UPM Annual Report 2020

UPM RAFLATAC

LABELLING A SMARTER FUTURE BEYOND FOSSILS We strengthened our position as a key player in the labelling industry and are well positioned to seize new opportunities in the growing global label markets.

OUR DIRECTION • Profitable organic growth, potentially complemented by acquisitions • Expanding customer reach through commercial excellence •Widening product portfolio, especially in high value-added and sustainable products and solutions • Innovating in productivity OUR STRENGTHS • End-use-focused product offering • Sustainability and product safety leadership • Global delivery network and efficient supply chain

We respond to the accelerating needs for sustainable labelling solutions.

UPMRaflatac creates unique value with its product range. Our technical expertise cov ers all relevant end-use industries, whilst our deep know-how of the packaging value chain and our global commercial reach fur ther strengthen our competitive advantage. As one of the UPM growth businesses, UPMRaflatac has proven its execution capabilities and ability to operate resiliently in the recently volatile market environ ment. Our long-term efforts to improve competitiveness and commercial offering, combined with increased market demand, resulted in excellent performance in 2020. The main drivers in the packaging value chain continued to be packaging unit growth in fast moving consumer goods

We continued developing our commer cial excellence by introducing new ways to reach customers like virtual selling as well as internal and digital sales. The MyRAFLATAC customer portal launched in 2019 continues expanding to newmarkets. material company going beyond fossils. In 2020, we were taking major steps to reach this target whilst supporting customers’ and brand owners’ goals to reduce, recycle and renew packaging materials. UPMRaflatac PP PCR was the first polypropylene label filmmanufactured from post-consumer recycled (PCR) plastic More sustainable packaging UPMRaflatac aims to be the first label

like food, personal care and beverages, as well as e-commerce, niche segments like pharmaceuticals and the need for sustain able solutions. The COVID-19 pandemic increased demand for food and logistics packaging. The long-term demand outlook remains solid. Our strategic cornerstones—a wider product portfolio, improved customer reach and winning operations—are more relevant today than ever, and we made strong pro gress in all these areas. Reach and resilience Despite the volatile demand, we were able to serve essential industries globally, even during lockdowns.

• Global scale in R&D and technical expertise • Modern, strategically located production assets

KEY FIGURES

2020 1,560

2019 1,555

Sales, EURm

214 542 39.5

Comparable EBIT, EURm

126 579 21.8

Capital employed (average), EURm

Comparable ROCE, % Personnel on 31 Dec.

3,087

3,181

Comparable EBIT increased, due to improved mix and margin management. Delivery volumes were higher and fixed costs were lower. Global demand growth for self-adhesive label materials was good in consumer goods and e-commerce-driven labelling.

CASE

on the market (on a mass balance basis). The product was developed in collaboration with SABIC, a global leader in diversified chemicals. UPMRaflatac Forest Film™ label material made from renewable sources was recognised with multiple awards around the world. We are scaling up our linerless pro duction capacity and investing in a new production line in Nowa Wies, Poland. The investment strengthens our position in the fast-growing linerless labelstock market driven by sustainability and the need for increased efficiency. RafCycle partnerships continued to increase and our recycling service now has 180 partners globally and has expanded in

Asia-Pacific and North America. At the end of 2020, we announced that we are one of the key collaborators in a new global indus try-wide consortium, CELAB, to boost the development of a circular business model in the self-adhesive label industry. We also partnered with UPM Specialty Papers’ UPM LinerLoop™ recycling con cept to strengthen the labelling value chain offering of recycled content and closed loop products. Improving efficiency We have a relentless drive to improve effec tiveness and productivity in everything we do. The three-year programme Step Change in Productivity has progressed as planned.

This programme aims to increase our effective capacity without increases in the capital expenditure or operating costs, thus improving our competitiveness. To secure our future performance and ability to invest and develop for the future, we further improved effectiveness and cost-efficiency. These measures included changes in the global and regional operating models and restructuring actions or down sizing at some of our operating sites globally. By actively collaborating with our part ners and other UPM businesses, we will continue shaping the packaging material value chain.

FULLY TRACEABLE SUPPLY CHAIN

When introducing new renewable and recycled raw materials to the market, it is important that we understand the feedstock and have an assurance mechanism in place for responsible sourcing. The ISCC PLUS certification is based on a mass balance approach, meaning that we use biobased and recycled alternatives to replace an equivalent amount of virgin fossil resources in the production process. UPM Raflatac’s products, in cluding the wood-based Forest Film material and the first ever polypropylene label material with recycled content, have already previously been certified according to the ISCC PLUS Scheme.

Bringing customers and brand owners closer to their sustainability goals, certain UPM Raflatac products and multiple production sites have achieved certification for a fully traceable supply chain. Our factories in Tampere, Finland; Nowa Wies, Poland; Mills River in the US and Changshu, Chi na; along with nine distribution terminals world wide, have been presented with the International Sustainability and Carbon Certification Scheme ISCC PLUS sustainability certification. As a globally recognised high-quality certifica tion scheme for biobased and circular plastic, ISCC PLUS provides us with external proof that

value chains for both our renewable and recy cled raw materials are fully traceable and com panies meet environmental and social standards. This strengthens our leadership in the field.

www.upmraflatac.com

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UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020

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