UPM Annual Report 2025

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Governance

Accounts and performance

Report of the Board of Directors

Sustainability Statement

Financial Statements

Auditor's Report

Sustainability Assurance Reports

Key figures

The U.S. dollar weakened rapidly during Q2 2025 and stayed broadly stable on a lower level vs. the euro during H2 2025. This had a negative impact on UPM’s businesses, especially UPM Fibres and UPM Communication Papers. Global market shipments of BHKP pulp were up 6% year-over-year and NBSK down slightly in the first 11 months compared with the previous year. In the full year 2025, the average European pulp market price in euros was 2.5% lower for NBSK and 14% lower for BHKP compared to 2024. In China, the average pulp market price in US dollars was 7% lower for NBSK and 15% lower for BHKP year-over-year. European demand for graphic papers decreased by 8% in 2025 compared with 2024. Market prices decreased for all grades. In October, paper production at the UPM Kaukas mill in Finland ended permanently, and in December, it ended at the UPM Ettringen mill in Germany. These changes reduced UPM’s graphic paper production capacity by 13%. The global markets for self-adhesive label materials were resilient in Europe, market shipments growing by 2% year-over-year, but growth slowed down in North America to 1% and were challenging in the Asia Pacific region. UPM’s deliveries outpaced the market growth. Label, release liner and packaging paper markets were affected by tariff uncertainties, resulting in lower prices and reduced deliveries. Fine paper markets were slow but improved towards the end of the year. Demand for spruce plywood in Europe was stable but at a relatively low level as the construction markets remained slow. Demand for birch plywood in panel trading and industrial end uses was good and demand for LNG end-use birch plywood very good. In 2025, European electricity markets saw prices slightly up from 2024, with record solar generation. In the Nordics, high hydrological reserves pushed prices historically low in the first half of the year, but prices recovered in the latter part. The average Finnish area spot price was €40.5/MWh, 11% lower than in 2024. Markets for advanced renewable biofuels improved. The price development of feedstock (CTO) and end products relative to each other was favorable. Interest in UPM’s bio-based renewable functional fillers and glycols remained strong at the same time as the targeted markets continued their steady growth.

Market environment in 2025 The global economy is estimated to have grown by a little over 3% in 2025. World trade in goods increased by 2.5% according to WTO. Global inflation continued its downward trajectory from the post-pandemic highs, settling at just over 4%. The U.S. announced a new tariff regime in April 2025, imposing broad, double-digit tariffs on imports, with escalations toward China, the EU, and India. Sharp increases caused a supply shock in the U.S. and demand shocks elsewhere, slowing trade growth and disrupting supply chains. Uncertainty curbed investment, dampened consumption, and delayed business decisions. Russia-Ukraine war continued into its fourth year with no durable resolution, sustaining energy and food price pressures and European energy security concerns. Conflicts in the Middle East caused regional instability, oil price volatility and concerns over shipping routes. Amid these headwinds, AI-related capital expenditure surged, contributing significantly to growth and preventing the worst predictions from coming true. The EU economy showed resilience, achieving real GDP growth of 1.4% thanks to good early-year performance, front-loaded exports and investment. Spain and Poland outpaced the average growth, offsetting slower growth in Germany and Italy. Inflation eased to 2.5%, with unemployment stable at 6%. The U.S. economy weathered severe trade and domestic policy tensions growing by over 2%, fuelled by solid consumer spending, robust investment, exports and government outlays. Inflation held steady at a moderate 2.7% year-end. The Asia-Pacific (APAC) showed notable resilience as the world's fastest-growing area, contributing around 60% of global growth despite headwinds uncertainty over tariffs and subdued demand in subregions. Growth in broader APAC held steady at around 4.5%. The COP30 conference held in November 2025 in Belém, Brazil, marked the tenth anniversary of the Paris Agreement. Amid geopolitical tensions, U.S. tariffs and surging energy demand, the focus shifted from ambition toward implementation, bridging the gap between pledges and action, as well as balancing energy security, affordability, and sustainability. The Belém Package focused on adaptation, finance delivery, multilateral cooperation, and human-centered outcomes across 29 consensus decisions. The outlook for electricity growth is strong, driven by AI data centers, electrification, cooling, and industrialization. In 2025, clean energy investment outpaced fossils, with solar and wind leading growth. The IEA's World Energy Outlook stressed this as a defining shift, with renewables expanding fast enough to meet new demand in some periods, but overall emissions still increasing. The year started in a positive sentiment of market recovery in most of UPM businesses. As uncertainty in the global trade ramped up with the introduction of tariffs, the demand for our products slowed and most market prices decreased, most notably pulp and paper prices. Our pulp, label material and biofuel deliveries increased year-on-year, but deliveries of paper, plywood, timber and electricity fell. The direct impact of tariffs was relatively minor in 2025 and impacted mainly UPM Communication Papers.

2025 9,656

2024 10,339

2023

Sales, € million

10,460

Comparable EBITDA, € million

1,311 13.6 749

1,734

1,573 15.0 608 1,013 464 934 394 755 0.73 1.40 9.7

% of sales

16.8 604

Operating profit, € million Comparable EBIT, € million

921 9.5

1,224

% of sales

11.8

Profit before tax, € million

690 863 491 714 0.91 1.33

500 1,123 463 953 0.82 1.74

Comparable profit before tax, € million

Profit for the period, € million

Comparable profit for the period, € million

Earnings per share (EPS), €

Comparable EPS, €

3.2 6.2 3.5 6.4

Return on equity (ROE), %

4.5 6.5 5.5 6.7

4.0 8.3 4.1 8.2

Comparable ROE, %

Return on capital employed (ROCE), %

Comparable ROCE, %

2,269

Operating cash flow, € million Operating cash flow per share, € Equity per share at the end of period, €

1,405 2.66 18.97 14,129 3,004

1,352 2.54 20.89 15,452 2,869

4.25

20.93 14,916 2,432

Capital employed at the end of period, € million

Net debt, € million Net debt to EBITDA

2.29

1.66

1.55

Personnel at the end of period

15,127

15,827

16,573

Refer to » Other financial information, Alternative performance measures for definitions of key figures.

Results 2025 compared with 2024

change in the fair value of forest assets net of wood harvested was €144 million (80 million). Operating profit totaled €749 million (604 million). Items affecting comparability in operating profit totaled €-171 million in the period (-620 million). In 2025, items affecting comparability include €42 million restructuring charges and €10 million impairment charges related to the closure of Ettringen paper mill in Germany, €36 million restructuring charges and €36 million impairment charges of fixed assets related to the closure of Kaukas paper machine 1 in Finland, €14 million reversal of restructuring charges related to the closure of Plattling paper mill in 2023, €9 million restructuring charges in UPM Communication Papers to improve mills' operations' efficiency, €4 million restructuring charges and €4 million impairment charges resulting from the exercise of a put option concerning the Kraftwerk Plattling power plant company in UPM Communication Papers, €28 million restructuring charges related to the discontinuation of label materials' production at Nancy factory in France, €30 million restructuring charges to improve operations' competitiveness and efficiency in UPM Adhesive Materials, €6 million addition to impairment charges and €2 million reversal of restructuring charges related to the closure of Kaltenkirchen factory, €2 million restructuring charges related to discontinuation of Rotterdam refinery project, €3 million restructuring charges and €1 million impairment charges related to the closure of the UPM Biomedicals business in Other operations, €10 million charges related to strategic review of UPM Plywood Business Area

In 2025, sales were €9,656 million, 7% lower than the €10,339 million in 2024. Sales decreased due to lower sales prices and adverse changes in currencies, only partially offset by increased delivery volumes. Sales decreased in UPM Communication Papers, UPM Fibres, UPM Specialty Papers, UPM Plywood and UPM Energy business areas. Sales increased in UPM Adhesive Materials and in the Other operations reporting segment. Comparable EBIT decreased by 25% to €921 million, 9.5 % of sales (1,224 million, 11.8%). Comparable EBIT decreased due to lower sales prices and adverse changes in currencies. Sales prices decreased in all business areas, most notably in UPM Fibres, UPM Communication Papers and UPM Specialty Papers. Variable costs decreased, as increases in wood costs were more than offset by decreases in most other input cost categories. Fixed costs also remained unchanged on the Group level. Delivery volumes increased in UPM Fibres, UPM Adhesive Materials and Other operations. Deliveries fell the most in UPM Communication Papers. On the Group level, the net impact of changes in delivery volumes was neutral to earnings. Depreciation, amortization and impairment charges excluding items affecting comparability, totaled €535 million (590 million) including depreciation of leased assets totaling €90 million (85 million). The