Global Forest and Paper Company UPM Selects IBM as Information Technology Delivery Partner

IBM (NYSE: IBM) today announced that UPM, one of the world's leading manufacturers of printing papers, is expanding its business relationship with IBM in a 6-year IT development contract. The agreement was signed on October 5th, and work begins on the project in November 2006.

IBM will manage the completion of UPM's ongoing Supply Chain project, provide Application Management Services for global supply chain applications and support to build the future UPM Supply Chain Application Centre.

IBM has been involved in UPM's Supply Chain program since 2003, supporting UPM with consulting and application implementation services.

"We consider this contract as a major step in our IT strategy implementation. The partnership with IBM gives us the opportunity to establish our global IT delivery model in a short timeframe. Applying the best-practice-model of application management by IBM also gives us the confidence that the future IT delivery model will be efficient and serve our business in the best way possible," says Conrad Frede, Chief Information Officer of UPM.

To support the new service delivery model, IBM will establish a Supply Chain Application Centre together with UPM. A team of 40 UPM IT experts will join IBM to further develop, roll-out and maintain a portfolio of applications that will assist UPM to respond quickly to customer and market changes and help improve the company's supply chain.

"A key challenge for many forest and paper companies is to remain nimble and responsive to their clients' needs in a fiercely competitive environment," says Juha Hulkkonen, Global Business Services Country Manager, IBM Finland. "UPM has an ambitious goal to take their operational effectiveness to new heights amid those challenges. Tapping into IBM's experience in transforming our own supply chain will help pave the way for this important project."

About UPM:

UPM is one of the world's leading forest products groups. The Group's sales in 2005 were EUR 9.3 billion, and it has over 31,000 employees. UPM's main products include printing papers, converting materials and wood products. The company has production plants in 15 countries and its main market areas are Europe and North America. UPM's shares are listed on the Helsinki and New York stock exchanges. www.upm-kymmene.com