The Finnish paper-maker plans to cut 17% of its coated magazine paper capacity and 12% of its coated fine paper capacity in Europe.

UPM president and chief executive Jussi Pesonen said the programme was a response to the company's need to restore profitability, and that it would affect all of its operations.

"In this kind of business environment sustainable profitability improvement requires new thinking and more drastic measures than before," said Pesonen.

Most of the mills affected will be in Finland. A spokesman for UPM said the effects of the cost-saving programme would be minimal in terms of UK production.

He added the announcement had nothing to do with last year's labour dispute in Finland, more with general overcapacity in the country, and the company's need for "financial fitness".

Continuous improvement programmes taking place across the firm's production facilities will remain in place for the foreseeable future, said the spokesman.

As part of the rationalisation, UPM plans to exit the "brown sack" paper market.

It also intends to begin outsourcing various operations. Negotiations are also expected that to start soon that will affect a further 400 jobs.

UPM will take a 89m fixed asset write-off in the
second quarter of this year.

UPM's proposals

- The closure of the Voikkaa mill. It produces 410,000 tonnes per year of coated magazine grades

- The closure of Kymi paper machine 7, which produces 150,000 tonnes per year of coated fine paper

- The closure of the firm's Tervasaari paper machine 6 and the old pulp line, which produces 60,000 tonnes per year of semi-alkaline pulp