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

UPM STRATEGY –AIMING HIGHER

WE CREATE VALUE BY SEIZING…

…THE LIMITLESS POTENTIAL OF BIOECONOMY

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PERFORMANCE

GROWTH

INNOVATION

RESPONSIBILITY

PORTFOLIO

SIGNIFICANCE •Top performance drives value creation and mitigates risks related to the business environment •Top performance enables investments in growth, innovation and responsibility

SIGNIFICANCE •Long-term earnings growth requires margin improvement and top-line growth •UPM’s growing businesses have significantly higher margins than its mature businesses

SIGNIFICANCE •Replacement of non-renewable materials with sustainable alternatives presents large value- creation opportunities •R&D, bioeconomy innovations and new technologies support UPM’s transformation TARGET •Increase growth with new businesses, products and technologies •Improve competitiveness with product, service and process development

SIGNIFICANCE •Global consumers present a large and growing demand for sustainable and safe solutions •Responsible operations and value chain mitigate risks related to changes in consumer choices and regulation TARGET •Provide solutions to global challenges, while creating value for our stakeholders •Sustainable, innovation-driven and exciting future beyond fossils OUR WAY •Compliance •Responsible operations and value chain •Value-based leadership •Renewable raw materials, recyclable and safe products

SIGNIFICANCE •Value creation is driven by performance within each business and synergies within the group •Long-term value creation is further driven by effective capital allocation and right choice of businesses

TARGET •Continuous improvement of performance

TARGET •Earnings growth •Attractive returns

TARGET •Superior long-term shareholder returns •Attractive value creation

•Top relative performance in each business in comparison with peers

OUR WAY •Right operating model with separate business areas •Commercial excellence •Cost efficiency •High-performing people •Efficient use of assets and capital

OUR WAY •Focused growth projects to maintain and grow earnings •Transformative prospects for significant earnings growth •Sustainable and safe solutions for growing global consumer demand •Sustainable competitive advantage •Talent attraction

OUR WAY •New businesses, products and technologies with focus on bioeconomy

OUR WAY •Develop businesses with strong long-term fundamentals and sustainable competitive advantage •Capitalise on corporate benefits and synergies •Disciplined and effective capital allocation and strong balance sheet •Continuous transformation

•Product, service and process development, including circular economy and digitalisation •Development of capabilities •Extensive partner network

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CONTENTS

UPM ANNUAL REPORT 2018