UPM Annual Report 2025

We are UPM

Governance

Accounts and performance

Our strategy

UPM in brief

Our businesses

Sustainability

Our goal is to increase our earnings and valuation while offering our shareholders an attractive dividend. Making more sustainable choices increases demand for our products. Generating shareholder value

Risks and opportunities UPM is exposed to several risks and opportunities in its operating environment. Many of these risks and opportunities arise from the general political and economic environment, as well as global megatrends.

Sensitivity to pulp and electricity prices on page 123 Risks in the Report of the Board of Directors on page 128 UPM’s cost structure is presented on page 276 Main currency exposures are presented on page 314

Geopolitical and economic uncertainty

Strategic portfolio projects The announced graphic paper Joint Venture aims to position UPM Communication Papers for continued value creation for its customers in a way that benefits UPM's shareholders. UPM Plywood is currently undergoing a strategic review to assess options for maximizing the long-term potential and value creation of the business.

The transition to a low-carbon economy may cause policy changes and shifts in market preferences, standards and technologies. These changes may affect cost structures, the commercial opportunities of biomass, and the competitiveness of products, raw materials, industries, and countries. The physical impacts of climate change include more frequent and extreme weather conditions such as droughts, floods and forest fires, which can disrupt business operations and damage UPM's or suppliers' production assets. Damage caused by insects and tree diseases may become more common. Management: Long-term targets and science-based measures to mitigate global warming through sus tainable forestry, reducing emissions and innovating novel products. Enhance biodiversity. Opportunity: Transition opportunities include those driven by resource efficiency, new technologies, and CO 2 -free electricity, products and services. These may bring us new markets, customers, sources of fund ing, and a competitive advantage. Longer forest growing season in the northern hemisphere. UPM’s product offering competes in markets where customers have competing alternatives, and shifts in supply and demand continuously influence prices. Changes in production capacity, shifts in the supply chain, new product or raw material development, and changes in competitor and consumer behavior may impact price levels for our products and main inputs, and cause temporary or permanent changes in demand. The rapid acceleration of digitalization and e-commerce may expedite the decline in demand for communication papers and simultaneously increase demand for sustainable packaging products. Management: Industry-leading balance sheet. Continuous improvement in competitiveness, resource efficiency and customer offering. Responsible operations. Business portfolio development. Opportunity: The growing need and consumer preference for renewable and recyclable solutions create business opportunities and drives demand growth. Currently, high uncertainty relates to intertwining geopolitical and trade tensions between major econo mies, particularly to the impacts of the policies and actions of the current U.S. administration and poten tial countermeasures by other countries. Russia’s ongoing war in Ukraine, the conflicts in the Middle East, and the recent tension over Greenland, continue to cause high uncertainty in the operating environment, which may impact economic growth, inflation and trade. These factors challenge the competitiveness and predictability of companies with international value chains and operations in several countries. Testing relationships between businesses, governments, and society, as well as the growing international focus on defense and protectionist trade policies, may stress the economic and political environment, causing local challenges to our operations or influencing demand, sales prices, or input costs for our products. Management: Monitoring through international trade associations. Compliance. Continuous improve ment in competitiveness. Continuous monitoring of the geopolitical landscape. Disciplined planning and selection of investments. Business portfolio development. Opportunity : Diverse business portfolio, geographical presence and responsible business practices may present supply chain optimization or strategic opportunities (incl. M&A) during testing economic times.

An attractive business portfolio to drive growth, profitability and valuation In the future, UPM’s portfolio would consist of higher-margin businesses in growing markets with a strong track record of realized sales growth. We aim for healthy growth and improved long-term profitability, which would also increase the value of our shares.

Strong balance sheet Our strong balance sheet mitigates risks and enables us to implement our strategy, even in uncertain times.

Cyclical and competitive business environment

Attractive shareholder distribution We aim to pay attractive dividends, targeting at least half of the comparable earnings per share over time.

Low-CapEx growth Our businesses serve growing markets, and our global market presence enables us to capture market opportunities in faster growing geographies. Our strong asset base enables us to grow with focused, low-capital steps. These efforts support attractive returns on invested capital.

Climate change

Sustainability at the core We see sustainability as a key driver of growth and competitiveness. We seize the opportunities presented by the growing consumer demand for sustainable choices. Stricter regulations to mitigate climate change and address the plastics challenge present opportunities to us. Responsible operations and value chains mitigate risks.

Innovating for the everyday We drive innovation to create high-value business opportunities in areas such as biochemicals, biofuels and specialty packag ing materials. Our strengths include successful commercialization and scaling innovation up to significant volumes. We protect our intellectual property.

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UPM Annual Report 2025

UPM Annual Report 2025