UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

2. Business performance

1.5 Changes in accounting policies The group has reviewed IFRS Accounting Standard amendments effective on periods starting 1 January 2024. Classification of liabilities As of 1 January 2024, the group has adopted the amendments to IAS 1. According to the amendments, for a liability to be classified as non current, an entity must have the right to defer settlement of the liability for at least twelve months after the reporting period. The right must have substance and exist at the end of the reporting period and the classification of the liability must be unaffected by the likelihood that the company will exercise that right. The amendment did not have any impact on the group's financial statements. Other interpretations and amendments effective as of 1 January 2024, did not have any impact on group's financial statements. Income tax – OECD Pillar Two model rules The group is in the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted in Finland in 2023, the jurisdiction in which UPM is incorporated, and came into effect from 1 January 2024. The group applies the IAS 12 exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. The entities in scope will be liable to pay a top-up tax for the difference between their GloBe effective tax rate per jurisdiction and the 15% minimum rate. The Pillar Two legislation had no impact on income taxes for the current reporting period. » Refer note 7.1 Tax on profit for the year

Sales

Comparable EBIT

Comparable ROE

EUR 10,339 m

EUR 1,224 m

8.3 %

(6.2%)

(EUR 10,460m)

(EUR 1,013m)

2.1 Business areas UPM business portfolio consist of six competitive businesses with strong market positions. UPM reports financial information for the following business areas (segments): UPM Fibres, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers, UPM Plywood and Other operations. UPM has production plants in 11 countries. The group’s most important markets are Europe, North America and Asia.

Comparable EBIT, EURm

600

400

200

Accounting policies

0

UPM business areas are reported consistently, with the internal reporting provided to UPM’s President and CEO who is responsible for allocating resources and assessing performance of the business areas. Internal reporting is prepared under the same basis as the consolidated accounts. Costs, revenues, assets and liabilities are allocated to business areas on a consistent basis. The sales transactions between business areas are based on market prices, and they are eliminated on consolidation.

UPM Fibres

UPM Energy

UPM Raflatac

UPM Plywood

Other Operations

UPM Specialty Papers

UPM Communication Papers

2023 2024

Comparable ROCE, %

0 10 20 30 40

Capital employed 31 Dec 2024 EUR 15,452 million

Other operations 19%

UPM Communication Papers 7% UPM Plywood 2%

UPM Fibres 48%

UPM Fibres

UPM Energy

UPM Raflatac

UPM Plywood

UPM Raflatac 5% UPM Specialty Papers 5%

UPM Specialty Papers

UPM Communication Papers

UPM Energy 16%

2023

2024

UPM FINANCIAL REPORT 2024 264

264

UPM FINANCIAL REPORT 2024

265

265

UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024