UPM Annual Report 2016

In brief

Strategy

Businesses

Stakeholders

Governance

Accounts

Global businesses – local presence

UPM’s sales by market 2016 EUR 9,812 million

12,000 customers in 120 countries

Financial performance

54 production plants in 12 countries

Strong cash flow

Top performance

Attractive dividend

85,000 shareholders in 40 countries

63% Europe

Comparable EBIT

Operating cash flow

Dividend (proposal)

13% North America

1,143m

1,686m

507m

18% Asia

EUR

EUR

EUR

+25%

+42%

+27%

Comparable ROE 10.9% +1.4pp

19,300 employees in 45 countries

55,000 suppliers in 70 countries

Industry-leading balance sheet

6% Rest of the world

Net debt reduction EUR 969m, –46%

Net debt/EBITDA 0.73x

Employee engagement 69% +3pp

LTA frequency 3.7 –6%

The UPM Code of Conduct lays the foundation for responsible business operations and continuous improvement. % of active employees completed Code of Conduct training 97% +6pp

Focused investments

Responsibility performance

Capital expenditure EUR 325m Attractive returns reached 80% of the EUR 200m EBITDA target set for the first wave of growth projects

5/6 business areas achieved their financial targets

Engaged, high-performing people implement the Biofore strategy and drive short- and long-term success.

Ensuring a safe working environment and safeguarding for employees and everyone working for UPM.

Share of certified wood 84% +0pp

Supplier Code qualified supplier spend 80% +1pp

Share of ecolabelled products 69% –1pp

Read more: www.upm.com/investors

Forest certification is an excellent tool for promoting sustainable forestry.

Ecolabels help customers and consumers to make responsible choices and promote transparency.

Transparent supplier requirements form the basis of responsible sourcing throughout the entire supply chain.

EVENTS IN 2016

2 FEBRUARY UPM Board of Directors approved revised Code of Conduct 8 FEBRUARY Winfried Schaur appointed Executive Vice President, UPM Paper ENA

18 APRIL UPM Biofuels gained ISCC PLUS certification for bio- based applications

22 JUNE Antti Jääskeläinen appointed Executive Vice President, UPM Raflatac

1 OCTOBER UPM Raflatac’s new global operating model UPM Paper Asia renamed as UPM Specialty Papers

3 NOVEMBER UPM Paper ENA’s plan to reduce 305,000 tonnes of graphic paper capacity in Europe

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19 JANUARY UPM joined a group of the world's top 50 sustainability leaders in the Global Compact LEAD forum 21 JANUARY UPM ranked 25th on the list of the 100 most sustainable corporations in the world

Start-up of UPM Otepää plywood mill expansion and the new biomass boiler 11 OCTOBER UPM Raflatac to build a new coating line at the label stock factory in Wroclaw, Poland 25 OCTOBER UPM received acknowledgement from CDP for its climate actions

UPM Kaukas pulp mill investment completed

15 NOVEMBER UPM Biofuels joined below50 sustainable fuels coalition for low-carbon world

21 MAY Paper production ceased at Madison Paper Industries in the US

23 MARCH UPM Biochemicals established an innovation unit at the Biomedicum research and educational centre in Helsinki, Finland

1 JULY Sale of Schwedt paper mill Change of corporate structure in Finland 4 JULY UPM Kymi pulp mill investment announced 13 JULY Discussions with the Government of Uruguay on the development of logistics infrastructure

A new machine unit at the Harjavalta hydropower plant brought into use 8 SEPTEMBER UPM as industry leader in the Dow Jones Sustainability Europe Index 15 SEPTEMBER UPM Paper ENA’s organisational structure renewed

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UPM Annual Report 2016

UPM Annual Report 2016