UPM Annual Report 2025

We are UPM

Governance

Accounts and performance

Our strategy

UPM in brief

Our businesses

Sustainability

Accelerating innovation through AI

Innovating for impact

Innovation plays a key role in ensuring UPM’s ability to grow in the long term and deliver consistently strong margins across all businesses.

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.

Priorities

We focus on ensuring high performance in established businesses and creating opportu nities in adjacent and new businesses. We adopt a structured approach to inno vation to strengthen alignment with business priorities and future growth. We have intro duced a strategic innovation management model to improve prioritization, accelerate execution and ensure a measurable impact across the innovation portfolio through strategic alignment. In 2025, we spent €404 million (€488 mil lion) on research and development, account ing 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 business es, transformative business prospects and digitalization projects.

High performance • Process optimization and cost of production • Strong global R&D infrastructure Sustainability as competitive advantage • Reduction of emissions, material use and raw material footprint • Sustainable Product Design concept applied across all product development projects Strategic renewal • Platform and process development and renewal • Extensive partner network and new capabilities

Market relevance • Product development, co-creation with customers • Portfolio growth, including fibre-based packaging, replacing plastic and aluminum in food packaging and advanced biofuels development Future growth • Innovations to build and enter new markets • Decarbonization solutions such as renewable chemicals and materials

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 en able 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; account ability; data governance; and continuous development. Operational highlights include the launch of “Griffy,” an AI-powered corporate chatbot that improves access to information and pi lots in areas such as automated order intake, invoice handling, supplier query processes, and maintenance optimization. These initia tives enhance productivity, reinvent process es and unlock new value for customers and employees.

To build AI literacy, UPM launched a com pany-wide e-learning course on 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 ex pertise, UPM is developing the systemic capabilities necessary for sustainable growth and competitiveness in the evolving digital landscape.

Read more on R&D in the Report of the Board of Directors on page 250

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UPM Annual Report 2025

UPM Annual Report 2025