UPM Annual Report 2025

We are UPM

Governance

Accounts and performance

Our strategy

UPM in brief

Our businesses

Sustainability

Financial performance and targets

Driving long-term value creation

We aim for earnings growth and attractive returns on capital. In 2025, our comparable EBIT decreased by 25% from the previous year in a challenging market.

We deliver sustainable growth and attractive returns over time by combining agile business operations, disciplined capital allocation and corporate synergies.

Financial targets At a business level, we aim for world-class performance and attractive returns (ROCE %). At the Group level, we are targeting growth in comparable EBIT and a return on equity (ROE) exceeding 10%. We also aim to maintain a strong balance sheet with a net debt/EBITDA ratio of 2x or lower.

Portfolio of attractive businesses • Leading businesses in growing markets • World-class performance. Agile operating model: Our businesses operate as separate, market-driven entities • High efficiency and agility • Differentiated commercial strategies • Optimal sourcing • Broad product development opportunities. Corporate synergies for our businesses • Competitive and sustainable wood sourc ing, forestry and plantation operations • Efficient global functions • Technology development and intellectual property rights • Global business platform • Disciplined and effective capital allocation • Compliance, the UPM Code of Conduct, and a strong UPM brand. Effective capital allocation We aim to allocate capital in a balanced way by developing the company through focused investments, offering attractive shareholder

The market environment was challenging across our businesses in 2025, impacted by changes and high uncertainty in global trade relations. During the year, we took decisive actions to further strengthen our competi tiveness. A major investment cycle at UPM has come to an end. Despite low pulp prices, our highly competitive business platform in Uru guay performed well. The Leuna biorefinery

began delivering industrial sugars to cus tomers in December and expects to enter the market with further commercial products in the first half of 2026. Our focus is on improving performance and cash flow, as well as strengthening our balance sheet. Our strong asset base enables us to capture growth opportunities with low capital expenditures.

distribution and maintaining a strong balance sheet. Capital allocation is essential for achieving attractive long-term returns and de veloping a portfolio of world-class businesses. At UPM, capital allocation decisions are made at the corporate level: • Focused investments to grow the company and its earnings • Attractive dividends, targeting at least half of comparable earnings per share over time

• Maintain a strong balance sheet. Accord ing to UPM’s leverage policy, the net debt to EBITDA ratio should be less than two. An investment-grade rating is an impor tant element of the financing strategy • Share buybacks are a complementary tool that can be used relative to investment opportunities and company valuation.

Financial Statements on page 258

Group financial performance and targets

Dividend per share

Enterprise value and cumulative dividends

€

%

€m

Comparable ROE

Net debt and leverage

Comparable EBIT

100

30,000

1.0 1.2 1.4 1.6

%

€m

Net debt/EBITDA (x)

€m

25,000

2,500

4,000

12

4

80

Target

2,000

20,000

3,000

9

3

60

1,500

0.0 0.2 0.4 0.6 0.8

15,000

2,000

2

6

1,000

40

10,000

1

1,000

3

500

20

5,000

0

0

0

0

16 17

16 17 18 19 20 21 22 23 24 25

16 17 18 19 20 21 22 23 24 25

20 21 22 23 24 25

18 19

0

0

-1

16 17

24 25 20 21 22 23 18 19

20 21 22 23 18 19 16 17 Dividend € per share (2025 proposal) % of comparable EPS

24 25*

Net debt Net debt/EBITDA

Cumulative dividend Market capitalization Net debt

-6.7% Share price 2025

*Board’s proposal

Business area long-term return targets

UPM Communication Papers

UPM Specialty Papers

UPM Adhesive Materials

UPM Plywood

ROCE %* ) UPM Fibres

UPM Energy*** )

5-year share performance and valuation multiples

2025 2024 2023 2022 2021

FCF/CE %** )

ROCE %* )

ROCE %* )

ROCE %* )

ROCE %* )

21

24.79

Share price at Dec. 31, € Comparable EPS, € Dividend per share, €

26.56 34.06 34.93 33.46 1.74 1.40 3.09 2.22

50

20

50

48

20

50

20

1.50 Dividend proposal, € per share

18

44

1.33

17

17

16

40

40

40

40

1.50 *)

1.50 1.50 86 107

1.50

1.30

Target

15

15

15

Target

34

32

113

Dividend to comparable EPS, %

49

59 3.9

12

11

30

30

30

11

10

25

6.1

Effective dividend yield, %

5.6

4.4 4.3

10

10

10

22

22

Target

Target 17

20

20

20

7

7

27.3 1.31 12.3

P/E ratio

32.5 46.8 12.2 13.9 1.27 1.63 1.49 1.65

18

Target

6

Target

14

14

11

5

5

5

P/BV ratio 1)

10

15

4

6

10

10

10

Share buy-back program for 6 million shares, shares cancelled in May 160 M€

12

2

9.8

13.1

8.3 10.2

EV/EBITDA ratio 2)

0

0

0

0

0

0

13,072

Market capitalization, € million

14,165 18,165 18,629 17,845

21 22 23 24 25

21 22 23 24 25

21 22 23 24 25

21 22 23 24 25

21 22 23 24 25

21 22 23 24 25

*) 2025: Board’s proposal 1) P/BV ratio = Share price at Dec. 31/Equity per share 2) EV/EBITDA ratio = (Market capitalization + Net debt)/EBITDA

* ) ROCE % = Return of capital employed excluding items affecting comparability ** ) Free cash flow after investing activities and restructuring costs *** ) Shareholdings in UPM Energy valued at fair value

24

25

UPM Annual Report 2025

UPM Annual Report 2025