UPM Annual Report 2025

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We are UPM

Governance

Accounts and performance

Financial Statements

Report of the Board of Directors

Sustainability Statement

Auditor's Report

Sustainability Assurance Reports

Free cash flow Free cash flow is primarily a liquidity measure. It is an important indicator of UPM’s overall operational performance as it reflects the cash generated from operations after investing activities.

Changes in leased assets

Free cash flow

Machinery and equipment

Other leased assets

Advance payments 1)

1,500

€ million

Land areas

Buildings

Total

2025 Carrying value, at January 1

1,000

€ million

2025

2024

291

144

411

—

847

1,405 -428

1,352 -586 766 -801

Operating cash flow Investing cash flow

New contracts and subsequent additions

—

500

Business acquisitions

—

977

Free cash flow

Reassessments and disposals

—

-792 -160

Dividends paid to owners of the parent company

€ million

Depreciation

-18

-23

-48

—

-90

—

Treasury shares purchased

-23

-19

Dividends paid to non-controlling interests

Impairments

—

-14

—

-15

-500

-8

—

Return of capital to NCI Other financing cash flow

Translation differences

-32

-4

-28

—

-64

-1 —

-10

-1,000

Carrying value, at December 31

263

142

372

—

778

Transaction costs and discounts in operating cash flow Change in other financial assets in operating cash flow Change in other financial assets in investing cash flow

2024 Carrying value, at January 1

-73

-79

272

161

226

683

—

80 55

135 302 437

Change in net debt, cash Change in net debt, non-cash

New contracts and subsequent additions

181

213

Reassessments and disposals

-1

—

135

Change in net debt Opening net debt Closing net debt

Depreciation

-18

-24

-43

—

-85

2,869 3,004

2,432 2,869

Reclassifications

—

-33

—

Translation differences

Bonds

Carrying value, at December 31

291

144

411

—

847

Nominal value issued, million

Carrying value 2025 € million

Carrying value 2024 € million

1) Advance payments for leases not commenced at the year end reporting date December 31.

Fixed rate period

Interest rate, %

Currency

The lease liability is recognized at the commencement date and measured at the present value of the lease payments to be paid during the lease term. The Group uses, as a basis, discount rate implicit in the lease and if that rate cannot be readily determined, UPM uses incremental borrowing rate which comprises of currency and lease term based reference rate and specific credit spread as well as other specific terms and conditions of a lease. Lease payments can include fixed payments, variable payments that depend on an index or rate and extension option payments or purchase options if it is reasonably certain that the Group will exercise them. The lease liability is subsequently measured at amortized cost using the effective interest rate method and remeasured (with corresponding adjustment to the related leased asset) when there is a change in future lease payments due to renegotiation, changes of an index or rate or reassessment of options. Leased asset comprises the initial lease liability, initial direct costs and the obligations to refurbish the asset, less any incentives granted by the lessors. The leased asset is subsequently valued at cost less accumulated depreciation and impairment losses. Remeasurement takes place in case lease liability is remeasured and change in cash flows is based on contract terms that have been included in the original contract. The leased asset is depreciated over the shorter of the asset’s useful life and the lease term. The leased asset is subject to testing for impairment if there is an indicator for impairment, as for own assets. The Group has elected to separate non-lease components such as service components and other variable components and account them for as expenses, if they can be separated from the leased asset. However, the Group does not separate non-lease components from the lease

1997-2027 2020-2028 2021-2031 2022-2029 2024-2034

7.450 0.125 0.500 2.250 3.375

USD EUR EUR EUR EUR

375 750 500 500 600

331 691 496 498 578

375 675 496 497 599

Accounting policies

Leases

The Group as a lessee UPM assesses whether a contract is or contains a lease at inception of the contract. This assessment involves the exercise of judgment about whether it depends on a specified asset, whether UPM obtains substantially all the economic benefits from the use of that asset, and whether UPM has the right to direct the use of the asset. The Group recognizes a leased asset and a lease liability at the lease commencement date, except for short-term leases. UPM applies this to all asset classes. Short-term leases are leases that, at the commencement date, have a lease term of 12 months or less. A lease that contains a purchase option is not a short-term lease. UPM recognizes lease payments of short-term leases as an expense on a straight-line basis over the lease term. The lease term is determined as the non-cancellable period of the lease taking into consideration the options to extend and terminate if it is reasonably certain that the Group will exercise the extension option or will not exercise the termination option. If the contract is for an indefinite period of time and the Group and the lessor both have a right to terminate the contract within a short notice period (12 months or less) without a significant economic penalties and termination cash payments, the contract is considered to be a short-term contract.

Value, at December 31

2,594

2,642

Current portion

—

Non-current portion

2,594

2,642

Leases Leases of property, plant and equipment where UPM, as a lessee, obtains substantially all of the economic benefits from the use of the identified asset and where UPM has the right to direct the use of the identified asset, are classified as leases. Approximately 29% (29%) of leased assets recognized on the balance sheet consist of land areas in Uruguay, which the Group uses for eucalyptus plantations. Approximately 23% (24%) consists of Uruguay railway service agreement. Approximately 8% (8%) of leased assets on the balance sheet consists of vessels for sea transportation in Europe. Approximately 3% (6%) of the leased assets on the balance sheet consist of four power plants. UPM uses the energy generated by these plants for its own production. In addition, the Group has leased two waste water treatment plants as well as several warehouses, terminals, offices and railcars. UPM also leases some production machinery and equipment like forklifts and vehicles that are insignificant to the total leased assets portfolio.

In 2025, additions to leased assets mainly relate to the commencement of the service agreement related to wastewater treatment in Leuna Germany. Business acquisitions in 2025 relate to the acquisition of Metamark. Refer to » Note 8.1 Business acquisitions and disposals for more information. Impairment charges in 2025 relate to the closure of paper machine 1 at the Kaukas mill. In 2024, additions to leased assets mainly relate to Uruguay railway service agreement. In 2025, the total cash outflow for leased assets was €112 (105) million. The expenses related to short-term leases recognized in the income statement in 2025 were €3 million. The Group did not have significant variable lease payments in 2025. The lease commitments for leases not commenced at year-end December 31, 2025 were €0 (24) million. The decrease during reporting period is due to the commencement of the service agreement related to wastewater treatment in Leuna, Germany.

UPM Financial Report 2025

304

UPM Financial Report 2025

305

304

305

UPM Annual Report 2025

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