UPM Annual Report 2023

BEYOND FOSSILS

UPM

BUSINESSES

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2023

DRIVING LONG-TERM VALUE CREATION

Top performance enables investments in growth, innovation and responsibility We aim for continuous improvement in our financial performance. We make good use of commercial strategies, tight cost control, materials and energy efficiency, effective capital allocation and efficient use of assets. We capture opportunities provided by our agile operating model, while capitalising on corporate synergies. Value-enhancing growth Consumer megatrends drive the demand growth for most of our products. This is further supported by the rapidly increasing need for sustainable alternatives to fossil-based materials and energy. We grow businesses with strong long-term demand fundamentals, where we have a clear competitive advantage. This underpins attractive returns on invested capital. We are in an intensive growth phase. The UPM Paso de los Toros pulp mill is growing UPM’s pulp production capacity by more than 50% at low costs; the OL3 nuclear power plant unit is increasing UPM Energy’s carbon-free electricity generation by nearly 50% at an opportune time, and the UPM Leuna biorefinery, due to start by the end of 2024, will open a completely new growth business in biochemicals. Responsibility is good business For us, sustainability is an important driver for growth and competitiveness. We capture the opportunities presented by increasingly responsible consumer choices and tightening regulations for mitigating climate change and answering the plastics challenge, for example. Responsible operations and value chains help to mitigate risks. Innovating for a future beyond fossils We innovate new growth businesses with a unique competitive position in biochemicals, biofuels, biomedicals and speciality packaging materials, for example. The successful commercialisation and scale-up of the businesses to a significant size are important. We protect our intellectual property. An improving business portfolio drives profitability and valuation Increasing our share of sustainability-driven higher-margin growth businesses improves our long-term profitability and boosts the value of our shares. On average, UPM’s growth businesses have more than two times higher EBIT margins than the mature graphic paper business.

Dividend per share CREATING SHAREHOLDER VALUE Making more sustainable choices increases demand for our products and attracts interest from investors. Our goal is to increase our earnings and valuation in the coming years, while offering an attractive dividend to our shareholders. -2.5% Share price 2023 EUR % Enterprise value and cumulative dividends EURm

Strong balance sheet Our strong balance sheet mitigates risks and enables us to implement our Biofore strategy even during uncertain times.

Attractive dividends We aim to pay attractive dividends, targeting at least half of the comparable earnings per share over time.

30,000

1.6

100

5-YEAR SHARE PERFORMANCE AND VALUATION MULTIPLES 2023

1.4

2022 34.93

2021 33.46

2020 30.47

2019 30.91

25,000

80

1.50 Dividend proposal EUR

1.2

Share price at 31 Dec, EUR Comparable EPS, EUR Dividend per share, EUR Dividend to comparable EPS, %

34.06

20,000

1.40

3.09 1.50

2.22 1.30

1.37 1.30

2.07 1.30

1.0

60

1.50 *)

0.8

15,000

107 4.4

49

59

95

63

40

0.6

Effective dividend yield, %

4.3

3.9

4.3

4.2

10,000

per share

0.4

P/E ratio

46.8 1.63 13.1

12.2 1.49

13.9 1.65 10.2

29.0 1.74 11.3

15.5 1.64

20

5,000

0.2

P/BV ratio 1)

Share of ESG-focused investors of all institutional shareholders 50%

EV/EBITDA ratio 2 )

8.3

8.7

0.0

0

0

18 19 20 21 16 17 14 15

22 23*

22 23 18 19 20 21 16 17 14 15

Market capitalisation, EUR million

18,165

18,629

17,845

16,250

16,485

Dividend EUR per share (2023 proposal) % of comparable EPS

*) 2023: Board’s proposal 1) P/BV ratio = Share price at 31 Dec./Equity per share 2) EV/EBITDA ratio = (Market capitalisation + Net debt)/EBITDA

Cumulative dividend Market capitalisation Net debt

*Board’s proposal

18

19

UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023