Operating profits for 2005 fell to 190m, compared with 429m in 2004. Pre-tax profits were also cut by more than half to 176m, with sales down 5% to 6.3bn.
As a result, the firm has announced that it is to implement cost-cutting measures, including the removal of uncompetitive capacity. Paper buyers are also being warned that average prices are forecast to be higher this year.
The warning came from UPM president and chief executive Jussi Pesonen (pictured), who said the Finnish labour dispute that hit the country's pulp and paper mills last summer only partially explained the firm's weak result.
Another reason for UPM's poor performance was overcapacity in printing papers.
"To achieve a turnaround, we must take new kinds of action," said Pesonen, who expects the firm's profitability to improve this year.
The cost-cutting measures will include a restructure of UPM's production portfolio.
The company has removed some 350,000 tonnes of paper production capacity since 2001, with a further 120,000 tonnes scheduled for this year.
Meanwhile, UPM has appointed Jyrki Salo as its new chief financial officer with immediate effect.
UPM to curb freefalling profits with cost cuts
UPMs weak financial performance has continued with profits down by more than half and sales also dipping, as the firm announced its year-end results for 2005.
