UPM Annual Report 2025

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piloting and analytics, enabling seamless collaboration with customers, value chain partners and research organizations such as universities. The centers work closely with UPM’s mills, businesses and business-specific research centers in various countries. In Germany, UPM has increased biochemical R&D and piloting activities in several laboratories connected with the biochemicals refinery in Leuna. In 2025, UPM began development activities at the newly established research center in Halle, Germany. With a strong focus on biotechnology and advanced analytical tools, the center strengthens UPM’s capabilities to improve existing processes, support biochemicals operations, ensure product quality in customer applications and expand our product portfolio. The company’s research center in Lappeenranta, Finland, focuses on developing renewable fibres, advanced materials and decarbonization solutions. UPM’s Asia research center in Changshu, China, focuses on ensuring the competitiveness of advanced materials. In Uruguay, the focus is on piloting future pulp end uses in close collaboration with UPM’s forestry research center, which specializes in eucalyptus plantations. UPM Biochemicals - Ramping up new business Decarbonization solutions offer innovative, sustainable ways to address society’s urgent need to reduce its carbon footprint. With the launch of its biochemicals business, UPM will enable its customers to transition from using fossil raw materials to wood-based alternatives for packaging, plastics, PET bottles, textiles and pharmaceuticals. These chemicals have a considerably lower CO₂ footprint than fossil-based chemical products, as documented by a third-party-reviewed LCA. In January 2020, UPM announced that it would invest in a 220,000 tonne next-generation biochemicals refinery in Leuna, Germany. The investment’s estimated cost is €1,335 million. The start-up of the Leuna biorefinery progressed in 2025. The wood-to-lignin-and-sugar process was successfully ramped up and the first commercial deliveries of industrial sugars took place in Q4 2025. With the achieved progress in the critical first part of the process and the advanced status of corrective works in the final core processes, production and sales of further products, lignin, renewable functional fillers and finally glycols is expected to start in 2026. The biorefinery achieved ISCC PLUS, PEFC and FSC™ chain-of custody certifications, which highlight UPM’s commitment to sustainable sourcing, full traceability and transparent operations. The biorefinery is the first of its kind, and its process design and some of its technologies are new to the world. The biorefinery will produce a range of 100% wood-based biochemicals that will enable the transition from fossil raw materials to sustainable alternatives in various consumer driven applications. The investment opens up new markets for UPM with significant growth potential. The industrial-scale biorefinery will convert solid wood into next generation biochemicals: bio-monoethylene glycol (BioMEG); and Renewable Functional Fillers (RFF). In addition, the biorefinery will produce bio-monopropylene glycol (BioMPG) and industrial sugars. The combination of a sustainable wood supply, unique technology concept, integration into existing infrastructure at Leuna and proximity to customers will ensure the competitiveness of operations. The value UPM's focus in 2025

chain’s safety and sustainability will meet UPM’s high standards, and the strong focus on regional sourcing, especially of feedstock, will support market valuation. Commercial interest in the main products and side streams has continued to be strong, with confirmed customer contracts and a sales and customer qualification pipeline exceeding the annual capacity multiple times. Sales allocation for 2026 volumes has started. The biorefinery is expected to reach full production and positive EBIT in 2027. The ROCE target for the UPM Biochemicals business is 14%. In 2025, UPM Biochemicals and Nokian Tyres, a leading developer and manufacturer of premium tires, created the industry’s first concept tire, partly based on UPM BioMotion™ Renewable Functional Fillers (RFF). These fillers make up about 30% of a tire and consist of materials such as carbon black and precipitated silica. Initial tests show strong potential for reducing the environmental footprint of tires without compromising performance. This marks an important step toward more sustainable solutions in the automotive sector. Also in 2025, UPM introduced UPM Circular Renewable Black™, the world’s first biobased, near-infrared (NIR)-detectable, carbon-negative pigment. It enables premium packaging solutions that combine design excellence with full recyclability and strong sustainability performance. UPM’s new pigment is derived from renewable lignin and certified by third party standards, including FSC™, PEFC and ISCC Plus. It provides a deep black color for premium esthetics, full NIR detectability for efficient recycling and a carbon-negative footprint, which supports climate positive brand solutions. UPM Biofuels – Growing with advanced biofuels UPM’s renewable and sustainable biofuels help mitigate climate change. Advanced biofuels reduce greenhouse gas emissions by more than 80% compared to fossil fuels. In addition to decarbonizing road transportation, UPM helps de-fossilize various other industries by offering wood-based naphtha. Naphtha is a major raw material for most chemicals and plastics. UPM BioVerno™ naphtha is a drop-in replacement for fossil based naphtha, enabling the production of sustainable chemicals and plastics. UPM’s strategy is based on proprietary technology and UPM’s integrated feedstocks. With an annual capacity of 130,000 tonnes, the UPM Lappeenranta Biorefinery is the largest advanced biofuels-only refinery in the EU. In May 2025, UPM announced plans to discontinue the development of its potential second biomass-to-fuels refinery at the Port of Rotterdam after conducting extensive technical, commercial and strategic evaluations. Consequently, UPM halted all engineering activities related to the investment and withdrew from all associated commitments. Renewable fuels and renewable chemicals are central to UPM’s long term growth strategy in decarbonization solutions. UPM is focusing on three targeted growth areas in its biofuels business: • Evaluating the potential to debottleneck the Lappeenranta biorefinery to capture low CapEx expansion opportunities and leverage the strong market performance of crude tall oil (CTO)-derived biofuels. • Enabling the qualification of CTO-derived UPM biofuels as sustainable aviation fuel (SAF). This strategic direction is supported by successful SAF trials conducted with the Austrian aircraft manufacturer Diamond Aircraft using Austro Engine propulsion, and continued progress in the technical acceptance process at the American Society for Testing and

Materials (ASTM). Results from these trials and stakeholder reviews have been consistently positive. • Continuing feedstock technology development to qualify and enable the use of additional competitive and sustainable biomass. This will support the cost-efficient production of high-quality biofuels for road and aviation applications. Markets continue to grow and be driven by climate targets. It is estimated that around 30% of the fossil-derived fuels currently used for transportation in the EU could be replaced with advanced biofuels by 2050. UPM’s advanced biofuels belong to the most demanding sustainability category of the Renewable Energy Directive (RED II and RED III), which includes residues from agricultural and forestry activities. The EU-level directive (RED III) is expected to support demand and valuation for advanced renewable fuels, pending implementation in national legislation. AI program and achievements in 2025 AI is expected to transform the global economy by increasing productivity and accelerating the discovery of new ideas. Accordingly, UPM has a comprehensive AI strategy and a company-wide AI program to implement selected transformations. The strategy sets the direction and roadmap for driving the adoption and benefits of AI in areas with high-impact potential and value, such as increased sales, optimized supply chains and improved operational efficiency. Launched to accelerate adoption across the company, UPM’s AI program delivered significant progress in 2025. Guided by four core values – growth, efficiency, experience, and data quality – the program drives twelve high-impact transformations aligned with strategic priorities. These transformations enable improved customer support, optimized operations and enhanced decision-making. Key achievements include establishing the UPM AI Center of Excellence to scale and sustain AI capabilities. In June, new UPM AI guidelines were introduced to ensure the safe, secure and ethical use of AI. These guidelines are supported by five principles: human-centricity; transparency; accountability; data governance; and continuous development. Operational highlights include the launch of “Griffy,” an AI-powered corporate chatbot that improves access to information, and pilots in areas such as automated order intake, invoice handling, supplier query processes and maintenance optimization. These initiatives enhance productivity, reinvent processes, and unlock new value for customers and employees. To build AI literacy, UPM launched a company-wide e-learning course in the basics of AI and included aspects of it in mandatory compliance training. People leaders received guidance on encouraging AI discussions in their teams. This guidance is complemented by a dedicated portal and practical learning sessions. The AI Program demonstrates UPM’s dedication to innovation and renewal. By combining technology with human expertise, UPM is developing the systemic capabilities necessary for sustainable growth and competitiveness in the evolving digital landscape.

Research and development Innovating for the future

Innovation plays a key role in ensuring UPM’s long-term ability to grow and deliver consistently strong margins across all businesses. The company focuses on ensuring high performance in established businesses and creating opportunities in adjacent and new businesses. UPM adopts a structured approach to innovation to strengthen alignment with business priorities and future growth. The company has introduced a strategic innovation management model to improve prioritization, accelerate execution and ensure a measurable impact across the innovation portfolio through strategic alignment. As part of this transformation, UPM Adhesive Materials piloted a global Product Development framework in 2025. The framework unifies processes across functions and regions, replacing fragmented practices with a single standard. This improves collaboration, data use and execution speed, demonstrating how structured innovation management delivers consistency and accelerates value creation. In 2025, UPM spent €404 million (€488 million) on research and development, accounting for 28.8% (36.1%) of operating cash flow. In addition to direct R&D expenditure of €60 million (€70 million), the figure includes negative operating cash flow, as well as capital expenditure for developing businesses, transformative business prospects and digitalization projects. In September 2025, UPM’s Biomedicals business was closed, and all operations ceased. Patents, trademarks and rights protecting UPM’s innovations support the journey from innovation to business. UPM has more than 5,000 patents and patent applications, and more than 2,000 trademarks globally. Licensing innovations and technologies provides an excellent basis for creating value with customers and technology partners. research organizations, suppliers and startup companies. Collaboration speeds up the development and launch of new business solutions. UPM’s network includes the CLIC Innovation cluster, the Circular Bio based Europe Joint Undertaking (CBE JU), the European Chemical Industry Council (Cefic) and the Renewable Carbon Initiative (RCI). UPM is a member of the 4evergreen alliance, an initiative by the Confederation of European Paper Industries (Cepi) that aims to increase the overall recycling rate of fibre-based packaging to 90% by 2030. UPM is also a member of EUROPEN, a European association striving to achieve carbon neutrality in the packaging value chain. UPM aims to contribute to initiatives that reduce greenhouse gas and CO₂ emissions. In 2025, the company participated in Hydrogen Cluster Finland to develop new technologies, business opportunities and climate benefits within the network. UPM also continued a five-year research program led by the VTT Technical Research Centre of Finland and RISE Research Institutes of Sweden on emission-free pulping. The program aims to significantly reduce biomass burning and increase product yield from wood from around 50% to approximately 70%. Strong R&D infrastructure UPM’s three research centers in Finland, China and Germany accelerate the development of bio-based products. These centers focus on research, Extensive partner network UPM’s close-knit global network includes customers, universities,

UPM Financial Report 2025

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UPM Financial Report 2025

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UPM Annual Report 2025

UPM Annual Report 2025