UPM Annual Report 2020

UPM PLYWOOD

TUNED FOR CUSTOMER SUCCESS By taking advantage of the best characteristics of birch and spruce raw material we can offer hard-wearing and sustainable solutions to the construction and transport industries.

Our products are long lasting, carbon-storing and made from responsibly sourced wood.

OUR DIRECTION •Profitable growth through superior customer experience and operational excellence •A strengthened market position through 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®

KEY FIGURES

2020

2019

405

Sales, EURm

450

Plywood is an unparalleled material when it comes to climate positivity. With a lower carbon footprint, it can replace many sub stances that are made from non-renewable rawmaterials, such as aluminium, concrete and steel. WISA® plywood can be used in a sustainable and innovative way, both in building and construction, thanks to its structural strength, durability and environ mental certifications. For vehicle flooring, plywood’s competitive advantage is its excellent weight-to-strength ratio, which has a positive impact on fuel consumption. LNG carrier markets represent an inter esting end-use sector for plywood used in insulation elements.

In 2020, the market for spruce plywood was good. For birch plywood, demand was modest in industrial applications due to the COVID-19 pandemic, and the market was highly competitive. However, the long term demand outlook for birch plywood remained healthy. We continued to operate under the highly exceptional circumstances in 2020. In the first quarter of the year, our opera tions and supply reliability were impacted by the strike in Finland. From the second quarter onwards, the COVID-19 pandemic caused significant uncertainty, and a rapid response and resilience to pandemic-re lated changes in the business environment

was required. We took proactive measures to secure the safety of our employees and we were able to serve our customers and run our operations without interruption. Strengthening competitiveness and performance We finished the expansion of the UPMChu dovo plywood mill in Russia in 2019. The optimisation of the investment continued successfully in 2020 and the mill’s annual production capacity is increasing towards 155,000 cubic metres. The investment has improved our competitiveness and the mill’s environmental performance sub stantially. UPMChudovo, which celebrated to prevent moisture-related structural or health problems, because less moisture ends up in the structure. The WISA-Spruce wood construction product family includes also fire-retardant plywood and a biocide treated product resistant to wood decaying fungi. Another speciality product is a plywood that is used in roof structures, for exam ple, to withstand snow loads. Each speciality product supports a certain area in the wood construction process: the design stage and material selection, operations at the worksite and the securing of a long-lasting build ing and safe living conditions. All responsibly manufactured, durable and safe WISA plywood products are supported by Environmental Product Declaration documents.

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Comparable EBIT, EURm

36

292 11.2

Capital employed (average), EURm

329 11.0

Comparable ROCE, % Personnel on 31 Dec.

2,301

2,467

Comparable EBIT decreased slightly mainly due to lower delivery volumes and sales prices. Fixed costs were significantly lower. Market demand for plywood in Europe slowed down in 2020. Demand for spruce plywood was good and birch plywood-related industrial applications were modest.

CASE

its 30th anniversary in 2020, has been the pioneer of the modern plywood industry in Russia and continues to set the benchmark for the local plywood industry. In 2020, we took further action to secure long-term competitiveness and performance. The UPM Jyväskylä plywood mill, producing spruce and birch plywood in Finland, was permanently closed. Despite investments, as well as savings and improvement activities, the profitability of the mill was not sustainable. Responsibility at the core of our customer promise Responsibility is a solid part of what we do. Our “Responsibility Made Easy” promise

has six focus areas: responsibility as a busi ness partner, responsibly produced wood material, responsibility for society and environmental performance, responsibility towards our customers through products and services and innovations for building a more sustainable and fossil-free future. Customer needs are driving the develop ment of our operations and offerings. Our products are long-lasting, carbon-storing and made from responsibly sourced wood. In 2020, we increased the availability of FSC®-certified birch plywood in German markets, for example. New innovative plywood solutions continue to strengthen our offering. We launched a new water repellent WISA

SpruceWR plywood that enables efficient and effortless construction, even in chang ing weather and humidity conditions. (Read more on the left). An example of our efforts to promote cir cular economy is our collaboration with the Finnish agriculture sector. We have devel oped a new organic soil conditioner that can be used to improve the growth conditions of arable land. This soil conditioner is made from bark waste, which is a side stream of our plywood production.

INNOVATIONS IN RESPONSIBLE WOOD CONSTRUCTION

Specially treated plywood products developed by UPM Plywood increase the diversity of wood as a construction material. The starting point for the innovative speciality products is always to bring benefits to the end user – for example by making construction work more efficient. The latest addition to the product family is water re pellent plywood, which makes builder’s work easier and quicker. The plywood is treated with a protec tive wood-based surface treatment, which slows down the penetration of moisture into the structure and lets the panel breathe and dry freely. No extra time is spent on covering materials at the worksite in changing weather and humidity conditions.

Responsible product lifecycle on page 82 www.wisaplywood.com

The product is made of sustainably grown and sourced wood, and the wood-based surface treatment material does not contain any harmful chemicals. The water-repellent surface also helps

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UPM ANNUAL REPORT 2020

UPM ANNUAL REPORT 2020