UPM Annual Report 2021

BUSINESSES

UPM

BEYOND FOSSILS

STRATEGY

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2021

LABELLING A SMART FUTURE UPM RAFLATAC We respond to the accelerating need for sustainable labelling solutions and aim to be the first label materials company beyond fossils.

OUR DIRECTION • Profitable organic growth, potentially complemented by acquisitions • Expanding customer reach through commercial excellence • Widening product portfolio, especially through innovation of high-val ue-added and sustainable products • Productivity improvement in everything we do OUR STRENGTHS • End-use-focused product offering • Sustainability and product safety leadership • Global customer reach, delivery network and efficient supply chain • Global-scale R&D and technical expertise • Modern, strategically located production assets

KEY FIGURES

2021 2020

Sales, EURm

1,671

1,560

Comparable EBIT, EURm

223 553 40.2

214 542 39.5

Capital employed (average), EURm

Comparable ROCE, % Personnel on 31 Dec.

3,016

3,087

Comparable EBIT increased due to improved mix and margin management. Variable costs were higher. Global demand for self-adhesive label materials continued healthy in 2021.

CASE

We create unique value to customers and brand owners with innovative and sustainable label materials. Our products respond to con sumer trends such as packaging unit growth and e-commerce whilst meeting the needs of various industries in our value chain. Our product and service offering enables printers and converters to serve their customers effectively. Together with our partners we are labelling a smarter future beyond fossils. Significant progress in our core strategy Wemade significant progress in our strategy with a clear focus on growth and customers. We scaled up our linerless production capac ity and invested in a new production line in NowaWies, Poland. The new production line started-up at the end of 2021. The investment strengthens our position in the fast-growing linerless labelstockmarket driven by sustain ability and the need for increased efficiency. We continued developing our digital customer experience through MyRAF

solutions supporting brand owners' goals to reduce, recycle, renew and reuse pack aging materials. We also received several recognitions for our products' enabling of recyclability. Packaging recyclability and climate con tinued to be the main trends in sustainabil ity. We are committed to positive climate actions in line with UPM's commitment to pursue science-based measures limiting the global temperature rise to 1.5 °C and to uphold the Climate Pledge. For example, we introduced RAFNXT+ as the world's first CarbonNeutral®-certified label material (right). The demand for sustainable label solutions continues on a high level. During the year, we further developed our product portfolio and service offering like Raf- Cycle and Label Life lifecycle assessment to meet these needs. Currently, six of our ten production sites use 100% renewable electricity.

chain and customer reach provides our cus tomers with an unparalleled service level in all markets. New growth segments such as liner less and print on demand are creating new business opportunities for us. We are also proactively following changes in the packaging industry to adjust our product portfolio accordingly. Our drive to improve efficiency and productivity supports our growth. Our three-year programme Step Change in Productivity, launched in 2019, drives significant productivity growth across our production sites. The first label materials company beyond fossils UPMRaflatac's aim is to be the world's first label materials company to move beyond fossils, designing more sustainable solutions for the packaging industry. To reach this target, we launched several label

LATAC. This portal provides customers an unparalleled order-to-delivery experience 24/7. The tool's geographical roll-out will continue covering all regions and custom er take-up is accelerating. Our RafCycle TM recycling service was further expanded to over 250 partners globally. We achieved strong financial result amidst the challenging conditions. Thanks to the capability and grit of our employees we have ensured business continuity by sustaining our operations and excellent customer service. We took firm actions to mitigate increasing input costs and raw material shortages. Solid long-term growth The long-term outlook for pressure-sen sitive label materials remains solid. UPM Raflatac is in a good position to grasp the growth opportunities as the leading suppli er with solutions covering most industries and label applications. Our global supply

WORLD FIRST CARBON NEUTRAL LABEL MATERIAL Global consumer brands are facing increasing pressure to reduce the footprint of packaging. It can mean using less raw materials, increasing the use of renewable and recycled materials, as well as making it easier to recycle products. Alongside the label material verified by the Carbon Trust in 2019, we have now introduced thinner and lighter RAFNXT+, the world’s first CarbonNeutral® certified label material issued by Natural Capital Partners. It allows companies to compensate their unavoidable emissions by supporting certified emission compensation projects, which helps them reduce their climate impact in a way that can be taken into account when calculating their carbon footprint. We currently operate four carbon offsetting compensation projects that fight the causes of climate change, bring additional benefits including the supporting of local communities, for example, and are linked to UN SDGs. Col

laboration with Natural Capital Partners helps ensure that the investments are going to the right place and that the reduction in carbon emissions is both quantifiable and verifiable. The current projects are grassland conser vation in the US, improved water construction in Africa and cleaner cooking solutions in Ban gladesh and China. Additional compensation projects will also be initiated to meet demand.

www.upmraflatac.com

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UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021