UPM Annual Report 2025

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Governance

Accounts and performance

Financial Statements

Report of the Board of Directors

Sustainability Statement

Auditor's Report

Sustainability Assurance Reports

2) Distribution of other operating costs and expenses

Auditor’s fees

Other operating income

variability that may occur between the sales price and the amount UPM expects to receive. The variable consideration includes mainly cash discounts and volume rebates that encourage the customer to take specific volumes in a given timescale. In addition, the Group gives the customers the right for purchase price refund in case the products do not meet the quality as specified in the agreement. The amount of variable consideration is recognized as a refund liability when some of the amount received is expected to be refunded to the customer. Customer rebates payable to customers in relation to sales made until the end of the reporting period and expected quality claims are estimated using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. A refund liability is included in trade and other payables. Receivables are recognized when the goods are delivered, and the consideration is unconditional except for the passage of time. For most of UPM’s customer contracts the period between the transfer of goods or services to customers and the receipt of payment is less than 12 months. For these contracts the Group has elected to use the practical expedient not to adjust revenue for the effect of financing components. Advance payments received from customers are recognized as contract liability. UPM does not have any contract assets arising from contracts with customers.

€ million

2025

2024

€ million

2025

2024

€ million

2025

2024

Audit fee

4.7

4.5

Rents and lease expenses

19

21

Gains on sale of non-current assets

57

31

Audit related services Sustainability Statement assurance

Emission expenses 1)

Rental income

10

9

5

64

0.4

0.3

Emission rights received

101

92

Losses on sale of non-current assets

1

0

Other audit-related services

0.1

0.3

Derivatives, non-qualifying hedges

18

-25

Credit losses

1

10

Tax services

0.6

0.6

Maintenance and other operating expenses 2)

Exchange rate gains and losses

-37

-9

1,016

988

Other services

0.4

0.1

Total

Other

26

31

1,043

1,083

Total

6.2

5.8

Total

174

130

1) Emission expenses include gains on sales of emission rights €48 million (€2 million). 2) Other operating expenses include expenses related to services and Group’s administration.

In 2025, auditor's fees include €0.5 million (0.6) related to audit-related services, €0.6 million (0.4) related to tax services and €0.4 million related to other services (0.1) paid to Ernst & Young Oy. Research and development costs The research and development costs included in operating expenses were €60 million (€70 million) in 2025. The focus was on new technologies and developing businesses. Government grants In 2025, government grants recognized as deduction of operating expenses totaled to €32 million (€31 million) of which €31 million (€31 million) relates to Finland. In addition, the Group received emission rights from governments amounting to €101 million (€92 million) of which €61 million (€40 million) relates to Finland, €33 million (€40 million) to Germany, €5 million (€10 million) to China and €2 million (€2 million) to UK. In addition, the company receives electricity price compensation in Germany and Finland. The Group considers that the conditions related to subsidies have been met. Accordingly, the subsidies have been recorded as income for the period when the subsidy has been received. The authorities monitor the use of subsidies afterwards.

Emission rights The Group has recognized €101 million (€92 million) of income in Other operating income and €5 million of expense (€64 million) under Other operating costs and expenses relating to CO 2 emissions. The liability to cover the obligation to return emission rights amounted to €63 million (€66 million) and is recognized in provisions. The emission rights recognized in intangible assets are specified below.

Cost structure 2025 €8,630 million

Delivery of own products 10%

Other fixed costs 12%

€ million

2025

2024

Employee costs 13%

Refer to » Note 4.6 Working capital for information on contract liabilities and refund liabilities.

Carrying value, at January 1

264

256

Wood and fibre 27%

Emission rights received and purchased

160

96

Other variable costs 18%

Deliveries and disposals

-230

-84

2.3 Operating expenses and other operating income Operating expenses

Impairment

8

-5

Energy 9%

Fillers, coating and chemicals 9%

Translation differences

-1

—

Carrying value, at December 31

201

264

Accumulated costs

201

272

Operating expenses excluding forest assets fair value change, wood harvested and share of results of associates and joint ventures are presented below.

Cost structure 2024 €8,806 million

Accumulated impairments

—

-8

Carrying value, at December 31

201

264

Delivery of own products 11%

€ million

2025

2024

Other fixed costs 12%

Costs and expenses Raw materials, consumables and goods

5,194

5,236

Employee costs 13%

Employee costs 1)

1,155

1,179

Wood and fibre 28%

Other operating costs and expenses 2)

1,043

1,083

Delivery costs and other external charges

1,239

1,308

Other variable costs 16%

Total

8,630

8,806

Energy 9%

Fillers, coating and chemicals 10%

1) Refer to » Note 3 Employee rewards , for further information.

UPM Financial Report 2025

276

UPM Financial Report 2025

277

276

277

UPM Annual Report 2025

UPM Annual Report 2025