UPM Annual Report 2016

Contents

UPM Group

2 UPM in brief 4 Year 2016 in brief 6 Review by the President and CEO 8 UPM in transformation

Strategy 10 Grow with Biofore – UPM’s strategic focus areas 12 Performance improvement and transformation continued in 2016 14 Responsibility is good business 16 UPM as an investment

Annual General Meeting

17 UPM renewed its long-term financial targets 18 Operations are guided by the Biofore strategy 20 Changing operating environment 22 Risks and opportunities

UPM-Kymmene Corporation will hold its Annual General Meeting on Wednesday 29 March 2017 at 14:00 (EET), at Messukeskus, Messuaukio 1, 00520 Helsinki, Finland. Instructions for those wishing to attend are given in the notice to the meeting, which is available on the company’s website at www.upm.com.

Businesses 24 UPM Biorefining

28 UPM Energy 30 UPM Raflatac 32 UPM Specialty Papers 34 UPM Paper ENA 36 UPM Plywood 38 Innovation and R&D

Dividend

Stakeholders

40 Our people 44 Driving continuous improvement in safety 46 Our stakeholders

The Board of Directors has decided to propose to the Annual General Meeting that a dividend of EUR 0.95 per share be paid for the 2016 financial year. The dividend will be paid to the shareholders who are registered in the company’s shareholder register held by Euroclear Finland Ltd. on 31 March 2017, which is the record date for the dividend payment. The Board of Directors proposes that the dividend will be paid on 12 April 2017. Financial information in 2017

52 Continuous dialogue and collaboration with customers 54 UPM’s value creation also generates tax revenues 56 Product stewardship 58 Sustainable forestry 59 Responsible sourcing throughout the entire supply chain 62 Resource-efficient production 64 Responsible water use 66 Climate actions and energy efficiency 68 Circular economy at UPM 70 Value creation

UPMwill publish the financial reports in 2017 as follows:

The InterimReport for January–March (Q1) on 25 April 2017 The InterimReport for January–June (Q2) on 25 July 2017 The InterimReport for January–September (Q3) on 24 October 2017

Governance 72 Our governance 82 Board of Directors 84 Group Executive Team 86 GRI content index – short version 88 Independent Practitioner’s Assurance Report

Accounts for 2016 89 Contents

166 Financial information 2007–2016 168 More on resposibility 170 Competitive businesses, strong market positions 173 Addresses 175 Annual General Meeting

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CONTENTS

ACCOUNTS

UPM Annual Report 2016 174

UPM Annual Report 2016 175