UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Our strategy

Our businesses

Sustainability

REVIEW BY THE PRESIDENT AND CEO

Delivering performance and positioning for the future

"We took decisive actions to improve performance, accelerate growth and deliver value."

UPM delivered improved performance in 2024. Supported by the successful ramp-up of the UPM Paso de los Toros pulp mill and improved volumes in advanced materials, we navigated a year of gradual recovery.

However, the pace of market improvement slowed in the second half of the year. We implemented decisive measures to improve performance and were able to reduce fixed costs by EUR 103 million during the year. Our comparable EBIT 2024 increased by 21% from the previous year to EUR 1,224 million, or 11.8% of sales. Our operating cash flow and financial position remained solid. From transformation to growth UPM has transformed into a material solu tions company, with leading global market positions in several businesses. In 2024, nearly three quarters of the company’s sales came from our product range in renewable fibres, advanced materials and decarbonisa tion solutions. Geographically, already 46% of our sales originated from outside Europe. Today, we are well-positioned to seek value-enhancing growth in renewable fibres, advanced materials and decarbonisation solutions, serving customers in growing product segments and faster growing geogra phies. In the mature communication papers business, we continue to focus on strong cash flow generation. Creating value in an uncertain operating environment We enter 2025 with a broad portfolio of attractive businesses and valuable assets. To enhance the value of the company in the current uncertain operating environment, we are acting on three fronts: accelerating growth in targeted areas, improving overall performance and considering opportunities in our business portfolio.

In renewable fibres, 2025 will be the first year of full production at the UPM Paso de los Toros pulp mill in Uruguay. This will add approximately 300,000 tonnes of pulp production and unlock further potential in our highly competitive Uruguayan platform. We continue to optimise the Uruguayan business platform to drive down costs, and plan for debottlenecking opportunities at the mills to further increase production in the medium term. In Finland, the wood market remained structurally tight, keeping wood costs high. In the second half of the year, we imple mented a streamlined operating model that optimises the profitability of our Finnish fibres platform. As a result, we have been able to operate our well-maintained pulp mills profitably despite high wood costs and low pulp prices. In advanced materials, we aim to grow in the attractive labelling materials, specialty paper and flexible packaging markets, and faster growing geographies. The recent acquisitions of Metamark, Grafityp and AMC have given us a significant position in the fast-growing, high-value-added graphic solutions business. Both UPM Raflatac and UPM Specialty Papers are sharpening their competitiveness by reducing fixed costs, streamlining the product portfolio and opti mising production. With these measures, we aim for the businesses to improve margins and accelerate growth. In decarbonisation solutions, 2025 will be an exciting year as we launch the new business in UPM Biochemicals. The UPM Leuna Biorefinery has initiated the sequen

tial start-up, and the integrated commercial production of the site is expected to begin in the second half of 2025. Commercial interest in our products and side streams has been confirmed with customer agreements and we are managing a sales and product qual ification pipeline that is multiple times the annual capacity. This allows us to optimise the product mix. Finally, shaping the business portfo lio is an ongoing strategic process. This analysis is especially important in times of uncertainty and major shifts in the global operating environment. In UPM Fibres, we have built a very strong platform in Uruguay, which we can leverage for growth. In UPM Raflatac, we decided to build a strong position in the attractive graphics business through acquisitions. In biofuels, we decided to take two years to thoroughly validate and test the business case before taking the next larger growth steps. At the same time, we look forward to a successful launch of the biochemicals business and using the learnings for next steps. We exited the biocomposites business and plan to exit the biomedicals business to focus our development work. Sustainability is an integral part of our strategy and operations. We are commit ted to creating value for our customers, using sustainable, renewable feedstocks, fossil-free energy, reducing our own en vironmental footprint and enhancing our positive societal impact. Sustainability at the core of our operations

Our leading position in sustainability is based on world-leading standards, com mitment to respected global initiatives and third-party verification. We believe in science-based action and raising the bar on sustainability. Creating shareholder value The major investment cycle of 2020-2024 is coming to an end. We will maintain our disciplined capital allocation approach, targeting value-enhancing growth invest ments, while offering attractive sharehold er distribution and maintaining a strong balance sheet. We are confident in UPM's ability to create value from our portfolio of businesses and our recent large investments. On this basis, the Board of Directors has proposed a dividend of EUR 1.50 per share for the year 2024. The Board has also decided to launch UPM's first share buyback programme. In 2024, UPM’s teams once again demon strated their resilience by successfully navigating volatile markets and challenging conditions. I would like to thank them and all our customers, shareholders and other stakeholders for their continued commit ment and trust, and I look forward to our shared success in 2025!

WE RENEW THE EVERYDAY Our ability to innovate and our commitment to customers and sustainability have transformed us as a company. With our expertise and broad portfolio of materials and solutions, we enable sustainable everyday choices and the transition from fossil-based materials to renewables across multiple value chains. We strive to create value for our customers every day through the performance and quality of our products, the reliability of our service, and the sus tainability of our own actions. We want to be the trusted partner to our customers and stakeholders and make a positive impact to their lives through our daily actions and choices.

Massimo Reynaudo President and CEO

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024