UPM Annual Report 2024

WE ARE UPM

GOVERNANCE

ACCOUNTS AND PERFORMANCE

Our strategy

Our businesses

Sustainability

UPM Plywood is committed to high-quality products and exceptional customer service. We focus on maximising the capacity of our mills and exploring new growth opportunities. UPM Plywood

UPM Communication Papers is known for its diverse product portfolio, global reach, and commitment to sustainability. We continue to deliver strong performance through proactive asset management and customer-focused solutions. UPM Communication Papers

UPM Plywood’s long-term loyal customers include large market leading distributors and industrial users, who value high-quality products, a reliable supply of plywood and veneer and professional customer service. UPM is the largest plywood producer in Europe. The clear priority for the future is to bring all mills up to full capacity after the sharp decline in construction activity since 2023. Full operation will significantly increase volumes and therefore profitability while we are exploring opportunities for growth investments. In terms of organic growth, we see all our key end-uses growing in the mid-term faster than GDP. Of particular interest is the LNG end-use, as there is an extraordinary boom in demand for LNG and therefore also LNG tankers. Our WISA-Birch plywood is the clear market leader in LNG cargo containment systems, with more than half of the current fleet supplied. We are exploring opportuni ties to increase our LNG plywood production capacity to meet this growth. We are also looking at new geographies, new species to complement spruce and

birch, and new product categories to broad en our product portfolio. A big untapped opportunity is North America, and we are well-positioned to capture a share of this market with our focused offering. We have one of the largest R&D organis tions in the industry. Innovations in material sciences enable us to continually improve product performance to meet our customers’ needs and sustainability expectations. WISA plywood products store five times more bio genic CO 2 during their lifecycle than the Scopes 1, 2 and 3 fossil emissions from our operations. Our patented proprietary WISA BioBond glueing technology contributes by replacing half the fossil-based phenol with wood-based lignin, significantly reducing the CO 2 footprint. Recent targeted investments enabled us to expand our product range with the WISA Birch LG product and further automate our veneer processing capabilities. These im provements enhance production quality and productivity, especially for LNG plywood. The investments were completed as planned and the results are already visible in the key figures of the mills.

UPM Communication Papers is a leading pro ducer of graphic papers. Our global reach, diverse product portfolio, and ability to deliver large volumes foster long-term cus tomer relationships. This strong foundation, coupled with our commitment to sustaina bility and market understanding, forms our competitive edge. Our proactive asset management ensures competitiveness in a dynamic market. Our global network of paper mills provides flex ibility, allowing us to meet our customers’ demands even in challenging circumstances. In 2024, despite unexpected shifts in raw material markets, our resilience delivered a strong cash flow and profitability. We have enhanced customer understanding and satisfaction. With detailed customer insights, we are taking targeted actions in order to meet evolving needs and drive commercial performance. Our wide and diverse product portfolio is a key strength. As the market evolves, we are adopting a focused strategy, driving competitiveness across paper categories and key markets, and prioritising areas with at

tractive margins and growth potential. This strategy aligns our offering with the needs of our customers. Sustainability is central to our strategy, enabling long-term value creation for our customers. We support our customers in meeting stringent sustainability regulations, addressing global megatrends such as cli mate change, nature’s role and digitalisation. In 2024, we reduced our environmental footprint, particularly in logistics, by piloting transportation solutions that reduced CO 2 emissions by two-thirds and yielded signifi cant cost savings. Our energy management approach focuses on flexibility, optimising electricity use, and replacing fossil fu el-based power generation with electric boilers, significantly reducing emissions. UPM Communication Papers is well-po sitioned for high performance, supported by our strong market presence, our focus on high-value product segments, and our com mitment to sustainability. Our competitive edge lies in our adaptability, platform health, and the ability to create lasting value for cus tomers and stakeholders. We are confident

KEY FIGURES 2024

KEY FIGURES 2024

SALES

COMPARABLE EBIT

SALES

COMPARABLE EBIT

EURm

EURm 42

EURm

EURm 273

430

2,953

+2%

-26%

-18%

-41%

PERSONNEL

COMPARABLE ROCE

PERSONNEL

COMPARABLE ROCE

on 31 Dec. 1,598

%

on 31 Dec. 5,190

%

17.1

23.8

-5.1pp

-8.7pp

that paper will remain a viable medium that will continue to deliver value to companies and societies for years to come.

More key figures on page 118 www.wisaplywood.com

More key figures on page 118 www.upmpaper.com

CASE STUDY

CASE STUDY

LIFE CYCLE ANALYSES FOR ALL SPECIAL BIRCH PLYWOOD PRODUCTS

WIND POWER FOR GERMAN MILLS

UPM Plywood has published LCA summaries for WISA ® birch plywood products that are not included in the Environmental Product Declarations (EPDs). These summaries provide customers with third-party-reviewed LCA information about the environmental performance of these products from cradle to gate. The LCA assesses various environmental impact categories such as climate change, ozone depletion, and water and resource use. Climate change is particularly high on the agenda. Customers are increasingly interested in calculating their carbon footprint. The LCA summaries help them compare the environmental impacts of different product options. The LCA process helps us understand the effects of changes in raw materials or emissions, aiding continuous operational improvements.

A significant step in 2024 was UPM's Wind Power Purchase Agreement (PPA) with German onshore wind farms. This agreement will supply our German mills with up to 430 GWh of fossil-free wind power annually, the same capacity as a similar agreement signed in Finland in 2022. This option supports our customers in our joint efforts to produce printed products with improved environmental performance. In combination with the recently commissioned power-to-heat boilers with a total capacity of 230 MW, UPM’s German paper mills are now able to generate fossil-free heat and replace the use of natural gas. By utilising the flexibility potential of our mills, we have been able to benefit from lower spot market prices and reduce costs in an increasingly volatile energy system.

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UPM ANNUAL REPORT 2024

UPM ANNUAL REPORT 2024