UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Our strategy

Our businesses

Sustainability

UPM Raflatac continues to strengthen its competitiveness and growth prospects through strategic initiatives. The Graphics business, in particular, shows a high potential for organic growth, complemented with acquisitions. UPM Raflatac

UPM Specialty Papers is poised for growth in labelling materials and the packaging segments, driven by global megatrends, sustainability and regulatory compliance. The business is well-positioned for growth. UPM Specialty Papers

UPM Raflatac delivers long-term value in self-adhesive paper and film products. Our global customer reach is supported by a strong and efficient production, distribution and sales network. Our expertise in product development and adhesive technology en ables us to excel in advanced label applica tions as well as in adjacent markets such as graphics solutions and speciality tapes. The Graphics business, in particular, offers high growth potential through organic and acquisition opportunities. The specialty tape sector, due to its fragmented nature, offers significant opportunities for acquisitions. We continued to strengthen our com petitiveness and growth prospects through strategic initiatives. An important highlight was the acquisition of the Belgian compa ny Grafityp. This acquisition strengthens our competitive position in the graphics sector and provides us with access to new, fast-growing end-uses such as vehicle wrapping. We also took the strategic decision to close the Kaltenkirchen factory in Ger many in order to accelerate our growth

in Films and Graphics by improving the overall profitability of our operations and maximising synergies. The label materials production of the factory will be trans ferred to Poland and Finland. Graphics production will be transferred to Belgium during 2025. We want to increase our global reach and expand in both existing and new markets. We aim to gain a market share in our core markets of EMEIA and North America. To strengthen our position in North America, we opened a new terminal in Toronto, Canada. We are also looking for expansion and growth opportunities in the fast-growing regions of Asia, India and Latin America. Sustainability is one of our key compet itive advantages. There is a strong market demand for solutions that reduce CO 2 emissions and promote circularity, such as our Carbon Action portfolio and the New Wave label launched in 2024. We have also received a new validity certificate for our unique RafCycle™ recycling service from DEKRA, a leading international assurance service provider.

UPM Specialty Papers has a long history of success in the specialty and APAC fine paper markets. Our success is based on long-term customer relationships, financial strength, and reliability. With our global reach, we are able to meet the needs of international customers, while providing services and expertise locally in their markets. UPM Specialty Papers has a strong foot hold in Europe and the growing markets of Asia Pacific. In recent years, we have also strengthened our position in the Ameri cas. In label papers, we are an established global market leader and aim to continue to grow with the market. In APAC fine papers, we are focusing on renewing the business and concentrating on segments in which sustainability adds value. There are also significant growth oppor tunities in the flexible packaging segment. The substitution of plastic packaging with fibre-based solutions offers opportunities for our barrier papers. With our expertise in producing highly demanding specialty papers, innovative solutions, and the support of UPM’s strong R&D resources, we have established ourselves as a viable partner in

this segment. In 2024, we launched several co-created packaging solutions with our partners; our aim is to offer proven concepts that can be adopted by packaging con verters, thus supporting their transition to fibre-based materials. The year 2024 was a year of perseverance for UPM Specialty Papers, as the recovery of our product markets started after unusually high destocking in our value chains. The focus of the organisation was on margin manage ment, cost saving measures and maintaining the agility to respond to the volatile markets of recent years. Sustainability is a key driver and design principle for our products. Key consider ations include ensuring recyclability and sustainable fibre sourcing and replacing fossil-based materials with renewable alter natives. Regulatory developments, particu larly in the EU, are placing new demands on the paper and packaging value chain. For example, the Packaging and Packaging Waste Regulation (PPWR) will require all packaging in Europe to be recyclable by 2030. The EUDR (European Deforestation Regulation) will also have a global impact,

KEY FIGURES 2024

KEY FIGURES 2024

SALES

COMPARABLE EBIT

SALES

COMPARABLE EBIT

EURm

EURm 132

EURm

EURm 135

1,562

1,467

+5%

+28%

-1%

+37%

PERSONNEL

COMPARABLE ROCE

PERSONNEL

COMPARABLE ROCE

on 31 Dec. 3,224

%

on 31 Dec. 1,945

%

18.3

+5.8pp 17.1

+4.3pp

Despite a challenging market environ ment, we remain optimistic about the future. Positive signs of continued demand recovery in our core markets have strengthened our belief that the overall demand for pres sure sensitive label material will return to pre-pandemic growth levels.

requiring fibres to be traceable and sourced from sustainable sources. We are well prepared to help our customers meet these requirements.

More key figures on page 117 www.upmraflatac.com

More key figures on page 117 www.upmspecialtypapers.com

CASE STUDY

CASE STUDY

NEW SOLUTION FOR PLASTIC PACKAGING

NEW SOLUTIONS FOR LEADING BRANDS COLLABORATION

UPM Raflatac has introduced the New Wave paper label material, the first of its kind to be certified by RecyClass for use on rigid plastic containers made of high-density pol yethylene (HDPE) and polypropylene (PP). The test results confirm compatibility even with natural and white material streams, which require the highest purity of recyclate from recycling processes. The label is ideal for home and personal care products such as soap bottles and detergent containers. It can be washed clean at 40 °C with plain water, resulting in a recyclate that can be reused. This innovation makes it easier for brands to certify their packaging as recyclable and offers more options for using label materials from a renewable source.

The demand for sustainable packaging is growing fast. Our many co-creation projects aim to improve the performance of fibre-based packaging and provide brands and converters with paper-based barrier solutions for more demanding end-uses. The projects with customers and expert partners in the packaging industry have resulted in improved barrier properties that are essential to preserve the freshness and quality of products such as coffee, chocolate and spices, and to safeguard food safety. The collaboration results in innovations that offer brands and end-users options that can be recycled in fibre recycling streams, or that are even compostable in some cases.

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024