In 2006 structural changes occurred in UPM

Feb 02, 2007. /Lesprom Network/. In 2006, UPM (Finland) underwent structural changes and implemented an investment programme at the UPM Chudovo and Pestovo mills in Russia. As a result of organizational and financial restructuring of its Russian subsidiary a new company ООО UPM-Kymmene was established, consolidating the company shared business services. During 2006 in Russia, UPM focused on developing its logging company ZAO Tikhvinsky Komplexny Lespromkhoz. One of the goals of the development programme has been getting the forest management and wood sourcing practices of the company to fulfil the criteria of international forest certification standards. By the end 2006, the external auditing company SGS Vostok Limited conducted an audit required for the FSC forest management certificate. The auditor recommended to FSC's decision making bodies to grant the certificate. UPM will continue to develop Tikhvinsky. The objective is to define the economically and ecologically efficient best practices for the management of its forests in Russia. Also in December 2006, UPM’s Russian forestry and wood sourcing organisation successfully passed the FSC chain of custody audit and is now expecting the certificate. In September 2006, Greenpeace published a report claiming that UPM was receiving illegal wood from Russian Karelia. In October, UPM performed wood supplier and field checks in the region in question to ensure that the wood was legally procured. DNV (Det Norske Veritas) attended the field audit to verify the results. The investigation found that UPM’s suppliers had performed in accordance with the felling permits and technical instructions, and they had complied with Russian law. In 2006, UPM carried out 150 supplier checks covering 252 different logging sites. These suppliers accounted for 85% of the wood procured in Russia. No serious breaches of contract were reported. The checks found 30 % of the sites had minor non-conformities related to documentation, site management, health and safety and logging practices. Corrective actions have been agreed with the suppliers concerned. Sales of Paper and Converting Materials Supply volumes of UPM magazine papers increased in 2006 following the growth of the Russian printed periodicals market. This market is rapidly developing now and is far from being saturated. The following market development factors allowed UPM, on the one hand, to raise sales volumes considerably, and, on the other hand, diversify and expand the range of products and services. In 2006, the Russian labelstock market grew and UPM Raflatac was successful on the market. Sales of filmic materials hit record high. UPM Raflatac’ main task for 2007 will be to offer a maximum variety of specialized materials and a reliable service to its clients. Main Walki Wisa sales volumes fell on packaging materials for food industry, particularly for butter, and metal industry. 2006 was a favourable year for UPM’s packaging materials. The Postac company (a subsidiary of Bong Suomi OY) launched at the mill in Kaluga the envelop manufacture of UPM Letter paper. It gained a considerable share of the Russian envelop market and is eager to increase purchase volumes of UPM Letter in the coming years. Additionally, UPM carried out trial shipments of a consignment of moisture-resistant (not alkaline-resistant) paper UPM Labelcoat LC with reduced Cobb indicator (20–22%). This paper is manufactured at the UPM mill in Jamsankoski, Finland, and is used in labeling. While commenting on 2006 results for UPM in Russia, Arto Juvonen said: "2006 was not an easy year for us in Russia. We worked hard to lay down a foundation for future. I look at the future with confidence. We have a professional team and we have our clients and partners who are interested in developing joint projects."