UPM Annual Report 2021

BUSINESSES

UPM

BEYOND FOSSILS

STRATEGY

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2021

OFFERING RENEWAL UPM PLYWOOD We offer high-quality WISA® plywood and veneer products and solutions, mainly for the construction and transport industries.

OUR DIRECTION • Profitable growth through superior customer experience and operational excellence • A strengthened market position by increasing value and service packages • Delivering implemented bolt-on expansions and evaluating future growth opportunities

KEY FIGURES

2021 2020

Sales, EURm

492

405

Comparable EBIT, EURm

72

33

Capital employed (average), EURm

286 25.1

292 11.2

Comparable ROCE, % Personnel on 31 Dec.

2,196

2,301

OUR STRENGTHS • End use, market and customer insight

Comparable EBIT increased due to higher sales prices and delivery volumes. Variable and fixed costs were higher. In 2021, demand for spruce plywood was strong and demand for birch plywood was good.

• Leader in supply reliability with consistent high quality • Leading supplier in demanding end-use segments • Strongest brand on the market: WISA®

CASE

WISA WOODSAT - THE WORLD’S FIRST WOODEN SATELLITE WISA Woodsat, which will be launched into space in 2022, will test the suitability of wood material, especially birch plywood, for spacecraft structures. The satellite exposes the material over an extended period to extreme conditions of space such as hot, cold, vacuum and radiation. To observe the behaviour and changes in the colouring of the plywood surface, the sat ellite is equipped with a suite of sensors and a camera mounted on a 3D-printed metal selfie stick. The minimalistic 10x10x10 cm nanosat ellite has been designed and built in Finland. WISA Woodsat will be launched to polar orbit by Rocket Lab’s Electron launch vehicle. The launch will take place from the Mahia Peninsula launch complex in New Zealand. The satellite will be deployed by rocket to an orbit 550 kilometres above our planet. Travelling at a speed of 28,000 kilometres per hour, it will take about 90 minutes for it to travel around the Earth.

Plywood can replace many substances that are made from non-renewable rawmateri als, such as aluminium, concrete and steel. Plywood stores more carbon dioxide than is released in its manufacturing process. Our products are long lasting, carbon storing and made from responsibly sourced wood. Advantages of using WISA® plywood in building and construction include its struc tural strength, durability, and environmen tal certifications. Plywood is an excellent rawmaterial for vehicle flooring due to its weight-to-strength ratio, which has a posi tive impact on fuel consumption. Successful response to booming markets In 2021, themarket for spruce and birch ply wood was strong. Thanks to robust demand from construction and renovation activities, our performance was at record levels in terms of both earnings and operations. Our commercial strategy and organisational agility helped us successfully respond to the challenges of the rapidly growing demand for

birch and spruce plywood. Our efforts were rewarded with high customer satisfaction. The panel trading business and demand in industrial end uses improved significant ly. We greatly benefitted from the strategic asset portfolio development and the recent launch of new product categories. Further more, our services to stand out from the competition continued to strengthen the solutions we can offer our customers. The most challenging markets were the LNG carrier markets due to seasonal slow ing — fewer new vessels were ordered than planned. Also, the competition became more intense. In Europe, the plywood market faced some tension as a result of Brexit and the European Commission’s anti-dumping investigation into Russian birch plywood. Rawmaterial costs increased through out 2021, especially for chemicals, coatings and logs. In spite of this, we managed to achieve good operational efficiency, while improving our competitiveness with fewer plywood mills than in the previous year.

Seizing future growth potential Our aim is to further strengthen our leading position in high- and medium-range stan dard products, and in demanding industrial applications. Global megatrends and increasing environmental awareness support our commercial strategy and, together with ap plication-specific customer requirements, continue to be the key drivers of our R&D activities. We are continuously evaluating different options to enable further growth and aiming to strengthen our position in selected markets outside Europe. In December, UPMPlywood reached a 3-year labour agreement with employees and the Industrial Union. This modern agreement enables mill capacity to be used more efficiently and flexibly to respond to changes in market demand. UPMPlywood also announced a EUR 10 million invest ment in the UPM Joensuu plywood mill.

Sustainability makes us stand out Our “ResponsibilityMade Easy” promise consists of six focus areas: responsibility as a business partner; responsibly produced woodmaterial; responsibility for society and environmental performance; responsibility towards our customers; and innovations. The proven climate benefits of our products are reflected in the Environmental Product Declarations. We have also begun scaling up our WISA® BioBond gluing technology for spruce plywood products. This approach partly replaces fossil-based phenol with bio-based lignin in plywood manufacturing. Our positive carbon footprint aligns with our continuous efforts to offer our custom ers clear sustainability benefits. In 2021, our decision to gradually shift to only using zero-carbon electricity was an important step on our climate action path and the tran sition towards a low-carbon economy.

In addition to UPM Plywood, the Finnish space companies Arctic Astronautics and Huld are involved in the joint project. Supported by the European Space Agency (ESA), the data from the mission will be used for further product development. Fossil materials such as carbon fibre can be replaced by renewable wood-based materials, also in demanding applications.

www.wisawoodsat.space

www.wisaplywood.com

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UPM ANNUAL REPORT 2021

UPM ANNUAL REPORT 2021