UPM Annual Report 2024

WE ARE UPM

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ACCOUNTS AND PERFORMANCE

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Sustainability

The UPM Paso de los Toros pulp mill is an important milestone for UPM

UPM enters the biochemicals business with a new biorefinery in Leuna

IN BRIEF • Annual production capacity of 220,000 tonnes of 100% wood-based biochemicals • Investment estimated at EUR 1,275 million • Competitive wood supply, unique production process and efficient logistics • The ROCE target for UPM Biochemicals is 14% The biorefinery will convert solid wood into next-generation biochemicals: bio-mo noethylene glycol (BioMEG) and Renewable Functional Fillers (RFF). The biorefinery will also produce bio-monopropylene glycol (BioMPG) and industrial sugars. End-use seg ments for renewable glycols include textiles, PET bottles, packaging, coolants, composites, pharmaceuticals, cosmetics and detergents. Lignin-based Renewable Functional Fillers (RFF) provide a sustainable alternative to carbon black and precipitated silica in a wide UPM Biochemicals offers innovative, sustain able and competitive wood-based biochem icals to replace fossil-based raw materials and improve environmental performance in various applications. Our products are uniquely positioned to decarbonise the raw material supply of our customers and major global brand owners. The biorefinery will create new market opportunities for UPM with significant growth potential.

IN BRIEF • Annual production capacity of 2.1 million tonnes of eucalyptus pulp • Total investment USD 3.47 billion • Full production from Q3 2024 • High safety and sustainability standards • World-class cost competitiveness • Competitive wood supply, best available techniques and efficient logistics • The deep-sea pulp terminal and port operations in Montevideo • The rail connection from the mill to the port terminal in full use at the end of 2024 The new world-class pulp mill has signifi cantly increased UPM’s earnings and share holder value by increasing pulp capacity by more than 50%. This has positioned us as one of the world’s leading suppliers of eucalyptus pulp. The positive long-term outlook for pulp demand is driven by global megatrends such as urbanisation, population growth and the need for renewable materials. With the new capacity and stronger global customer reach, we are well positioned to capture opportunities of growing end-use markets competitively. The mill complies with strict Uruguayan environmental regulations and international standards. Our extensive environmental mon itoring programme covers water and biota, air, soil, noise, and socioeconomic aspects. The UPM Paso de los Toros mill features state-of-the-art design, high automation, and

premium-quality pulp production. It gener ates a surplus of about 1 TWh of renewable wood-based electricity annually, contribut ing to Uruguay’s energy balance. UPM’s eucalyptus plantations in Uru guay provide a renewable raw material base, secured through owned and leased

plantations and wood sourcing agreements with private land owners. These plantations act as significant carbon sinks and neither compete with food production nor affect natural forests.

Paso de los Toros pulp mill

range of rubber and plastic applications. The combination of wood from sustainably managed forests, a unique technology con cept, integration into the existing infrastruc ture at Leuna and proximity to customers will ensure the competitiveness of the operation. The commissioning and start-up was initi ated in late 2024 and good progress has been made in most units. However, in the quality assurance checks, certain corrective works required in the sugars-to-chemicals process were identified. These works have been arranged and will take a few months. Mean while, the sequential start-up in the other units continues. The integrated commercial production of the site is expected to start in H2 2025. The biorefinery is expected to reach full production and positive EBIT in 2027. All teams, business processes and systems are operational, we have secured the required materials to start and run the refinery as well as the infrastructure and

capacity to ship our products. Commercial interest in the products and side-streams has been confirmed with cus tomer contracts. We are managing a sales and customer qualification pipeline multiple times the annual capacity. Commercial activities con tinued to proceed positively in various product and application areas. For example, commer cial partnerships for both UPM BioPura™ renewable bio-monoethylene glycols and UPM BioMotion™ Renewable Functional Fillers products were successfully launched. UPM Biochemicals has established part nerships with companies such as Nokian Tyres (page 47), Södra and Bormioli Pharma to develop innovative products using its bio chemicals. These partnerships demonstrate the potential for sustainable alternatives in various industries, including automotive and pharmaceutical packaging.

• High standards of safety and sustainability in the value chain • Biorefinery expected to reach full production and positive EBIT in 2027 • Extensive partner network in multiple value chains

UPM Leuna Biorefinery

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024