May 30, 2013 / 3:57 PM / 4 years ago

UPDATE 1-Finland's UPM sees steady growth in label business

HELSINKI, May 30 (Reuters) - The world's second-biggest self-adhesive label maker, UPM-Kymmene, expects the unit's sales to grow annually by around 4 percent in coming years, helped by strong Asian demand, and acquisitions could accelerate the pace, an executive said.

The Finnish forestry products group, better known for its troubled magazine paper and newsprint operations, has shifted focus to more profitable businesses such as labels used in food packaging, beverage and shampoo bottles and baggage tags.

UPM says the label market is growing as people in developing countries, especially China, get wealthier and buy more packaged goods.

"We see the global (market) growth at around 4 percent annually, and we will grow in general along with that. If we can find suitable acquisitions, the growth would be faster," Jussi Vanhanen, president of UPM's label business, told Reuters.

"There are not very many companies that we would want to acquire, but of course we have an open mind (to deals), and we have been making a deal per year," he said.

The business unit last year had sales of 1.2 billion euros ($1.56 billion), or 12 percent of UPM's total revenue, and had an underlying operating margin - a measure of profitability - of 6.7 percent, compared to 5.1 percent for the company overall.

It holds around 20 percent of the global self-adhesive label market, second only to Avery Dennison of the United States.

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