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

Business area information for the year ended 31 December 2024

The goods and services included in sales revenue of each business area are presented in below table:

BUSINESS AREA

DESCRIPTION AND PRODUCTS

ELIMINATI ONS AND RECONCILI -ATIONS 2)

UPM Fibres

UPM Fibres consists of UPM Pulp and UPM Timber business units.

UPM SPECIALTY PAPERS

OTHER OPE RATIONS

UPM FIBRES

UPM ENERGY

UPM RAFLATAC

UPM COM PAPERS

UPM PLYWOOD

UPM Pulp offers a versatile range of responsibly-produced pulp grades suitable for a wide range of end-uses such as tissue, specialty and packaging papers, graphic papers and board.

EURm, OR AS INDICATED

GROUP

External sales Internal sales

3,108

487 139 627 181

1,562

1,272

2,920

409

582

-1

10,339

UPM Timber offers certified sawn timber for joinery, packaging, furniture, planing and construction end-use segments.

621

—

195

-1,049 -1,051

—

Total sales

3,728

1,562

1,467

2,953

430

623

10,339

UPM Energy

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 and producers.

Comparable EBIT

533

132

135

273

-52

-20

1,224

Items affecting comparability in operating profit

UPM Raflatac

-114 419

—

-44 88

-3

-83

—

-382 -434

-620 604 -104

UPM Raflatac offers innovative and sustainable self-adhesive label materials for branding and promotion, information and functional labelling in the food, beverage, personal care, pharmaceutical and logistics segments, for example. UPM Specialty Papers offers labelling and packaging materials as well as office and graphic papers for labelling, commercial siliconising, packaging, office use and printing. UPM Communication Papers offers an extensive product range of sustainably produced graphic papers for advertising and publishing as well as home and office uses. UPM Plywood offers high quality WISA® plywood and veneer products for construction, vehicle flooring, LNG shipbuilding, parquet manufacturing and other industrial applications. Other operations include UPM Forest, UPM Biofuels, UPM Biochemicals-, UPM Biomedicals- business units and group services. UPM Forest secures competitive wood and biomass for UPM businesses and manages UPM-owned and privately-owned forests in North Europe. In addition, UPM offers forestry services to forest owners and forest investors. UPM Biofuels produces wood-based renewable diesel for all diesel engines and renewable naphtha that can be used as a biocomponent for gasoline or for replacing fossil raw materials in the petrochemical industry. UPM Biochemicals offers innovative wood-based biochemicals for replacing fossil-based raw materials in various applications such as textiles, PET bottles, packaging, cosmetics, pharmaceuticals, detergents, rubbers and resins. UPM Biomedicals is the forerunner in producing nanofibrillar cellulose for clinical and life science applications in the field of drug screening, personalised medicine, advanced cell therapies, 3D bioprinting, tissue engineering and wound care. UPM Biocomposites is a pioneer in circular economy offering composite decking materials based on both recycled consumer and industrial waste. The product range also includes composite materials made from renewable fibres and polymers to replace fossil-based plastics.

Operating profit Finance costs, net

181

132

190

-13

UPM Specialty Papers

Income taxes

-37

Profit for the period Operating assets 1) Deferred tax assets

463

UPM Communication Papers

7,772

2,562

862

1,036

1,500

275

3,331

-332

17,005

526

UPM Plywood

Other non-operating assets

Other financial assets

1,502

Other operations

Total assets

19,096

Operating liabilities 1) Deferred tax liabilities

422

149

274

376

394

-308

1,375

673 603

Other liabilities

Other financial liabilities

4,906 7,556

Total liabilities

Other items Change in fair value of forest assets and wood harvested Share of results of associates and joint ventures Depreciation and amortisation

—

-1

— — —

-316 -121

-7

-45 -26

-71

-68 -32

-23

-47

-576 -562

Impairment charges

—

-2

—

-380

Capital employed, 31 December

7,350 7,153

2,527 2,426

713 722

762 789

1,125 1,151

241 243

2,937 3,129

-201 -428

15,452 15,184

Average capital employed

Capital expenditure

335

—

550

Capital expenditure, excluding acquisitions and shares

Key performance indicators and financial targets UPM aims to grow its comparable EBIT over the long term. The group has a portfolio of five businesses that operate on growing markets and one business that faces declining demand. All of UPM's businesses are competitive and have strong market positions. Financial target setting, follow up and allocation of resources in the group’s performance management process is mainly based on the business area comparable EBIT and comparable ROCE.

335 -1.7

— — —

527

Comparable ROCE, % Personnel, 31 December

7.5

18.3

17.1

23.8

17.1

8.2

UPM presents comparable performance measures to reflect the underlying business performance and to enhance comparability from period to period. However, the comparable performance measures used by management should not be considered in isolation as a substitute for measures of performance in accordance with IFRS. Business area information including description of items affecting comparability is presented below.

2,740

3,224

1,945

5,190

1,598

1,039

15,827

1) Business area’s operating assets include goodwill, other intangible assets, property, plant and equipment, forest assets, energy shareholdings, investments in associates and joint ventures, inventories and trade receivables. Operating liabilities include trade payables and advances received. 2) Eliminations and reconciliations include the elimination of internal sales and internal inventory margin and the changes in fair value of unrealised cash flow and commodity hedges that are not allocated to segments. » Refer Other financial information on Alternative performance measures, for definitions of key figures and reconciliation to measures presented in the consolidated income statement and balance sheet prepared in accordance with IFRS Accounting Standards.