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

5. Capital structure

Repayments of debt and maturities of unused committed credit lines at the end of 2024

UPM has a strong cash flow and industry-leading balance sheet that mitigates risks and enables value-enhancing strategic actions.

2,000

Net debt

Free cash flow

1,500

Leases Loans Unused committed credit lines

EUR 2,869 m

EUR 766 m

1,000

EURm

(EUR 2,432m)

(EUR 1,193m)

500

5.1 Capital management UPM’s objective for managing capital comprising of net debt and total equity is to ensure maintenance of flexible capital structure to enable the ability to operate in capital markets and maintain optimal returns to shareholders. The group manages its financing activities, debt portfolio and financial resources via various policies that are designed to ensure optimum financing arrangements minimising simultaneously financial expenses and refinancing risk and optimising liquidity. Borrowing activities are centralised to the parent to the extent possible and cash resources are distributed within the group by the central treasury department. UPM targets a net debt to EBITDA ratio of approximately 2 times or less. UPM’s capital

Liquidity and refinancing risk

2025 2026 2027 2028 2029 2030+

Under all circumstances, UPM seeks to maintain adequate liquidity, which depends on a number of factors, such as the availability of cash flows from operations and access to additional debt and equity financing. UPM aims to ensure sufficient liquidity by means of efficient cash management and restricting financial investments to investment types that can readily be converted into cash and by keeping a sufficient amount of unused committed credit lines or cash as a reserve. UPM aims to minimise refinancing risks by ensuring a balanced loan portfolio maturing schedule and sufficiently long maturities. The average loan maturity at 31 December 2024 was 5.5 years (5.1 years).

Maturity table of debt at the end of 2024

EURm Bonds

2025

2026

2027

2028

2029 2030+

Total 2,711

—

361

750

500

1,100

Loans from financial institutions

31 81

31 69

31 63

31 55

188 832 131

Lease liabilities

115

451

Other loans

2 1

— —

129

— —

Current loans and debt held for sale

—

Principal payments Interest payments

152 102

112

461

844

714

1,581

3,863

93 620 The difference between the above nominal values and carrying value of total debt arise from fair value adjustments decreasing carrying value by EUR 26 million and other non-cash adjustments decreasing carrying value by EUR 23 million. 91 63 56 215

Liquidity and refinancing

EURm

2024 2023

EURm

2024 2023

Cash at bank

849

613

Equity attributable to owners of the parent company

11,139

11,161

Cash equivalents

19 39

Maturity table of debt at the end of 2023

Non-controlling interest

401

370

Cash classified as assets held for sale

—

Total equity

11,540

11,531

Investment funds

EURm Bonds

2024

2025

2026

2027

2028 2029+

Total 2,089

Non-current debt

3,747

3,056

Committed credit lines

2,310

2,909

—

339

750

1,000

Current debt

166

327

of which used

— —

Loans from financial institutions

20 94

34 97

31 64

31 53

31 50

208 706 137 183

Debt held for sale

—

Loan commitments

—

Lease liabilities

348 135

Total debt

3,913

3,385

Used uncommitted credit lines

-1

-182 -114

Other loans

—

— —

Total capitalisation

15,452

14,916

Long-term loan repayment cash flow

-151

Current loans and debt held for sale

183 297

—

Total debt

3,913

3,385

Debt held for sale

—

-2

Principal payments Interest payments

133

95 62

423

830

1,545

3,323

Less: Interest-bearing financial assets and investment funds

Liquidity

3,050

3,284

75 409 The difference between the above nominal values and carrying value of total debt arise from fair value adjustments decreasing carrying value by EUR 45 million and other non-cash adjustments decreasing carrying value by EUR 20 million. 66 61 34 111

1,044

906

Less: Interest-bearing financial assets held for sale

—

Cash and cash equivalents comprise cash in hand, deposits held at banks and with original maturities of three months or less. Investment funds comprise fund investments with a redemption period of less than 12 months. Commercial papers and utilised bank overdrafts are included in used uncommitted credit lines and presented within current debt in the balance sheet. In 2024 or 2023, no material impairment and no expected credit losses were recognised in profit or loss for loan receivables or cash and cash equivalents.

Net debt

2,869

2,432

Gearing ratio, % 1) Net debt to EBITDA 1)

1.66 1.55 1) Refer » Other financial information on Alternative performance measures.