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

GLOBAL BUSINESSES – LOCAL PRESENCE UPM’s sales by market 2018 EUR 10,483 million

KEY PERFORMANCE INDICATORS

54 12 production plants in

countries

ATTRACTIVE DIVIDEND

STRONG CASH FLOW

TOP PERFORMANCE

19,000 46 employees in 12,600 110 customers in 93,600 32 shareholders in 24,000 75 b-to-b suppliers in

Comparable EBIT

Operating cash flow

Dividend (proposal)

countries

1,513m

1,391m

693m

EUR +17%

EUR –11%

EUR +13%

62% Europe

12% North America

countries

Comparable ROE

20% Asia

12.9%

Net debt reduction

Industry-leading balance sheet

485m

EUR

countries

+1.0pp

Net debt -311m

countries

6% Rest of the world

EUR

4/6 business areas achieved their financial targets

FOCUSED INVESTMENTS

Capital expenditure

303m

Active employees completed Code of Conduct training 99% +1pp

Employee engagement index 71% favourable +0pp

Ensuring a safe working environment and safeguarding for employees and everyone working for UPM. Total recordable injury frequency 6.9 –16%

EUR

attractive returns with disciplined and effective investments

The UPM Code of Conduct lays the foundation for responsible business operations and continuous improvement.

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

READ MORE: upm.com/investors

Supplier Code qualified supplier spend 83% +1pp

Fossil CO 2

Emissions related to energy use 6.1 million t –4%

Share of certified wood 81% –4pp

EVENTS IN 2018

Forest certification is an excellent tool for ensuring sustainable forestry. Chain-of-Custody requirements ensure 100% supply from controlled sources.

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

Creating climate solutions and working towards carbon neutrality.

16 APRIL UPM launches a new biocomposite material for 3D printing 20 APRIL UPM Plywood announces the replacement project for the boiler and scarf-joining line at the UPM Joensuu plywood mill UPM Biofuels gains the world’s first RSB low indirect land use change (ILUC) risk certification for its feedstocks 26 APRIL UPM decides to increase label paper production capacity at the UPM Changshu mill, China and the UPM Nordland mill, Germany UPM Paper ENA is renamed UPM Communication Papers in Finland 24 APRIL

11 JANUARY UPM Raflatac opens new slitting and distribution terminal in Santiago, Chile 12 JANUARY UPM Specialty Papers recog­ nised as a Water Efficiency Frontrunner in China 15 JANUARY UPM Biofuels receives Uruguay’s first RSB sustain­ ability certification for the cultivation of the Brassica carinata crop

1 FEBRUARY UPM listed in the

RobecoSAM’s Sustainability Yearbook 2018 with Gold Class and Industry Mover distinctions 5 FEBRUARY UPM Biofuels starts an environmental impact assessment (EIA) for a possible biofuels biorefinery in Kotka, Finland

5 JULY UPM joins Together for Sustainability (TfS) initiative to enhance sustainability in its supply chains 9 JULY UPM Raflatac opens new slitting and distribution terminal in Seoul, South Korea

10 SEPTEMBER UPM Raflatac acquires a terminal in Seattle, USA 13 SEPTEMBER UPM recognised for the sixth time as the industry’s most responsible company in the global Dow Jones Sustainability Index for 2018–2019

27 NOVEMBER UPM launches a new biodiversity target

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22 JANUARY UPM Biofuels and ZERO environmental organisation cooperate to promote the green shift in the transportation and petrochemical industries 31 JANUARY UPM announces an expansion of its release liner capacity at the UPM Jämsänkoski mill, Finland

8 MARCH UPM Specialty Papers receives Singapore Green Label certification for its sustainable manufacturing, product value chain and environmental practices 11 MARCH TVO signs a settlement agreement on OL3 EPR project completion and related disputes 14 MARCH UPM Biofuels enters the bioplastics market with UPM BioVerno renewable naphtha

21 MAY The Helsinki Court of Appeal dismisses the claim of Metsähallitus concerning the raw wood market from 1997 to 2004

17 SEPTEMBER UPM launches new brand promise: UPM Biofore – Beyond Fossils 24 SEPTEMBER Compact LEAD companies demonstrating world-class commitment to corporate sustainability UN recognises UPM as one of 34 Global

4 OCTOBER UPM Biofuels completes its environmental impact assessment for possible Kotka Biorefinery in Finland UPM Jämsänkoski release liner expansion completed in Finland

10 DECEMBER UPM increases the

fair value of its forest assets in Finland and changes its accounting policy in relation to forest renewal costs The new cut-size line completed at UPM Changshu, China

UPM Kaukas pulp mill expansion in Finland completed

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CONTENTS

UPM ANNUAL REPORT 2018

UPM ANNUAL REPORT 2018