UPM Annual Report 2023

BUSINESSES

UPM

BEYOND FOSSILS

RESPONSIBILITY

GOVERNANCE

ACCOUNTS FOR 2023

ON GROWTH TRACK UPM RAFLATAC We deliver long-term value in the attractive packaging materials value chain and are expanding our product portfolio to include new applications.

OUR DIRECTION • Profitable organic growth, potentially complemented by acquisitions • Expanding customer reach through commercial excellence • Widening product portfolio with high-value added and sustainable products • Productivity improvement in everything we do

OUR STRENGTHS • Safe and sustainable products for various end uses • Global customer reach, delivery network and efficient supply chain • Global-scale R&D and technical expertise • Modern, strategically located production assets

PLANNED ACTIONS FOR 2024 • Continue with the Germany-based AMC integration • Capture growth opportunities and expand product portfolio to new applications • Continue new concepts in sustainability and the circular bioeconomy • Continue to improve productivity

SPOTLIGHT

KEY FIGURES 2023

LOOKING BEYOND THE LABEL

SALES

COMPARABLE EBIT

COMPARABLE ROCE

PERSONNEL

UPM Raflatac’s Label Life service provides essential information on the en vironmental impact of our label materials using Life Cycle Assessment (LCA). In 2023, UPM Raflatac received a new certificate of validity for the service from international assurance service pro vider DEKRA. The new certification lends credibility to the process of generating LCAs on a large scale, thus supporting customers and brands with greater assurance when making decisions and communicating about sustainability. With the EU currently developing a digital product passport (DPP) for all products on the market, UPM Raflatac has designed its very own product passport prototype (PPP), an environmental declaration based on existing standards and validated by DEKRA. It includes several metrics that are broken down into life cycle stages: cradle-to-gate, transport-to-customer, printing, and end of life. Label Life is available for over 90% of our commercial portfolio.

EURm 1,485

EURm 103

% 14.0

on 31 Dec. 3,100

We have reached our all papers certified target years ahead of time. as our main partner in label waste recycling in the EMEIA region (Europe, the Middle East, India and Africa). The company now supports our RafCycle™ recycling process by transforming label waste into new con struction and insulation materials. Our ambition remains to be the world’s first label materials company to go beyond fossils. We published our first Climate Re view to describe our progress on three key areas in 2022: forest and land, emissions and efficiency, and products and servic es. These areas form the backbone of our ambitious climate targets set for 2030. We managed to reach our target of 100% cer tified papers by the end of 2023, six years ahead of time.

part of the packaging, but they can play a significant role in reducing a package’s environmental footprint and optimising its recyclability. In 2023, we expanded our wash-off port folio with new paper label materials that enhance the recycling of PET and HDPE plastics. Our CarbonNeutral ® certified products now cover the entire lifecycle of the label and enable our customers to prove that their printed and converted labels are carbon neutral. The development builds on our Life Cycle Assessment service, Label Life, which received a new certificate of va lidity from leading international assurance service provider DEKRA (on the left). Our innovative Ocean Action label won the Sustainability Award at the Label In dustry Global Awards 2023. The award rec ognises companies demonstrating progress towards a sustainable future for the global labels industry. The Ocean Action label is the world’s first certified label material to fight ocean-bound plastic pollution. We have developed our label waste recy cling service further by selecting Soprema

-25%

-52%

-17pp

More key figures on page 130

We create value for customers and brand owners with innovative and sustainable self-adhesive paper and film products for a wide variety of end uses. Our product and ser vice offering, reliable supply chain and wide distribution network enable printers and con verters to serve their customers effectively. Executing our long-term strategy in a difficult market environment The year 2023 was characterised by a his torically unprecedented decline in market demand for self-adhesive labelling materi als in Europe and North America. Destock ing and low consumer demand impacted our business, and subsequent recovery and improvement started to be visible only towards the end of the year.

However, we managed to protect our performance by continuing with tight margin management, adjusting our capacity and resources to the lower market demand, and taking cost-reduction actions in all parts of the organisation. The headcount impact of these actions is 300. Despite the challenges, we made sub stantial progress in executing our strategy. Our key achievements included: • Expanding our sustainability services and SmartCircle wash-off product portfolio • Developing new growth platforms includ ing linerless and graphics solutions • Successfully integrating the previously acquired AMC AG in Germany • Opening a new state-of-the-art slitting and distribution terminal in Rosarito,

Mexico, allowing us to better serve our customers in North America • Enhancing our digital customer reach The long-term outlook for self-adhesive label materials remains positive and we are well positioned in growing and diverse end uses. While the market environment re mains dynamic, our focus in the short term is to protect our performance and emerge even stronger as the markets normalise. Leader in sustainable labelling Driven by resource scarcity, climate change and tightening regulation, sustain ability is a pivotal factor that will shape the packaging industry in the years to come. Labels might only constitute a small

www.upmraflatac.com

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UPM ANNUAL REPORT 2023

UPM ANNUAL REPORT 2023