UPM Annual Report 2018

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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 RAFLATAC

LABELING A SMARTER FUTURE

OUR DIRECTION • Profitable organic growth potentially complemented with acquisitions • Expanding customer reach through increased distribution, sales and service coverage and sustainable partnerships • Widening product portfolio, especially in high value- added products • Innovating new products and solutions to meet the increasing need for sustainable products Customer-driven global platform to build on In the packaging value chain sustainability continues to be one of the main drivers of future growth. As an industry leader in sustainability, we offer innovative solutions to support customers and brand owners in meeting their targets. We operate in 40 countries and serve our customers in 110 countries on six continents. Clear strategy to continue growth and value creation Our strategic cornerstones for growth continue to be improved customer reach, wider product portfolio and continuously improving operations. In January, we opened a new slitting and distribution terminal in Santiago, Chile, to serve our customers in the wine and craft beverage segments. In July, we opened a new terminal in Seoul, South Korea, to expand the service network in the Asia-Pacific market. In September, we expanded our service coverage in the Northwestern USA with a terminal acquisition in Seattle. Over the last five years, we have opened seven new slitting and distribution terminals. In 2018, we continued widening our product portfolio with high value-adding, innovative and sustainable products, especially for food and beverage labelling, as well as for pharmaceutical and health care end-use segments. Our partnerships with label printers and brand owners are an elementary part of building brand and product appeal in end-use markets. In January 2019, a new special products production line expansion was completed in Tampere, Finland. This investment strengthens our position in the high value-added labels market. Innovative and sustainable labelling solutions Global megatrends and growing environmental awareness increase the demand for more sustainable solutions.

UPM’s Biofore Site™ concept, which was piloted at UPMRaflatac in 2018, aims to enhance the sustainability culture in factories and terminals. It also provides a platform for continuous improvement towards meeting UPM’s 2030 responsibility targets (read more on page 71). In 2018, we launched several ecodesigned products. Examples include thin and light label solutions that use less rawmaterials, label products containing recycled content and wash-off adhesives that promote recyclability. Ecodesigned label materials reduce environmental impact on climate, energy, water and waste. This performance can be verified using UPMRaflatac’s Label Life tool. The RafCycle® solution for turning waste into a resource continued its geographic expansion into Southeast Asia and the USA. RafCycle now has over 130 partners globally who recycle their label waste. Collaboration throughout the value chain UPMRaflatac builds sustainable partnerships throughout the entire packaging value chain. In 2018, we signed up to the New Plastics Economy Global Commitment along with over 250 organisations. The commitment and its vision for a circular economy for plastic is led by the EllenMacArthur Foundation (EMF), in collaboration with UN Environment (read more on the right). UPMRaflatac also joined The Circular Economy 100 (CE100), a precompetitive innovation programme established by the EMF to enable organisations to develop new opportunities and act upon their circular economy ambitions faster. Overall, UPMRaflatac has more than 20 stakeholder collaboration projects on sustainability with its suppliers, customers, brand owners, environmental organisations and other industry bodies. OUR STRENGTHS • End use focused product offering • Industry leader in sustainability and product safety • Global delivery network, accurate and efficient supply chain • Global scale in R&D, quality development and technical expertise • Modern, strategically located and efficiently scalable production assets

UPM RAFLATAC INNOVATES TOWARDS CIRCULAR ECONOMY UPM Raflatac is committed to developing labelling solutions with other industry leaders to support brand owners in eliminating unnecessary plastic packaging and achieving their target of 100% reusable, recyclable or compostable plastic packaging by 2025. Reaching these targets requires the cooperation of players on the whole packaging value chain. Innovative solutions such as the RafCycle recycling programme, thin film materials, wash-off adhesives and label materials containing recycled content are some initiatives UPM Raflatac has undertaken to promote a circular plastics economy. UPM Raflatac signed the New Plastics Economy Global Commitment among 250 organisations, including many of the world’s largest packaging producers, brands, retailers, recyclers and NGOs. The Global Commitment is led by the Ellen MacArthur Foundation (EMF) in collaboration with UN Environment. Targets will be reviewed every 18 months, and become increasingly ambitious over the coming years. Businesses that sign the commitment will publish annual data on their progress to help drive momentum and ensure transparency.