UPM Annual Report 2019

OUR DIRECTION • Profitable growth through superior customer experience and operational excellence • Strengthen market position by increasing value and service offerings OUR STRENGTHS • End-use, market and customer insight • Leading reliability of supply, with consistent high quality • Leading supplier in demanding end-use segments • Strongest brand on the market: WISA ®

UPM Plywood

BUILDING COMPETITIVE ADVANTAGE UPM Plywood’s primary end uses are building and construction, vehicle flooring and liquefied natural gas (LNG) shipbuilding. Our strategy focuses on demanding high-end applications and on medium-range standard products.

KEY FIGURES

2019

2018

450

Sales, EURm

480

36

Comparable EBIT, EURm

52

329 11.0

Capital employed (average), EURm

283 18.4

Comparable ROCE, % Personnel on 31 Dec.

2,467

2,502

Comparable EBIT decreased mainly due to lower delivery volumes. Market demand in Europe decelerated in 2019. Demand for spruce plywood and for birch plywood-related industrial applications was weakening.

In 2019, we finished our two-year growth investment at the UPMChudovo mill in Russia. The mill’s birch plywood production capacity increased by 45,000 to 155,000 cubic metres along with the expansion of the product portfolio. In addition, the investment improved the mill’s environmental performance; the mill’s wood efficiency was improved, a new bioheat boiler was built at the mill site and the water treatment facility is being renewed. Delivering responsible solutions Our products are long-lasting, carbon- storing andmade from responsibly sourced wood. Plywood is an optimal material for most end-uses thanks to its superior strength-to-weight-to-price ratio and its renewable rawmaterial base. Building and construction is the main end use, and we lead in high- and medium-range standard products in Europe. New innovative and sustainable plywood solutions are further

commercial strategy of identifying new end-use applications with our fire- retardant structural plywood for building and construction end uses. Committed to lifecycle approach WISA Plywood is made of wood that is renewable and stores carbon. All the wood used in our products come from known, responsibly managed forests in Finland, the Baltic countries and Russia. Compared with other materials, such as aluminium, plastic and steel, plywood manufacturing consumes significantly less energy. In 2019, we published Environmental Product Declarations for our WISA products to show a product’s environmental impact throughout its whole lifecycle, from raw-material sourcing to disposal. These third-party- verified and internationally comparable declarations help building contractors and designers better understand the environmental impact of construction products andmaterials.

strengthening our offerings. The role of lignin in resins also continues to grow. Since autumn 2017, lignin has been used as part of the WISA BioBond gluing technology in plywood production. Road transport is expected to remain the major mode of freight transport in Europe. Growing e-commerce volumes are driving a growth in plywood demand in light vehicles. Our WISA birch plywood has a positive ecological impact on fuel consumption, given its excellent weight- to-strength ratio compared with other materials. LNG use is growing globally. We are the leading supplier of birch plywood for large LNG carriers. The LNG plywood manufacturing process is strictly controlled. CertifiedWISA-Birch plywood is ideal for insulation in these vessels due to its strength and stability at –163°C. Customer needs are driving the development of our operations and offerings. Our innovations are focusing on new sustainable and multi-functional products. In 2019, we continued our

Our new gluing technology replaces fossil-based phenol with bio-based lignin in our plywood production.

CASE

FIRE-RETARDANT PLYWOOD MAKES BUILDING EASIER The fire safety of a building needs to be ensured already at the design stage. With WISA-SpruceFR, fire-retardant structures can be built using much simpler designs and less materials. The work of designers and builders becomes easier as fire protection is achieved with one structural product rather than complicated multi-layered structures. This also saves time and storage space. WISA-Spruce FR meets the requirements of the most stringent fire-risk classification for wood materials, and it can be used in the same way as regular plywood. The fire-retardant treatment does not affect the technical properties of the plywood. Lightweight and durable spruce plywood is

particularly well suited for use in load-bearing structures such as walls and floors. With an expanded range, fire-retardant plywood can now be used for all frame-construction end uses. WISA-Spruce FR plywood is made from sustainably grown and sourced wood, and the fire-retardant treatment given to the plywood is not harmful to the environment. WISA plywood has third-party verified, internationally comparable Environmental Product Declarations (EPDs). These EPDs contain information on the product’s environmental impact throughout its lifecycle, from the sourcing of raw materials to its disposal.

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OUR BUSINESSES

OUR BUSINESSES

UPM ANNUAL REPORT 2019

UPM ANNUAL REPORT 2019

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