UPM Annual Report 2025

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Goodwill by business area

Impairment testing Impairment tests for goodwill and water rights with indefinite life were carried out in the fourth quarter 2025. Water rights of hydropower plants belonging to UPM Energy and reported in intangible rights amounted €189 million at the end of 2025 and 2024. The values of water rights were tested based on expected future cash flows of each separate hydro power plant. The impairment test of

water rights did not result in a recognition of any impairment in 2025 and 2024. Goodwill impairment tests were carried out for pulp operations in Uruguay, belonging to the UPM Fibres business area, UPM Adhesive Materials business area and UPM Plywood business area. The recoverable amount of CGUs was estimated based on value in use calculations.

4.4 Goodwill and other intangible assets Companies acquired in 2025 relate mainly to the acquisition of Metamark in UPM Adhesive Materials business area. Refer to » note 8.1. Business acquisitions and disposals for further information. In 2025, the Group impaired the entire goodwill of Other operations amounting to €1 million. Companies acquired in 2024 relate to the acquisition of Grafityp in UPM Adhesive Materials business area. In 2024, the Group impaired the entire goodwill of Pulp operations in Finland CGU amounting to €113 million and entire goodwill of UPM Biochemicals CGU amounting to €5 million.

€ million

2025

2024

Pulp operations Uruguay UPM Adhesive Materials

100

111 48

151

UPM Plywood

13

13

Other operations

—

1

Total

264

174

The basis for valuation and key assumptions used in goodwill impairment testing are summarized in the below table:

Goodwill

Basis of valuation Value in use Value in use Value in use

Cash generating unit

Period of forecast

Pre-tax discount rate

Key assumptions

€ million

2025

2024

Pulp operations Uruguay UPM Adhesive Materials

10 years + terminal value 10 years + terminal value 10 years + terminal value

8.60% (2024: 9.12%) 9.14% (2024: 10.59%) 10.18% (2024: 11.12%)

Pulp price, wood costs

Carrying value, at January 1 Companies acquired Translation differences Impairment charges Carrying value, at December 31

174 109

283

Product prices, cost development Product prices, cost development

3 7

UPM Plywood

-18

-1

-118 174

Sensitivity analyses The sensitivity analyses of goodwill impairment tests indicate that no reasonable change in key assumptions would result in recognition of impairment loss against goodwill. In pulp operations Uruguay, the recoverable amount is most sensitive to pulp sales prices.

264

Discount rate The discount rate is estimated using the weighted average cost of capital (WACC) on the calculation date adjusted for risks specific to the business in question. The adjusted after-tax discount rate is translated to a pre-tax rate for each cash generating unit (CGU) based on the specific tax rate applicable to where the CGU operates.

Other intangible assets

Software and other intangible assets

€ million

Intangible rights

Total

2025 Accumulated costs

Key estimates and judgments

375 -159

624

999

Accumulated amortization and impairments

-488

-646

Accounting policies

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

216 212

136 104

352 316

The Group’s assessment of the carrying value of goodwill and indefinite life assets requires significant judgment. While management believes that estimates of future cash flows are reasonable, different assumptions are subject to change as a result of changing economic and operational conditions. Actual cash flows could therefore vary from estimated discounted future cash flows and could result in changes in the recognition of impairment charges in future periods. Future cash flows The review of recoverable amount for goodwill and indefinite life assets is based on a calculation of value in use, using management projections of future cash flows. The most important assessments and assumptions needed in calculations are forecasts for future growth rates for the business in question, product prices, cost development and the discount rates applied. The Group is using ten-year forecasts in calculations as the nature of the Group’s business is long term, due to its capital intensity, and is exposed to cyclical changes. In estimates of product prices and cost development, forecasts prepared by management for the next three years and estimates made for the following seven years are taken into consideration. In addition, consideration is given to the investment decisions made by the Group as well as the profitability programs that the Group has implemented and the views of knowledgeable industry experts on the long-term development of demand and prices. In the projection of cash flows UPM uses EBITDA adjusted with cash flows not captured within EBITDA, including working capital movements and capital expenditures. An assumed terminal value is based on a EBITDA multiples six times.

Goodwill Goodwill arises in connection with business combinations where the consideration transferred exceeds the fair value of the acquired net assets. Goodwill is recognized at cost less accumulated impairment and is an intangible asset with an indefinite useful life. Goodwill is allocated to the cash generating units that are expected to benefit from the synergies from the business combination. Intangible rights Intangible rights include water rights of hydropower plants, patents, licenses, intellectual property and similar rights. Water rights are deemed to have an indefinite useful life as the company has a contractual right to exploit water resources in the energy production of power plants. The values of water rights are tested annually for impairment based on expected future cash flows of each separate hydropower plant. Other intangible rights are recognized at cost less accumulated amortization and impairment. Amortization is calculated using the straight-line method over their estimated useful lives ranging from 5 to 10 years. Software and other intangible assets Research expenditure is recognized as an expense as incurred. Costs incurred in acquiring software that will contribute to future period financial benefit are capitalized to software and systems. Other intangible assets are recognized at cost less accumulated amortization and impairment. Amortization is calculated using the straight-line method over their estimated useful lives ranging from 3 to 5 years.

Additions

3 0

6

9

Companies acquired 1)

60

60

Amortization Impairment

-7

-24

-30

-1

0

-2

Reclassifications

9 0

-8 -2

1

Translation differences

-2

Carrying value, at December 31 Emission rights, carrying value 2)

216

136

352 201 554

Carrying value including emission rights, at December 31

2024 Accumulated costs

434 -222

587

1,021 -705 316 459

Accumulated amortization and impairments

-482

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

212 214

104 245

Additions

3 —

16

18

Companies acquired 1)

5

5

Amortization Impairment

-5

-26

-30

0 0 0

-5

-5

Reclassifications 3)

-136

-135

Translation differences

4

4

Carrying value, at December 31 Emission rights, carrying value 2)

212

104

316 264 580

Carrying value including emission rights, at December 31

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) Refer to » Note 2.3 Operating expenses and other operating income , for further information on emission rights. 3) Reclassifications in 2024 relate to final classification of assets in the Uruguay pulp mill investment. Refer to » Note 4.1 Property, plant and equipment.

UPM Financial Report 2025

292

UPM Financial Report 2025

293

292

293

UPM Annual Report 2025

UPM Annual Report 2025