Niemels resignation was accepted by the board and will take effect immediately, as part of the companys reorganisation and succession plan of its executive team announced at the end of last year.

At the time there was no indication Niemel would resign. Senior executive vice president and chief operating officer Jussi Pesonen has replaced him.

Upon being questioned during UPMs results press conference, Pesonen declined to elaborate further on Niemels sudden departure.

Niemel had been 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 to current price levels and the strength of the euro.

UPM reported sales of 6.7bn (9.9bn), 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 created non-recurring costs of 31m.

Profits before extraordinary items also 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.

Current order book levels were slightly stronger than this time last year, Pesonen said.

Story by Andy Scott