UPM Annual Report 2018

UPM AT A GLANCE

STRATEGY

BUSINESSES

SOCIETY AND ENVIRONMENT

GOVERNANCE AND COMPLIANCE

REPORT OF THE BOARD OF DIRECTORS

FINANCIAL STATEMENTS

AUDITOR’S REPORT

OTHER FINANCIAL INFORMATION

Business area information for the year ended 31 December 2017

Items affecting comparability

Certain non-operational or non-cash valuation transactions with significant income statement impact are considered as items affecting comparability and reported separately to reflect the underlying business performance and to enhance comparability from period to period. In 2018, items affecting comparability in operating profit include fair value change of forest assets in Finland amounting to EUR 345 million, resulting mainly from higher forest growth estimates. In addition, the group has adjusted its long-term wood price estimates slightly. Capital gains affecting the comparability comprise of a gain of EUR 30 million relating to sale of UPM Communication Papers’ hydropower facilities in Schongau and Ettringen, Germany. Restructuring charges reported as items affecting comparability include reversals of previous years’ restructuring provisions, amounting to EUR 18 million for UPM Communication Papers and EUR 9 million charges in UPM Energy regarding restructuring of ownership in Meri- Pori power plant. 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 optimisation of operations in UPM Communication Papers. 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.

EURm

2018

2017

UPM SPECIALTY PAPERS

UPM COM PAPERS

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

– 9

–3

External sales Internal sales Total sales

1,958

120 1,495

1,111 4,592

463

274

–2 10,010

–67

573

197

–

225

23

21

8

–1,046

–

Change in fair value of unrealised cash flow and commodity hedges Capital gains and losses on sale of non-current assets Fair value changes of forest assets resulting from changes in estimates In finance costs Gains and losses on sale of associates and joint ventures Total in profit before tax In income taxes Taxes related to items affecting comparability Total Total

2,531

317 1,495 1,336 4,615

484

281

–1,048 10,010

–

2

Comparable EBIT

587

91

136

152 231

62

51

–18 1,292

Items affecting comparability in operating profit

29

35

–30 557

–

–

– 16

–

–

–19 –33 –38 1,259

Operating profit Finance costs, net

91

136

152 247

62

51

345 382

–

–73

–33

Income taxes

–212

Profit for the period

974

– –

1 1

Operating assets 1) Deferred tax assets

3,358 2,316

686

1,104 2,149

301

1,544

–291 11,167

423 141

382

–31

Other non-operating assets

Other financial assets

1,337

Total assets

13,067

–80

7

Changes in tax rates

–

–5

Operating liabilities 1) Deferred tax liabilities

247

22

177

241 577

39

163

–260 1,206

Total

–80 302

2

458 939

Total in profit for the period

–30

Other liabilities

Other financial liabilities

1,800 4,404

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

33

–

–

–

–

–

69

– 103

2

–

–

–

1

–

2

–

5

–163

–9

–32

–80 –133

–23

–14

– –453

Sales by destination

Impairment charges

1

–

–

–

3

–

–1

–

3

Capital employed, 31 December

3,111 2,293 3,225 2,267

509 502

863 1,572 885 1,702

262 267

1,381 1,465

–214 9,777 –95 10,217

Average capital employed

Capital expenditure

135

27

47

28

51

29

11

– 329

Capital expenditure, excluding acquisitions and shares

62%

12%

20%

135 18.2

2

46

28

51

29

11

– 303 – 12.8 – 19,111

Comparable ROCE, % Personnel, 31 December

4.0

27.2

17.2 13.6

23.1

3.5 581

2,628

60 3,186

1,949 8,252 2,454

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%

2%

2%

» Refer Other financial information on 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 Finland

2018 2017 2018 2017

EURm Finland

2018

2017

8,900 8,108

131

183

916

825

Germany

987 406 152 784

946 361 161 799

59

25

Germany

1,688 1,650

United States

3 5

1 4

United States

1,158

1,160

United Kingdom

United Kingdom

664

645

China France

34

16

China France

1,186 1,079

59

68

1

1

395

411

Uruguay

1,820 1,766

17

19 42

Uruguay

57

55

Other EU countries

333 150 406

338 116 404

9

Other EU countries

2,380 2,235

Other European countries

40

9 2

Other European countries

461

434

Rest of world

5

Rest of world

1,577

1,516

Total

Total

13,996 13,067

303

303

10,483 10,010

132

133

CONTENTS

ACCOUNTS

UPM ANNUAL REPORT 2018

UPM ANNUAL REPORT 2018