UPM Annual Report 2017

In brief

Strategy

Businesses

Stakeholders

Governance

Accounts

Global businesses – local presence

Key performance indicators

UPM’s sales by market 2017 EUR 10,010 million

12,000 customers in 120 countries

54 production plants in 12 countries

Strong cash flow

Top performance

Attractive dividend

Comparable EBIT

Operating cash flow

Dividend (proposal)

90,000 shareholders in 35 countries

1,292m

1,558m

613m

62% Europe

EUR

EUR –8%

EUR

13% North America

20% Asia

+13%

+21%

Comparable ROE 11.9% +1.0pp

19,100 employees in 46 countries

25,000 b-to-b suppliers in 75 countries

Industry-leading balance sheet

Net debt reduction

5% Rest of the world

957m

EUR

–85%

Net debt/EBITDA 0.11x

Total recordable injury frequency 8.2 –12%

Employee engagement 71% +2pp

The UPM Code of Conduct lays the foundation for responsible business operations and continuous improvement. % of active employees completed Code of Conduct training 98% +1pp

Focused investments

Capital expenditure

EUR 329m attractive returns with disciplined and effective investments

5/6 business areas achieved their financial targets

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

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

CO 2 emissions related to energy use 6.4 million t –6%

Share of certified wood 85% +1pp

Supplier Code qualified supplier spend 82% +2pp

Read more: www.upm.com/investors

Creating climate solutions and working towards carbon neutrality.

Forest certification is an excellent tool for ensuring sustainable forestry.

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

2 OCTOBER UPM Plywood introduced a new sustainable

DECEMBER UPM Raflatac expansion in Poland was completed 8 DECEMBER UPM Biofuels won the Bioenergy Industry Leadership award

WISA BioBond gluing technology 24 OCTOBER UPM to expand the UPM Chudovo plywood mill in Russia 24 OCTOBER UPM evaluates the potential of building a biochemicals biorefinery in Germany

EVENTS IN 2017

21 APRIL UPM’s Zero Solid Waste to Landfill initiative won the Midwest Regional Sustainability Award in the US 26 APRIL UPM Raflatac invests in special label capacity in Finland

20 JUNE UPM invests in efficiency and competitiveness of the UPM Kaukas pulp mill 28 JUNE UPM tests Brassica carinata sequential cropping concept as part of Biofuels future development

7 AUGUST UPM Raflatac acquired the assets of Texas-based Southwest Label Stock distributing company

31 JANUARY UPM renewed its long- term financial targets

NOVEMBER UPM Kymi pulp mill investment completed

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02

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24 OCTOBER UPM Paper ENA’s plan to reduce graphic paper capacity in the US and optimise operations in Germany 25 OCTOBER UPM received an A score for CDP’s Water and Forests Programs

17 MAY UPM and FSC ® signed a global strategic partnership 29 MAY UPM Biofuels gained the world’s first RSB certification for wood-based liquid biofuels

31 JULY Sale of hydropower facilities in Austria and the US

7 SEPTEMBER UPM listed as the industry leader in the global Dow Jones Sustainability Index

27 MARCH The paper machine 3 in Steyrermühl was permanently closed in Austria

12 DECEMBER Sale of hydropower facilities in Germany 30 DECEMBER The paper machine 5 at UPM Blandin was permanently closed in the US

7 NOVEMBER UPM and the Government of Uruguay signed an investment agreement to establish an operating platform for a possible new pulp mill in Uruguay

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UPM Annual Report 2017

UPM Annual Report 2017