UPM Annual Report 2023

ACCOUNTS FOR 2023

UPM

BEYOND FOSSILS

BUSINESSES

RESPONSIBILITY

GOVERNANCE

2.2 Sales UPM generates revenue mainly from the sale of goods, i.e. several types of products. The majority of UPM’s revenue comes from sales of graphic and specialty papers to publishers, retailers, printing houses, merchants and distributors, converters and label stock manufacturers; sales of self adhesive label materials to label printers and brand owners and sales of pulp products to tissue, board, specialty and graphic paper producers. The revenue comprises also sales of energy, biofuels, sawn timber and plywood products and a very limited amount of services not related to sale of goods. UPM sells a proportion of its products to several major customers. The largest customer in terms of sales represented approximately 2% (3%) of UPM’s sales and the ten largest customers represented approximately 13% (15%) of such sales. The group disaggregates its external sales by business area, because this depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Sales by UPM business areas are reported consistently with the internal reporting provided to UPM’s President and CEO who is responsible for allocating resources and assessing performance of the business areas. The goods and services included in sales revenue of each business area are presented in below tables.

Items affecting comparability

Total assets and capital expenditure by country

Sales by business area

Assets

Capital expenditure

EURm

2023 2022

EURm Finland

2023 2022 2023 2022

In operating profit Impairment charges Restructuring charges

EURm

2023 3,044

2022 CHANGE %

-117 -199

-80 -15

8,633 2,139 5,817

12,478

153 358 581

82

UPM Fibres UPM Energy UPM Raflatac

2,704

13 % -14 % -25 % -11 % -26 % -22 % 26 %

Germany Uruguay

1,946 5,364

468 980

Change in fair value of unrealised cash flow and commodity hedges Capital gains and losses on sale of non-current assets

628

734

-2

13

1,485 1,485 3,598

1,982 1,677 4,866

China

572 463 103 106

680 660 108

4

4 9 1 1 6 2 1

UPM Specialty Papers

—

34

United States

12

UPM Communication Papers

United Kingdom

4

Fair value changes of forest assets

-86

—

UPM Plywood

422 802

539 634

Austria Russia Poland Estonia France

96 31

— —

Other items

—

-74

Other operations

—

—

Total

-405

-122

Eliminations

-1,003 10,460

-1,415 11,720

—

145

179

4 1 2

In finance costs

-65

—

Total

-11 %

47 27 54

55 37 65

Total in profit before tax

-470

-122

In income taxes Taxes related to items affecting comparability

107

9

Other EU countries Other European countries

—

—

Tax provisions

2

-10

32

40

—

—

Total

109 -361

-1

Rest of world

335

467

1

2

Total in profit for the period

-122

Total

18,473

22,207

1,122

1,555

In 2023, items affecting comparability include EUR 120 million restructuring charges and EUR 112 million impairment charges of fixed and leased assets related to the closure of the UPM Plattling paper mill in Germany, EUR 30 million restructuring charges relating to the closure of paper machine 6 at the UPM Schongau mill in Germany, EUR 10 million charges related to the sale of the Steyrermühl site in Austria and EUR 13 million restructuring charges and EUR 2 million impairment charges related to restructuring measures at the UPM Raflatac Nancy factory in France. Fair value decrease of forest assets EUR 86 million results from changes of estimates and increase in discount rate used in valuation of forest assets in Finland. Items affecting comparability in finance costs include EUR 71 million exchange rate losses related to the sale of Russian subsidiaries. In 2022, items affecting comparability include EUR 80 million impairment charges of assets impacted by Russia´s war in Ukraine. Other items include EUR 69 million settlement loss resulting from replacement of a defined benefit pension plan in Finland with defined contribution plan. Tax provisions relate to tax dispute.

» Refer Note 2.1 Business areas for information on UPM products.

Sales by destination country

External sales by major products

EURm Finland

2023 2022

1,267 1,469 1,366

973

BUSINESS AREA

BUSINESS

2023

2022

Germany

2,032 1,623

EUR million UPM Fibres UPM Energy UPM Raflatac

United States

UPM Pulp, UPM Timber

2,452

2,052

United Kingdom

548

676

UPM Energy UPM Raflatac

486

343

China France

1,533

1,165

1,485 1,300 3,570

1,981 1,423 4,792

435

501

UPM Specialty Papers

UPM Specialty Papers

Uruguay

66

56

UPM Communication Papers

UPM Communication Papers

Poland Austria Russia

301 160

402 194

UPM Plywood

UPM Plywood

402

518

UPM Forest, UPM Biofuels, UPM Biochemicals, UPM Biomedicals, UPM Biocomposites

Other operations

768

608

0

37

Other EU countries

1,594

2,033

Eliminations and reconciliations

-3

2

Other European countries

306

388

Total

10,460

11,720

Accounting policies

Rest of world

1,415

1,639

Total

10,460

11,720

BUSINESS

PRODUCT RANGE

Certain non-operational or non-cash valuation transactions with significant income statement impact are considered as items affecting comparability and reported separately to reflect the underlying business performance and to enhance comparability from period to period. The group applies relevant IFRS Accounting Standards to such transactions.

UPM Pulp

Softwood, birch and eucalyptus pulp Standard and special sawn timber

UPM Timber UPM Energy UPM Raflatac

Electricity and related services

Self-adhesive paper and film label stock

UPM Specialty Papers

Labelling materials, release base papers, flexible packaging materials, office papers, graphic papers

UPM Communication Papers

Graphic papers for various end uses

UPM Plywood

Plywood and veneer products

UPM Forest

Wood and wood-based biomass (logs, pulpwood, chips, forest residues etc.), full forestry service offering Wood-based renewable diesel for transport and renewable naphtha for transport and petrochemicals

UPM Biofuels

UPM Biochemicals UPM Biomedicals UPM Biocomposites

Lignin products for industrial use

Wood-based products for biomedical applications UPM ProFi decking products and UPM Formi granules

176

177

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023

UPM FINANCIAL REPORT 2023

176

UPM FINANCIAL REPORT 2023

177