"UPM's primary goal at present is to bring profitability up to an acceptable level," said UPM president and chief executive Jussi Pesonen at the Finnish paper manufacturer's annual general meeting, held on 31 March in Helsinki.

Steps to improve profitability are already underway. The firm improved cost-effectiveness and production efficiency in 2004.

In February it increased prices including newsprint and magazine paper, although it has yet to raise fine paper prices in Europe.

Pesonen said that the aim was for the firm to outstrip industry growth. In developed markets the firm will grow through modernising plants or acquisitions.

"UPM will either grow organically or through acquisitions, but in rapidly expanding markets the growth will be primarily organic," he said.

The second paper machine at the Changshu mill in China, which is scheduled to be completed during 2005, was a good example of the firm's investment in growth markets said Pesonen.

In 2004 deliveries by UPM rose 4% to 10.7bn tonnes. According to Pesonen there had been a clear improvement in print media advertising, with direct mail showing especially strong growth.

Although paper deliveries in the first quarter of this year were lower than in the corresponding quarter last year, he still expected deliveries for the year to be higher overall.

Story by Andy Scott