UPM Annual Report 2022

BUSINESSES

UPM

BEYOND FOSSILS

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2022

FIBRES FOR THE FUTURE UPM FIBRES - PULP & TIMBER

The new pulp mill in Paso de los Toros will raise our position among the world’s leading eucalyptus market pulp producers.

OUR DIRECTION • For pulp : to grow with our customers. To provide the most versatile pulp range, advanced technical service and a reliable long-term supply with undisputed commitment to sustainability. To maintain cost-competitiveness through continuous operational improvement. • For timber : to fulfil our ambitious vision of becoming a sawn timber industry leader in sustainability. To enhance profitability

OUR STRENGTHS • Broad selection of sustainably produced pulp grades for a wide range of end uses • Modern, efficient pulp mills and expert teams committed to grow with customers • Industry-leading forest management and sustainable eucalyptus plantations • Fossil-free timber production with a dedicated global sales and logistics network

PLANNED ACTIONS FOR 2023 • Start-up of UPM Paso de los Toros pulp mill and commercialisation of new pulp volumes • Continue to improve operational efficiency in Finnish pulp mills • Continue to improve carbon footprint for sawn timber

through efficient wood supply, fully integrated production and focused commercial strategy. To have a streamlined business model that secures our position in chosen key markets and end-use segments.

We offer the industry’s most comprehensive product range of sustainably produced hardwood and softwood pulps.

KEY FIGURES 2022

SALES

COMPARABLE EBIT

COMPARABLE ROCE

PERSONNEL on 31 Dec. 2,688

EURm 2,704

EURm 570

% 9.7

-3%

-27%

-9pp

More key figures on page 128

CASE

Pulp responds to the growing needs for re sponsible and renewable products as the glob al community works to reduce its dependence on fossil materials. We serve our customers with sustainably produced eucalyptus, birch and softwood pulp grades for a wide range of end uses such as tissue, specialty papers, graphic papers, board and packaging papers. Our timber business offers certified sawn timber and serves our customers in the furniture, joinery, planing, construction and packaging sectors.

Pulp sales prices increased to record lev els and peaked in the third quarter in both main markets. In the fourth quarter, pulp sales prices decreased. In Finland, pulp operations were affected by a strike between January and April and by the scheduled maintenance shutdowns at UPM Kaukas and UPM Pietarsaari in the second quarter. In Uruguay, operations at the UPM Fray Bentos pulp mill were affected by a scheduled maintenance shutdown in the fourth quarter.

Good demand with record sales prices In 2022, the good demand for tissue and hygiene products as well as for packaging materials supported global pulp demand. In China, pulp demand growth was solid as the COVID-19 lockdowns and containment measures continued to impact consumer spending. In Europe, the markets re mained good. However, market demand started to slow down towards the end of the year and overseas competition returned after a two-year absence.

MORE PULP FOR NEW MARKETS

to grow, although annual growth levels may not be those seen in recent decades. We are committed to the market and to our customers and want to co-operate with well-established producers. Thanks to our new pulp capacity, we will also start selling pulp in North America, the world’s third largest pulp market. The North American market considers eucalyptus fibre and its techni cal properties to be superior in various end uses.

During the construction of the mill we strength ened our global sales organisation and now have our own sales team for North America. We have gradually been developing the organisa tion and our competences, furthering digitalisa tion in logistics and technical customer service, for example.

The greater part of the 2.1 million tonnes of pulp from the UPM Paso de los Toros mill coming to the market will be delivered to existing customers in Asia and in Europe but also to new customers in North America. The demand for market pulp is estimated to increase by about 3% annually. China remains the world’s largest pulp market. Pulp demand and production volumes continue

www.upmpulp.com

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UPM ANNUAL REPORT 2022

UPM ANNUAL REPORT 2022