Niemels resignation was accepted by the board and will take effect immediately.

At the end of last year the company announced a reorganisation and succession plan as part of changes to its corporate management team.

Senior executive vice president and chief operating officer Jussi Pesonen will replace him.

Niemel had been in the role of president and chief executive since 1996, when UPM and Kymmene merged, and during his tenure had overseen the acquisition of Haindl and its foray into China.

In reporting UPMs results for 2003, Pesonen said the weak market situation for the third year in succession had left the company with unacceptable profitability levels.

Pesonen said the current economic situation showed no signs of recovery in the main markets, with operating profits for the first quarter of 2004 set to be lower than last year.

This he said was due current price levels and the strength of the Euro.

UPM reported sales of 6.7bn (Euro9.9bn), a fall of 5% on the previous year, with lower paper prices and the strength of the Euro being cited as reasons.
Operating profits fell 26% to 537m, while non-recurring restructuring costs amounted to 22m.

The failed MACtac acquisition also caused non-recurring costs of 31m.

Profits before extraordinary items fell to 383m, a drop of 29% on 2002.

The company said the economic recovery in Europe was forecast to continue for 2004, which should lead to improvements in paper demand, although this would vary by grade.

Prices for fine papers are expected to strengthen, but magazine paper prices will remain largely unchanged in Europe during the first quarter, whilst in the US they will increase.

Story by Andy Scott