UPM Annual Report 2019

CONTENTS UPM IN CHANGING WORLD 4

Future beyond fossils is a key driver for UPM going forward 6 The need for sustainable choices 8 Sustainable and safe solutions 10 Year 2019 in brief 12 From the President and CEO

OUR STRATEGY 16

UPM Biofore strategy – Beyond fossils

18 20 22 24 26 28 30

Top performance

Spearheads for growth Innovating for growth Value from responsibility Risks and opportunities Creating shareholder value

ANNUAL GENERAL MEETING

Megatrends drive demand for sustainable and safe solutions

UPM-Kymmene Corporation will hold its Annual General Meeting on Tuesday 31 March 2020 at 14:00 (EET) Finlandia Hall, Mannerheimintie 13e 00100 Helsinki, Finland

OUR BUSINESSES 34

Biofore Company

36 UPM Biorefining 38 A new era in Uruguay 42 UPM Energy 44 UPM Raflatac 46 UPM Specialty Papers 48

DIVIDEND The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 1.30 per share be paid for the 2019 financial year. The dividend will be paid to the shareholders who are registered in the company’s shareholders’ register held by Euroclear Finland Ltd on the dividend record date 2 April 2020. The Board of Directors proposes that the dividend be paid on 16 April 2020. Instructions for those wishing to attend are given in the notice to the meeting, which is available on the company’s website at upm.com/agm2020.

UPM Communication Papers

50 52 56

UPM Plywood

New sustainable alternatives Actions for future growth

THE WAY WE OPERATE 60

Our responsibility targets for 2030 Value from stakeholder engagement

62 66 68 72 74 78 80 82 84 86 88 90 92 94 96 98

Our businesses actively engage with stakeholders

Enabling people growth

Strengthening our safety culture

Making the right choices

FINANCIAL REPORTS IN 2020 UPM will publish the financial reports in 2020 as follows: • UPM Interim Report for January–March (Q1) on 23 April 2020

Our value creation generates tax revenue

Responsible sourcing

Lifelong product stewardship Active customer collaboration Committed to climate actions

• UPM Half Year Financial Report for January–June (Q1–Q2) on 23 July 2020 • UPM Interim Report for January–September (Q1–Q3) on 27 October 2020

Sustainable forestry

Reducing energy use and emissions to air

Improving resource efficiency

Responsible water use

Circular economy

Summary of our societal impacts

OUR GOVERNANCE 102

Significant decisions

110 112 114 116

Remuneration

Made of paper awarded the EU Ecolabel reg.nr. FI/11/001.

Board of Directors

Group Executive Team

Independent Practitioner’s Assurance Report

ACCOUNTS FOR 2019 120

Report of the Board of Directors

144 210

Financial statements 2019

Auditor’s report 214 Other financial information 218 Financial information 2010–2019 220 More on responsibility 222 UPM on a world map 225 Addresses 227 Annual General Meeting

226

227

UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019