UPM Annual Report 2021

ACCOUNTS FOR 2021

UPM

BEYOND FOSSILS

STRATEGY

BUSINESSES

RESPONSIBILITY

GOVERNANCE

Business area information for the year ended 31 December 2021

The goods and services included in sales revenue of each business area are presented in below table:

BUSINESS AREA UPM Biorefining

DESCRIPTION AND PRODUCTS

ELIMINATI ONS AND RECONCILI -ATIONS 2)

UPM Biorefining consists of UPM Pulp, UPM Timber and UPM Biofuels business units.

UPM SPECIALTY PAPERS

OTHER OPE RATIONS

UPM BIO REFINING

UPM ENERGY

UPM RAFLATAC

UPM COM PAPERS

UPM PLYWOOD

UPM Pulp offers a versatile range of responsibly-produced pulp grades suitable for a wide range of end uses such as tissue, specialty and packaging papers, graphic papers and board.

EURm, OR AS INDICATED

GROUP

2,289

290 236 526 270

1,671

1,275

3,536

471

277

5

9,814

External sales Internal sales

UPM Timber offers certified sawn timber for joinery, packaging, furniture, planing and construction end-use segments.

655

—

207

41

21

3

-1,163 -1,157

—

Total sales

2,945

1,671

1,482

3,577

492

280

9,814 1,471

UPM Biofuels produces wood-based renewable diesel for all diesel engines and renewable naphtha that can be used as a biocomponent for gasoline or for replacing fossil raw materials in the petrochemical industry. UPM Energy generates cost-competitive, zero-carbon electricity. Operations also include physical electricity and financial portfolio management as well as services to industrial electricity consumers and producers. UPM Raflatac offers innovative and sustainable self-adhesive label materials for branding and promotion, information and functional labelling in the food, beverage, personal care, pharmaceutical and logistics segments, for example. UPM Specialty Papers offers labelling and packaging materials as well as office and graphic papers for labelling, commercial siliconising, packaging, office use and printing. UPM Communication Papers offers an extensive product range of sustainably produced graphic papers for advertising and publishing as well as home and office uses. UPM Plywood offers high quality WISA® plywood and veneer products for construction, vehicle flooring, LNG shipbuilding, parquet manufacturing and other industrial applications. Other operations include UPM Forest, UPM Biochemicals-, UPM Biomedicals-, UPM Biocomposites- business units and group services. UPM Forest secures competitive wood and biomass for UPM businesses and manages UPM-owned and privately-owned forests in North Europe. In addition, UPM offers forestry services to forest owners and forest investors. UPM Biochemicals offers innovative wood-based biochemicals for replacing fossil-based raw materials in various applications such as textiles, PET bottles, packaging, cosmetics, pharmaceuticals, detergents, rubbers and resins. UPM Biomedicals is the forerunner in producing nanofibrillar cellulose for clinical and life science applications in the field of drug screening, personalised medicine, advanced cell therapies, 3D bioprinting, tissue engineering and wound care. UPM Biocomposites is a pioneer in circular economy offering composite decking materials based on both recycled consumer and industrial waste. The product range also includes composite materials made from renewable fibres and polymers to replace fossil-based plastics.

Comparable EBIT

817

223

135

-79

72

76

-42

Items affecting comparability in operating profit

UPM Energy

—

—

-1

—

93 14

8

-1

-9

91

Operating profit Finance costs, net

817

270

222

135

80

75

-50

1,562

-15

UPM Raflatac

-240

Income taxes

Profit for the period Operating assets 1) Deferred tax assets

1,307

UPM Specialty Papers

5,567

2,932

768

1,169

1,903

333

2,481

-516

14,635

466 139

UPM Communication Papers

Other non-operating assets

2,436

Other financial assets

Total assets

UPM Plywood

17,676

419

140

193

265

737

43

380

-468

1,710

Operating liabilities 1) Deferred tax liabilities

Other operations

596 863

Other liabilities

3,400 6,570

Other financial liabilities

Total liabilities

Other items Change in fair value of forest assets and wood harvested Share of results of associates and joint ventures Depreciation and amortisation

-9

—

—

—

—

—

120

—

111

2

—

—

—

—

—

—

— — —

2

-190

-7

-36

-75

-103

-27

-25

-463

-2

—

—

—

-52

1

—

-52

Impairment charges Capital employed, 31 December

5,148 4,437 1,191

2,792 2,375

575 553

903 864

1,165 1,275

290 286

2,101 1,992

785 874

13,759 12,657

Average capital employed

12

25

12

56

14

174

-1

1,483

Key performance indicators and financial targets UPM aims to grow its comparable EBIT over the long term. The group has a portfolio of five businesses that operate on growing markets and one business that faces declining demand. All of UPM businesses are competitive and have strong market positions. Financial target setting, follow up and allocation of resources in the group’s performance management process is mainly based on the business area comparable EBIT and comparable ROCE.

Capital expenditure

Capital expenditure, excluding acquisitions and shares

1,191

7

25

12

56

14

172

-1

1,477

UPM presents comparable performance measures to reflect the underlying business performance and to enhance comparability from period to period. However, the comparable performance measures used by management should not be considered in isolation as a substitute for measures of performance in accordance with IFRS. Business area information including description of items affecting comparability is presented below.

18.4

11.4

40.2

15.6

-6.2

25.1

3.8

— —

11.7

Comparable ROCE, % Personnel, 31 December

2,692

72

3,016

1,918

6,422

2,196

650

16,966

1) Business area’s operating assets include goodwill, other intangible assets, property, plant and equipment, forest assets, energy shareholdings, investments in associates and joint ventures, inventories and trade receivables. Operating liabilities include trade payables and advances received. 2) Eliminations and reconciliations include the elimination of internal sales and internal inventory margin and the changes in fair value of unrealised cash flow and commodity hedges that are not allocated to segments. » Refer Other financial information on Alternative performance measures, for definitions of key figures and reconciliation to measures presented in the consolidated income statement and balance sheet prepared in accordance with IFRS.

160

UPM FINANCIAL REPORT 2021 161 UPM ANNUAL REPORT 2021 161

UPM ANNUAL REPORT 2021

UPM FINANCIAL REPORT 2021 160