UPM Annual Report 2023

BUSINESSES

UPM

BEYOND FOSSILS

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2023

FIBRES FOR THE FUTURE UPM FIBRES - PULP

UPM has built a world-class global pulp supply network originating from Uruguay and Finland.

OUR DIRECTION • To grow with our customers

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

PLANNED ACTIONS FOR 2024 • Capture the full potential of our Uruguayan operations after the expansion • Commercialisation of new pulp volumes from UPM Paso de los Toros • Continue to improve cost competitiveness and operational efficiency of our Finnish pulp mills

• 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

SPOTLIGHT

KEY FIGURES 2023 FOR UPM FIBRES, INCL. UPM PULP AND UPM TIMBER BUSINESSES

EXCELLENT QUALITY

SALES

COMPARABLE EBIT

COMPARABLE ROCE

PERSONNEL on 31 Dec. 2,775

EURm 3,044

EURm 116

% 1.7

The new UPM Paso de los Toros pulp mill has reached high product quality ever since it was put into operation in April. The pulp manufactured at the mill is used by UPM’s global customer base to produce tissue, specialty, printing and writing papers. Deliveries to customers started in May. The mill reached technical readiness to start operations at the end of March. The actual start-up phase included many sub-processes, with production being gradually ramped up towards full nominal capacity. The Uruguayan environmental authorities approved all mill procedures, systems and technolo gies – a prerequisite for the mill being allowed to begin operations. A huge amount of planning, skills and hard work has gone into completing the project, with up to 7,500 people from 60 countries working on the site at its height. The end result is a great achieve ment for the teams involved, and indeed everyone in the organisation.

-13%

-80%

-8pp

More key figures on page 129

UPM Fibres responds to the growing needs for responsible and renewable products as the global community works to reduce its dependence on fossil materials. Our pulp business serves its customers with sustainably produced eucalyptus, birch and softwood pulp grades for a wide range of end uses such as tissue, specialty and graph ic papers, and board. Our timber business offers responsibly produced sawn timber and serves customers in the furniture, joinery, planing, construction and packag ing sectors. Room to improve In 2023, global chemical pulp demand was solid. Destocking impacted pulp demand in China in the first half of the year, but

demand improved in the second half in line with positive developments in end-use markets. In Europe, pulp demand was weak. Pulp sales prices declined in all markets to the bottom-of-the-cycle levels after all-time highs in the previous year. Prices started to recover in the second half of the year. In Uruguay, UPM’s transformative growth investment in the new Paso de los Toros pulp mill was concluded successfully and the mill began running in April (page 24). In Finland, scheduled maintenance shutdowns were successfully conducted at the UPM Kymi and UPM Kaukas pulp mills. We continued the product mix develop ment with an increased share of softwood in the Finnish pulp mills.

Sustainable demand outlook Global megatrends drive long-term demand growth for pulp. The demand for pulp is driven by the growing Asian middle class, increasing disposable incomes and a rise in the use of tissue and hygiene papers as well as paper and board based packaging materials. UPM is well positioned for growing pulp markets. The new UPM Paso de los Toros mill will place us among the world’s leading pulp producers, serving global pulp mar kets with nearly six million tonnes of pulp. Our strong position and sustainability across the forestry value chain in Uruguay and Finland enable our pulp business to grow and be competitive. Over the years, UPM has created in Uruguay a highly competitive industrial platform with two

world-class pulp mills, secure wood-supply from sustainably managed eucalyptus plan tations and efficient logistics. The new pulp mill will also improve the competitiveness of the UPM Fray Bentos pulp mill. In Finland, the increased share of softwood in the mills has strengthened the cost-compet itiveness of the pulp product mix. We are inspired by the limitless opportunities offered by the bioeconomy.

Solutions to mitigate climate change Pulp is at the core of the bioeconomy. We are actively seeking new solutions for the full potential of biomass by developing and piloting fibre based and bio-streams growth concepts for our pulp mills in cooperation with research institutes. In doing so, we see clear synergies and advantages in having in-house businesses focusing on replacing fossil materials with renewable solutions, such as lignin based chemicals. Our mills in Finland and Uruguay also produce renewa ble energy for national grids.

www.upmpulp.com

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UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023