UPM Annual Report 2024

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WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

UPM Fibres

UPM Energy

UPM Raflatac

UPM Specialty Papers

UPM Fibres consists of pulp and timber businesses. UPM Pulp offers a versatile range of responsibly-produced pulp grades suitable for a wide range of end-uses. UPM Timber offers certified sawn timber. UPM has three pulp mills in Finland, two mills and plantation operations in Uruguay and operates four sawmills in Finland.

UPM Energy generates cost competitive, zero-carbon electricity. Operations also include physical electricity and financial portfolio management as well as services to industrial electricity consumers. UPM Energy is the second largest electricity producer in Finland. UPM’s power generation capacity consists of hydropower, nuclear power and thermal power.

UPM Raflatac offers high-quality self adhesive paper and film products including label materials, graphics solutions and removable self adhesive products. UPM Raflatac is the second-largest producer of self adhesive label materials world wide.

UPM Specialty Papers offers labelling and packaging materials as well as office and graphic papers for labelling, commercial siliconising, packaging, office use and printing.

Comparable EBIT EURm

12 16

150

200 400 600

10 20 30

200

20 40 60

% of sales

100

0 4 8

23 24

2024 2023

Sales, EURm

3,728

3,044

Sales, EURm

627 188 30.0

628 189 30.2

Sales, EURm

1,562

1,485

Sales, EURm

1,467

1,485

Comparable EBITDA, EURm

844 22.6

407 13.4

Comparable EBITDA, EURm

177 11.3

146

Comparable EBITDA, EURm

208 14.2

172 11.6

% of sales

9.8

% of sales

Depreciation, amortisation and impairment charges, EURm

-7

Change in fair value of forest assets and wood harvested, EURm Share of results of associates and joint ventures, EURm Depreciation, amortisation and impairment charges, EURm

Depreciation, amortisation and impairment charges, EURm

-20

Operating profit, EURm

181 28.9

182 29.1

-71 88 5.6 -44

-47 81 5.5 -22

-74

-74 98 6.6

% of sales

Operating profit, EURm

132

Items affecting comparability in operating profit, EURm 1)

—

% of sales

9.0

% of sales

-437 419 11.2 -114 533 14.3

-273 116

Comparable EBIT, EURm

181 28.9

182 29.0

-3

—

Items affecting comparability in operating profit, EURm 1)

Operating profit, EURm

% of sales

Comparable EBIT, EURm

132

103

Comparable EBIT, EURm

135

% of sales

3.8

Capital employed (average), EURm

2,426 3,042

% of sales

8.5

7.0

% of sales

9.2

6.6

Items affecting comparability in operating profit, EURm 1)

—

Comparable ROCE, % Electricity deliveries, GWh

7.5

6.0

Capital employed (average), EURm

722 18.3

737 14.0

Capital employed (average), EURm

789 17.1

875 11.2

Comparable EBIT, EURm

116

11,328 12,059

Comparable ROCE, %

Comparable ROCE, % Paper deliveries, 1000 t

% of sales

3.8

1,429

1,407

1) 2023 includes EUR 3 million charges related to impairment of the Sierilä power plant project and EUR 3 million capital gain on sale of other non current assets.

1) 2024 includes EUR 11 million restructuring charges and EUR 26 million impairment charges related to the planned closure of Kaltenkirchen factory, EUR 6 million write down of inventory and an EUR 3 million insurance compensation related to Raflatac inventory in USA impacted by Hurricane Helene, and EUR 5 million relating to other restructuring measures. 2023 includes EUR 13 million restructuring charges and EUR 2 million impairment charges related to restructuring measures at the UPM Raflatac Nancy factory in France and EUR 7 million of other restructuring costs. 2024 compared with 2023 Comparable EBIT increased mainly due to higher delivery volumes and stable margins. Fixed costs increased. Market environment • In 2024, the global market for self-adhesive label materials grew from the low level in 2023, most notably in Europe. Sources: UPM, FINAT, TLMI

Capital employed (average), EURm

7,153

6,839

1) Items affecting comparability in 2024 relate to restructuring measures.

Comparable ROCE, % Pulp deliveries, 1,000 t

7.5

1.7

4,945

4,139

1) 2024 includes EUR 113 million goodwill impairment related to Pulp Finland and minor restructuring charges.

2024 compared with 2023 Comparable EBIT remained at the same level. Deliveries decreased, impacted by longer than expected maintenance shutdowns at the Olkiluoto nuclear power plant units. UPM’s average electricity sales price increased by 4% to EUR 51.4/

2024 compared with 2023 Comparable EBIT increased significantly due to higher delivery volumes and sales prices as well as lower variable costs. The completed ramp-up of UPM Paso de los Toros increased delivery volumes significantly. Fixed costs increased due to higher scheduled maintenance activities. The average price in euro for UPM’s pulp deliveries increased by 5%. Market environment • In 2024, chemical pulp demand was lower in China and solid in other main markets. Demand varied depending on end-use in all the main markets. • In 2024, the average European market price in euro was 17% higher for NBSK and 18% higher for BHKP, compared with 2023. In China, the average market price in US dollars was 2% higher for NBSK and 6% higher for BHKP, compared with 2023. • In 2024, demand for sawn timber was still subdued due to low construction activity in many areas. Prices recovered compared to 2023 but were offset by strongly increasing wood costs.

2024 compared with 2023 Comparable EBIT increased. The positive impact of lower input costs more than offset the negative impact of lower sales prices. Delivery volumes increased for specialty grades, and decreased for fine grades. Market environment • In 2024 demand for label, release base and packaging papers was solid. • In 2024, market prices decreased compared to 2023. Sources: UPM, RISI, AFRY, AWA

MWh (49.2/MWh). Market environment

• The Nordic hydrological balance was well above the long-term average at the end of December. In Finland, the hydrological situation was close to the long-term average. • The CO 2 emission daily future price of EUR 70.95/tonne at the end of 2024 was lower than at the end of 2023 (EUR 77.25/tonne). • The average Finnish area spot price on the Nordic electricity exchange in 2024 was EUR 45.6/MWh, 19% lower than in 2023 (EUR 56.5/MWh). Sources: The Norwegian Water Resources and Energy Directorate, Svensk Energi, Finnish Environment Institute, Nord Pool, NASDAQ OMX, ICE, UPM

Sources: FOEX, UPM

UPM FINANCIAL REPORT 2024

116

UPM FINANCIAL REPORT 2024

117

116

117

UPM ANNUAL REPORT 2024

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