio-fuel production plant adjacent to existing UPM pulp or paper mills would further improve the possibilities to use this wood raw material.

UPM is one of the world's leading forest products groups. The Group's sales in 2005 were EUR 9.3 billion, and it has about 30,000 employees. UPM's main products include printing papers, converting materials, and wood products. The company has production plants in 15 countries. Its main market areas are Europe and North America. UPM's shares are listed on the Helsinki and New York stock exchanges. Further information is available on the company's Web site at www.upm-kymmene.fi