UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Our strategy

Our businesses

Sustainability

UPM Fibres leads the multifibre pulp industry with solid platforms in Uruguay and Finland. Our sustainable forestry operations, efficient sawmills, state-of-the-art pulp mills, logistics and customer-centricity give us a strong competitive edge in meeting the growing global demand for sustainable solutions. UPM Fibres

At the end of 2024, we owned 916,000 hectares of forest land in Finland, Uruguay and the USA. Most of this land is in Finland, totalling around 522,000 hectares. In Uruguay, we own about 318,000 hectares of eucalyptus plantations, grasslands and conservation areas, and 76,000 hectares of forest in the USA. We also lease about 174,000 hectares in Uruguay and manage about 1.6 million hectares of private forests in Finland. Our commercial forests and tree plan tations are a strategic choice for us. The value of our forests and plantations, includ ing land, was over EUR 3.5 billion in 2024. We source wood as raw material for UPM's sustainable and recyclable prod ucts from a total of 15 countries. Wood harvested from our forests and plantations and from our partners covers about 65% of our annual wood demand globally. We receive around 18 million cubic metres of wood from our own sources of a total con sumption of 28 million cubic metres. In Uruguay, 90% of the wood delivered to the two pulp mills comes from our own or leased plantations. In Finland, this share is about 50%. We buy wood from around 14,500 private forest owners in Finland. Partnership in wood trade means jointly agreed, planned and long-term measures to ensure sustainable forest management. Sustainable growth, economic returns and consideration for biodiversity are key elements of the partnership. In Central Europe, we source wood for paper mills and for the new Leuna Biorefin ery. The paper mills mainly use spruce as a raw material. The main raw material for the biorefinery is beech from private forest owners. Our business is based on the use of forest biomass. We follow the same strict sustainability standards wherever we oper ate. Good forest management allows us to increase the use of forests while strength ening their carbon stocks and biodiversity. AVAILABILITY OF WOOD RAW MATERIAL IS FUNDAMENTAL

UPM Fibres is the world's leading pulp pro ducer with a multifibre portfolio. Our mul tifibre strategy is based on two platforms: the southern plantation-based eucalyptus hardwood pulp platform and the northern coniferous softwood pulp platform. The southern platform in Uruguay consists of two state-of-the-art pulp mills, eucalyptus plantations and tree nurseries. Operational excellence combined with efficient rail and sea logistics make our southern platform one of the most competitive in the industry. The successful ramp-up of the Paso de los Toros pulp mill was the highlight of the year for UPM Fibres and UPM as a whole (page 15). The new mill reached its nominal ca pacity in June. The rebuilt and modernised state-owned railway from the mill to the port of Montevideo was completed and gradu ally put into operation. With these strong foundations in place, the optimisation of wood costs, mill productivity and outbound logistics will continue and bring additional competitive advantages.

In our northern platform, which consists of three pulp mills and four sawmills in Finland as well as our wood sourcing and forestry operations, we focused on profita bility and competitiveness in a challenging market environment. Our well-maintained mills, which have benefited from targeted investments, are efficient and flexible to operate. To ensure that we actively manage the entire value chain from the forests to our pulp and timber end customers, we reorganised our Finnish operating model in 2024, bringing our pulp, timber and forestry operations under the same leadership. We have direct pulp and timber sales in all major strategic markets, with our own dedicated sales force, customer service and technical support. This focus on customers and the excellent service we provide them is one of our key competitive advantages. Pulp demand is growing in line with over all GDP growth and is driven in the medium to long term by global megatrends such as urbanisation and the growth of the middle

KEY FIGURES 2024

SALES

COMPARABLE EBIT

EURm

EURm

3,728

533

+22%

+357%

PERSONNEL

COMPARABLE ROCE

on 31 Dec. 2,740

%

+5.7pp 7.5

class, which will lead to increased demand for tissue paper especially in regions where current per capita tissue consumption is markedly lower than that in Western Europe or the USA. Another major growth driver is the replacement of plastics with sustainable fibre-based solutions in the packaging value chain. The pulp production process also gen erates recoverable sidestreams such as lignin and crude tall oil that can be used as raw materials in new wood-based businesses. In the timber business, we expect a grad ual turnaround in the construction sector, creating demand for wood construction and for sustainably produced, long-term carbon sequestering sawn timber to replace fossil building materials.

Being a leader in sustainability is a competitive advantage and a key element in serving our customers. For example, in 2024, UPM Pulp enhanced product-level carbon footprints using Life Cycle Assessment studies which help our customers track their Scope 3 emissions more accurately and plan their carbon reduction strategies. UPM was also one of the frontrunners in preparing for the EU Deforestation Regulation, ahead of the implementation deadline, ensuring that we and our customers are ready to comply with this new regulation (page 78).

CASE STUDY

SETTING SIGHTS ON NORTH AMERICA

Having established a strong presence in Europe and Asia-Pacific, UPM Pulp is now expanding into North America, the world’s third largest pulp market. After entering the market in 2021, our pulp deliveries will triple by 2025. Key to this success is the reliable delivery of products directly to customers’ pro duction sites, a critical factor given the lean stock practices of many customers. We also provide technical support to help customers optimise the use of hardwood and softwood pulp in their products. UPM sees significant growth potential in the North American market for high-qual ity tissue products, which is well suited to UPM Euca pulp from Uruguay. The service model, with a dedicated team working closely with customers, is another of our strengths.

Sustainable forestry on page 50 UPM Forest website

More key figures on page 116 www.upmpulp.com www.upmtimber.com

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024