UPM Annual Report 2025

We are UPM

Governance

Accounts and performance

Our businesses

UPM in brief

Our strategy

Sustainability

UPM Biorefining is driving the use of renewable, high-value materials in fuels and chemicals. Our biorefineries produce advanced biofuels and bio-based chemicals with strong sustainability performance and superior properties. UPM Biorefining

UPM Energy is paving the way for a sustainable future with fossil-free nuclear energy and hydropower. Our portfolio is well suited to the evolving electricity market, providing opportunities for value creation in physical markets. UPM Energy

Key figures 2025

Key figures 2025

In 2025, we discontinued the planning of a second biomass-to-fuels refinery in Rotter dam. We are pursuing growth in biofuels by developing proprietary technologies that en able the use of other advantageous bio-based feedstocks. Additionally, we aim to enter other high-value fuel market segments. In Leuna, Germany, we have built the world’s first industrial biorefinery, which will produce wood-based glycols, industrial sugars and renewable functional fillers (RFF) from sustainably sourced hardwood and sawmilling residues (page 26). The start-up of the Leuna biorefinery progressed in 2025. The first commercial deliveries of industrial sugars took place in the fourth quarter. Production and sales of further products, lignin, renewable functional fillers and finally glycols is expected to start in 2026. This biorefinery is expected to reach full production and positive EBIT during 2027. Our bio-based monoethylene glycols are a 100% renewable, drop-in alternative to fossil glycols. They are used in PET packaging, polyester textiles and foams for footwear, among other applications. We enter the mar ket directly and through downstream part

nerships, enabling value-chain integration all the way to fully bio-based PET and increased value generation for UPM. UPM’s RFF replaces fossil carbon black in tires, rubber goods and black plastics. In ad dition to significantly reducing CO₂, emissions they offer technical advantages such as reduced weight and enhanced conductivity. These advantages improve the performance and con sumer appeal of rubber-based products. The demand for our renewable portfolio is evident in the commercial pipeline, which far exceeds the capacity of the Leuna refinery, as well as in strategic partnerships spanning the packaging, textiles, automotive, and consumer goods industries. With our pioneering technolo gies and secure, sustainable raw materials, UPM Biorefining is well positioned to lead the shift from fossil to renewable carbon and capture growth in rapidly developing global markets. We are leading the transition to an industrial bioeconomy as a new growth pillar of the chemical industry.

by optimizing our hydro assets in volatile markets, which benefits society as a market balancer. The nuclear power plants provide the power system with a reliable baseload. UPM is also a major electricity consumer with significant demand-side flexibility, particularly at its paper mills. We channel the value of this flexibility to the markets through the UPM Energy control room. Due to decarbonization and digitalization efforts, demand for fossil-free electricity is expected to increase significantly in the com ing years. The electrification of district and industrial heating has resulted in increased investment in electric boilers. Demand for data centers will grow, driven by the adoption of cloud services and generative AI. The prospects for power demand growth are attractive as the need for reliable and flexible energy increases. In 2025, UPM Energy’s hydropower production was close to normal levels. June marked TVO's final takeover of the OL3 nu clear power unit, which operated smoothly in its second full year of continuous commer cial production.

We installed our second ultracapacitor at the Kuusankoski hydropower plant, as our experience with the first such investment at Ontojoki has been excellent. An ultracapac itor strengthens the ability of hydropower to balance the grid, allowing us to provide the market with very fast reserves through short-term energy storage. The need for fast and flexible balancing power has increased rapidly with the growing use of weather-de pendent energy sources. The Kuusankoski ultracapacitor leverages modern digital solutions and automation to optimize the performance of the ultracapacitor and hy dropower system. The most significant development regarding our energy assets is the potential extension of the operating licenses and lifetimes of the OL1 and OL2 nuclear power units beyond 2038. UPM Energy is also developing wind and solar power projects on UPM-owned land.

on Dec. 31 Personnel 504

Sales

Comparable EBIT

€m

€m

615

151

-2%

-17%

In operation since 2015 UPM Lappeenranta Biorefinery 130,000 Full capacity expected in 2027 UPM Leuna Biorefinery 220,000 Annual capacity in tonnes

Personnel

Comparable ROCE

on Dec. 31

%

86

5.8

-1.7pp

Annual capacity in tonnes

UPM Energy is the second largest electricity producer in Finland and a major player in the Nordic electricity markets. Our produc tion portfolio consists of our own and co owned hydropower plants as well as nuclear power shareholdings and is 99% fossil-free. We have generated significant added value

The Lappeenranta refinery in Finland uses crude tall oil (CTO), a wood-based biomass that does not compete with food production or cause changes in land use, to produce renewable UPM BioVerno™ diesel and naphtha.

More information on pages 121–122 upmbiochemicals.com upmbiofuels.com

More key figures on page 124 upmenergy.com

In focus

In focus

Ten years of pioneering renewable fuel production

Balancing the everyday

UPM Biofuels celebrated ten years of successful operations at its Lappeenranta Bi orefinery, the world’s first commercial-scale facility to produce advanced biofuels from wood-based residues. Since 2015, the refinery has contributed to decarbonization of the transport and petrochemical industries. All products are backed by globally recognized sustainability certifications. In addition to developing our technologies, we are making progress in the technical qualification of tall oil-based fuels for aviation use. We are conducting testing with the ASTM standardization organization as a necessary step for producing sustainable aviation fuels. The registration process and discussions with technical partners in the aviation industry are ongoing.

As the share of weather-dependent electricity generation grows, the future electricity system will require more flexibility. Fluctuations in supply will drive additional demand for balancing measures across the grid. This is managed through multiple marketplaces, where market participants can bid on balancing actions by changing either their electricity consumption or supply. Functioning electricity markets, combined with clear price signals, incentivize balancing actions. UPM Energy, the second largest energy producer in Finland, has developed its ca pabilities to actively participate in balancing markets through hydropower and storage solutions. In this model, hydropower plants and river flow are optimized in combination with ultracapacitors, i.e., new electricity storage technology.

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UPM Annual Report 2025

UPM Annual Report 2025