UPM Annual Report 2017

Accounts

In brief

Strategy

Businesses

Stakeholders

Governance

Business area information for the year ended 31 December 2016

Items affecting comparability

In 2017, items affecting comparability in operating profit include impairment charges of EUR 4 million relating to closure of Blandin paper machine 5 and reversal of impairment of EUR 1 million relating to prior paper machine closures. Restructuring charges reported as items affecting comparability include EUR 30 million related to the reorganisation of pension schemes in UPM Biorefining, EUR 13 million relating to closure of Blandin paper machine 5, EUR 24 million relating to restructuring charges of optimization of operations in UPM Paper ENA. Capital gains affecting the comparability comprise of a gain of EUR 33 million relating to sale of hydropower facilities in Austria and the United States and EUR 2 million relating to sale of other assets. In 2016, items affecting in comparability in operating profit include impairment charges of EUR 11 million relating to Madison mill closure, EUR 23 million relating to planned closure of Steyrermühl paper machine 3 and EUR 1 million relating to planned closure of Augsburg paper machine 2. Restructuring charges reported as items affecting comparability include EUR 13 million relating to Madison mill closure, EUR 22 million relating to planned closure of Steyrermühl paper machine 3, EUR 18 million relating to planned closure of Augsburg paper machine 2 and income of EUR 5 million relating to reversals of restructuring provisions of prior capacity closures. Capital gains affecting the comparability comprise of a gain of EUR 47 million relating to sale of Schwedt mill assets and EUR 2 million relating to sale of other assets.

EURm

2017

2016

UPM SPECIALTY PAPERS

UPM PAPER ENA

ELIMINATIONS AND RECONCI- LIATIONS 2)

UPM BIOREFINING

UPM ENERGY

UPM RAFLATAC

UPM PLYWOOD

OTHER OPERATIONS

In operating profit: Impairment charges Restructuring charges

EURm, OR AS INDICATED

GROUP

–3

–35 –48

External sales Internal sales

1,663

170 1,437

1,067 4,797

424

275

–22 9,812

–67

542

187

–

206

21

20

11

–987

–

Change in fair value of unrealised cash flow and commodity hedges Capital gains and losses on sale of non-current assets

Total sales

2,206

357 1,437

1,273 4,818 123 280

444

285

–1,009 9,812

2

27

Comparable EBIT

406

116

133

58

14

12 1,143

Items affecting comparability in operating profit

35

49 –7

–

–

–

–

–57

–

1

48

–7

Total

–33

Operating profit Finance costs, net

406

116

134

123 223

58

15

60 1,135

In finance costs: Gains and losses on sale of associates and joint ventures

–56

Income taxes

–200

1 1

–2 –2 –9

Profit for the period

880

Total

Total in profit before tax

–31

Operating assets 1) Deferred tax assets

3,586 2,283

666

1,121 2,287

304

1,691

–326 11,612

In income taxes: Taxes related to items affecting comparability

446 132

Other non-operating assets

7

7 4

Other financial assets

1,721 13,911

Changes in tax rates

–5

Total assets

Total

2

11

Total in profit for the period

–30

1

Operating liabilities 1) Deferred tax liabilities

245

34

165

137 505

43

179

–295 1,013

457 978

Other liabilities

Other financial liabilities

3,226 5,673

Total liabilities

Other items Change in fair value of forest assets and wood harvested Share of results of associates and joint ventures Depreciation and amortisation

29

–

–

–

–

–

59

–

88

2

–1 –9

–

–

2

–

3

–

5

–171

–33

–91 –164

–22

–13

1 –503

Sales by destination

Impairment charges

–1

–

–

–

–49

–

–

10

–41

Capital employed, 31 December

3,341 2,249 3,231 2,340

501 524

984 1,782 1,012 1,964

261 259

1,512 1,541

27 10,657 –36 10,833

Average capital employed

Capital expenditure

188

1

19

15

49

45

9

–1

325

20% 62%

Capital expenditure, excluding acquisitions and shares

13%

188 12.6

1

19

15

49

45

9

–1

325 10.6

Comparable ROCE, % Personnel, 31 December

5.0

25.5

12.1 14.3 1,984 8,664

22.6

0.9

–

2,630

71 3,062

2,469

442

–12 19,310

2%

1) Business area’s operating assets include goodwill, other intangible assets, property, plant and equipment, forest assets, energy shareholdings, investments in associates and joint-ventures, inventories and trade receivables. Operating liabilities include trade payables and advances received. 2) Eliminations and reconciliations include the elimination of internal sales and internal inventory margin and the consolidation of MPI as a joint operation. In addition the changes in fair value of unrealised cash flow and commodity hedges that are not allocated to segments are included in reconciliations.

2%

1%

» Refer Note 10.2 Alternative performance measures, for definitions of key figures and reconciliation to measures presented in the consolidated income statement and balance sheet prepared in accordance with IFRS.

Total assets and capital expenditure by country

Sales by country

Assets

Capital expenditure

EURm

2017

2016

2017

2016

EURm

2017

2016

Finland

8,108 8,566 946 1,008

183

157

Finland

825

886

Germany

25

18

Germany

1,650 1,160

1,699 1,217

United States

361 161 799

437 185 879

1 4

3 8

United States

United Kingdom

United Kingdom

645

715 860 434

China France

16

13

China France

1,079

68

71

1

3

411

Uruguay

1,766 2,010

19 42

84 33

Uruguay

55

48

Other EU countries

338 116 404

325

Other EU countries

2,235

2,099

Other European countries

91

9 2

5 1

Other European countries

434

383

Rest of world

340

Rest of world

1,516

1,472 9,812

Total

Total

13,067 13,911

303

325

10,010

CONTENTS

ACCOUNTS

120

121

UPM Annual Report 2017

UPM Annual Report 2017