The sawmiller’s sales totalled €688m (2011: €720m).

Metsä said efficient control of costs and raw materials, combined with sales of value-added products contributed to the better operating results.

The company blamed higher raw material costs, decreasing end product prices and production shutdowns for the low profitability in the sawn timber business.

Plywood product sales continued to be weak but profitability improved compared with the previous year due to more added-value products and positive price development.

Metsä Group’s wood supply business recorded €2m operating profits from sales of €1.14bn. In total, the group had operating profits of €181m (2011: €229m).

Meanwhile, UPM has launched arbitration proceedings against Metsä Group’s parent company Metsäliitto Co-operative in connection with the latter’s divestment of a 24.9% holding in Metsä Fibre Oy to Itochu Corporation for €472m.

As part of the transaction, Metsäliitto exercised its option to purchase UPM’s 11% ownership in Metsä Fibre for a previously agreed €150m.

But UPM is now claiming €58.5m damages from Metsäliitto and Metsä Board, as well as the payment of a further €58.5m due to Metsäliitto allegedly unfairly benefiting from the divestment at the expense of UPM.

UPM’s case is based on an alleged breach of a clause in Metsä Fibre’s shareholders’ agreement signed in 2009. Metsäliitto believes the claim is unfounded.