UPM-Kymmene has reported interim review figures for the period January to June 2001, showing that although turnover rose during the period, operating profits for the second quarter, particularly in the fine paper segment, suffered a significant drop.


Chief executive Juha Niemel said he expected to "see no improvement in paper demand in the near future, as economic growth has slowed in some of the companys most important markets."


Niemel said he expected the 2.24bn acquisition of Haindl to be cleared by the EU competition authorities, "without the need for further divestments to be made".


Group turnover for the first-half period was up 10% on last years figure, rising to 3bn (E5bn).


Profits before extraordinary items and net capital gains fell by some 5% during the period to 387m.


"Higher prices in publication papers helped operating profits, but operating profits in the fine papers market fell due to lower capacity usage," said Niemel.


Operating profits in the fine paper division fell by some 21% to just over 50m for the period on last years figure.


UPM-Kymmene has also announced that it is to invest some 37m in renewing PM1 at its Rauma mill, which will increase the machines capacity by some 50,000 tonnes to 300,000 tonnes per annum.


Paper production for the first-half of the year increased by 7% to over 4m tonnes, mainly attributable to the acquisitions of the Miramichi and Changshu paper mills.


Deliveries of newsprint and magazine paper also increased by some 5% on the first half of the year to over 2.7m tonnes, while fine paper deliveries suffered a 1% drop to just over 900,000 tonnes.


Story by Andy Scott