UPM Annual Report 2019

KEY PERFORMANCE INDICATORS

EVENTS IN 2019 JANUARY

4/6 business areas achieved their financial targets

UPM announces its participation in the international public tendering process in the port of Montevideo. In March, the National Ports Administration (ANP) awards UPM the concession in the port. UPM is ranked 23rd in the list of 100 most sustainable corporations by the Corporate Knights, and also highlighted as a global leader on the CDP Forest A List UPM Energy announces a refurbishment of the Kuusankoski hydropower plant in Finland UPM Biofuels launches a collaborative project with international dairy corporation Arla, packaging company Elopak and chemical producer Dow to bring 40 million wood-based packages into supermarkets Bernd Eikens is appointed Executive Vice President for UPM Biorefining as of 1 March 2019

9

UPM BIOREFINING

+0% 693m Dividend (proposal), EUR

TOP PERFORMANCE

STRONG CASH FLOW

ATTRACTIVE DIVIDEND

22

31

UPM ENERGY

FEBRUARY

5

–7% 1,404m Comparable EBIT, EUR

UPM RAFLATAC

INDUSTRY-LEADING BALANCE SHEET Net debt, EUR

15

Operating cash flow, EUR

MARCH

+39% 1,847m

UPM begins transplanting rare and threatened wood-inhabiting fungi as part of a unique biodiversity project

5

–453m

–1.7pp 11.2% Comparable ROE

UPM SPECIALTY PAPERS

APRIL

UPM Communication Papers announces plans to permanently close paper machine 10 at UPM Plattling, Germany. The paper machine was closed in July.

2

MAY

UPM COMMUNICATION PAPERS

378m attractive returns with disciplined and effective investments Capital expenditure, EUR

UPM launches FibDex ® , a wound dressing created from wood-based nanofibrillar cellulose for the European market

27

FOCUSED INVESTMENTS

JUNE

Jaakko Nikkilä is appointed Executive Vice President for UPM Specialty Papers as of 1 July 2019

27

UPM PLYWOOD

JULY

UPM makes the USD 2.7 billion investment decision to construct a 2.1million tonne greenfield eucalyptus pulp mill near Paso de los Toros in central Uruguay. UPM will also invest USD 350 million in port operations in Montevideo and local facilities, including a new residential area.

23

upm.com/investors

AUGUST

GLOBAL BUSINESSES – LOCAL PRESENCE

UPM, along with Bore Ltd and Wijnne Barends, affiliates of the Dutch Spliethoff Group, will design and build seven new LNG vessels for transporting pulp, paper and other products in Europe

26

SEPTEMBER

Active employees completed Code of Conduct training 96% * )

Employee engagement index 71% favourable Engaged, high- performing people implement the Biofore strategy and drive short- and long-term success. +0pp Supplier Code qualified supplier spend 84% Transparent supplier requirements form the basis of responsible sourcing throughout the entire supply chain. +1pp

Total recordable injury frequency 6.8 Ensuring a safe working environment for employees and everyone working for UPM.

UPM’s sales by market 2019 EUR 10,238 million

Presence

Countries

UPM announces plans to permanently close SC PM2 in Rauma, Finland and sell or close its Chapelle newsprint mill in France. UPM also announces plans to establish a new Business Services Hub in Wroclaw, Poland. The PM2 was closed in November. The expansion of UPM Chudovo plywood mill is inaugurated UPM maintains its industry-leader position in the Dow Jones European and World Sustainability Indices (DJSI) The UN recognises UPM as one of the 36 Global Compact LEAD participants demonstrating world-class commitment to corporate responsibility UPM announces that President and CEO Jussi Pesonen will continue in his current position. He will not be available for re-election to UPM’s Board of Directors. UPM decides to invest in a combined heat and power (CHP) plant at its Nordland paper mill in Germany to strengthen its cost competitiveness and reduce its CO 2 emissions by 5% UPM Raflatac opens a new label stock slitting and distribution terminal in Chelyabinsk, Russia UPM joins 4evergreen, a new initiative by CEPI (the Confederation of European Paper Industries) to boost fibre-based packaging in a circular economy

10

54 18,700 12,500 100,700 24,000

12 46 120

production plants in

The UPM Code of Conduct lays the

foundation for responsible business operations and continuous improvement. +96pp Share of certified wood 82% Forest certification is an excellent tool for ensuring sustainable forestry. Chain-of- Custody requirements ensure 100% supply from controlled sources. +1pp

16

62% Europe

employees in

23

+3%

OCTOBER

19% Asia

customers in

Fossil CO 2

emissions

24

(Scope 1 and 2) 5.8 million t Creating climate solutions and working towards carbon neutrality.

North America

32 81

shareholders in

NOVEMBER

Rest of the world

13%

20

–6%

b-to-b suppliers in

6%

28

* ) New training for the updated Code of Conduct started in September 2019.

10

11

UPM IN CHANGING WORLD

UPM IN CHANGING WORLD

UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019

CONTENTS