UPM Annual Report 2025

We are UPM

Governance

Accounts and performance

Financial Statements

Report of the Board of Directors

Sustainability Statement

Auditor's Report

Sustainability Assurance Reports

4.1 Property, plant and equipment

4. Capital employed UPM’s capital employed primarily relates to its production facilities and both forest and energy assets. UPM aims to capture growth opportunities in its existing business portfolio and invest in projects with attractive and sustainable returns.

Accounting policies

Machinery and equipment

Land and water areas

Other tangible assets

Construction in progress

Defined benefit pension plans Plan benefits depend on salary and length of service. The defined benefit obligations are calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the term of the related pension liability. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The cost of providing pensions is charged to the income statement as employee costs so as to spread the cost over the service lives of employees. Changes in actuarial assumptions and actuarial gains and losses arising from experience adjustments are charged or credited in other comprehensive income in the period in which they arise. Past service costs and gains or losses on settlement are recognized immediately in income when they occur. Defined contribution plans For defined contribution plans, contributions are paid to pension insurance companies. Once the contributions have been paid, there are no further payment obligations. Contributions to defined contribution plans are charged to the income statement in the period to which the contributions relate. Other post-employment obligations Some Group companies provide post-employment medical and other benefits to their retirees. The entitlement to healthcare benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment, using an accounting methodology similar to that for defined benefit pension plans. Valuations of these obligations are carried out by independent qualified actuaries.

€ million

Buildings

Total

2025 Accumulated costs

12,660 -10,110 2,550 3,005

760

1,462 -373 1,089

19,879 -13,420

845

4,152

Accumulated depreciation and impairments

—

-2,332 1,820 2,098

-605

Capital employed

Carrying value, at December 31 Carrying value, at January 1

845 954

155 178

6,459 7,085

850 387

€ million

2025

2024

1

8 3

0 — 0

400

Additions

4

Property, plant and equipment

6,459

7,085

Companies acquired 1)

1

0

— 0 — 0

4

Disposals 2) Depreciation Impairment

-28

-2

-23

-53

Leased assets

778

847

— — 0

-96

-306

-19

-421 -40

Forest assets

2,605

2,517

-5

-32 119

-3 14

Financial assets at FVOCI

2,193

2,247

Reclassifications

11

-146

-2

Translation differences and other changes

-85 845

-187

-224

-15 155

-3

-515

Goodwill and other intangible assets

818

754

Carrying value, at December 31

1,820

2,550

1,089

6,459

Operating working capital

1,714

2,161

2024 Accumulated costs

Provisions

-280

-253

954

4,699 -2,601 2,098 2,073

14,693 -11,688

821

1,224 -373

22,390 -15,305

Net retirement benefit assets and liabilities

-438

-496

Accumulated depreciation and impairments

—

-642

Carrying value, at December 31 Carrying value, at January 1

954 861

3,005 3,019

178 175

850 925 462

7,085 7,053

Cash and cash equivalents

715

892

Other assets and liabilities

-154

-154

Additions

44

0 6 0

3 2

0

508

Net deferred tax assets and liabilities

-279

-146

Companies acquired 1)

7

1

0 0 —

16 -3

Assets classified as held for sale, net

—

—

Disposals

-2

-1

—

Depreciation Impairment

— —

-101 -32

-339

-21

-461 -435

Total

14,129

15,452

-28 230

-1

-373 -167

Reclassifications 3)

1

55 98

16

136 272

Translation differences and other changes

43

119

8

4

Carrying value, at December 31

954

2,098

3,005

178

850

7,085

1) In 2025, the companies acquired relate to the acquisition of Metamark, and in 2024 to the acquisition of Grafityp. Refer to » Note 8.1 Business acquisitions and disposals. 2) Disposals in 2025 relates to the sale of Korkeakoski sawmill to Versowood and to the sale of the Plattling paper mill site in Germany. 3) Reclassifications in 2024 relate to final classification of assets in the Uruguay pulp mill investment. Refer to » Note 4.4 Goodwill and other intangible assets .

Capital expenditure Capital expenditure, excluding acquisitions and shares, amounted to €409 million (527 million) in 2025. In January 2020, UPM announced that it would invest in a 220,000 tonne next-generation biochemicals biorefinery in Leuna, Germany. The total investment estimate is €1,335 million. Capitalized borrowing costs In 2025, the borrowing costs capitalized as part of non-current assets amounted to €33 million (29 million). Amortization of capitalized borrowing costs was €4 million (4 million) and the average interest rate used 2.78% (3.04%), which represents the average costs to finance the projects. In 2025 and 2024, capitalized borrowing costs were related to the construction of the biochemicals biorefinery in Germany. Government grants In 2025, government grants recognized as deduction of non-current assets totaled to €1 million (3 million).

Major capital commitments at December 31

€ million

2025

2024

New biorefinery / Germany

42

177

Advanced label material capacity increase / Mills River, NC Capability enhancement and capacity increase / Malaysia

8

—

10

—

Impairment losses In 2025, impairment charges relate to the closure of the Ettringen paper mill in Germany, the closure of paper machine 1 at the Kaukas mill in Finland and to the closure of Kaltenkirchen factory in Germany. In 2024, impairment charges relate to the closure of UPM Hürth mill, closure of paper machine 3 at Nordland in Germany, closure of Kaltenkirchen factory in Germany and property, plant and equipment of Leuna biorefinery. In December 2024, the Group conducted the impairment

UPM Financial Report 2025

286

UPM Financial Report 2025

287

286

287

UPM Annual Report 2025

UPM Annual Report 2025