UPM annual report 2014

UPM – The Biofore Company

VISION As the frontrunner of the new forest industry

PURPOSE We create value from renewable and recyclable materials by combining expertise and technologies within fibre-based, energy-related and engineered materials businesses.

VALUES Trust and be trusted Achieve together Renew with courage

UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Cost leadership, change readiness, engagement and safety of our people form the foundation of our success.

UPM integrates bio and forest industries and builds a sustainable future across six business areas. Our products are made of renewable raw materials and are recyclable.

In 2014, UPM’s sales totalled EUR 9.9 billion. UPM has production plants in 13 countries and a global sales network. UPM employs approximately 20,000 employees worldwide. UPM shares are listed on the NASDAQ Helsinki stock exchange. At the end of 2014, UPM had approximately 90,000 shareholders.

UPM BIOREFINING

UPM ENERGY

UPM RAFLATAC

UPM PAPER ASIA

UPM PAPER ENA

UPM PLYWOOD

UPM Paper Asia serves growing markets with labelling materials globally and fine papers in Asia. The operations consist of the UPM Changshu paper mill in China and labelling and packaging materials production lines at the UPM Tervasaari and UPM Jämsänkoski mills in Finland. The main customers are retailers, printers, publishers, distributors and paper converters. UPM Paper Asia seeks growth in labelling materials globally and in high quality office papers in Asia.

UPM Energy generates cost competitive low- emission electricity and operates in physical and derivatives trading on the Nordic and Central European energy markets. UPM’s power generation capacity consists of hydropower, nuclear power and condensing power. UPM Energy aims to grow on the Nordic CO 2 emission-free energy market.

UPM Plywood offers plywood and veneer products, mainly for construction, vehicle flooring and LNG shipbuilding as well as other manufacturing industries. UPM is the leading plywood supplier in Europe, with production in Finland, Estonia and Russia. UPM Plywood aims to strengthen its market position in selected end-use segments and to increase value and customer-oriented service offering.

UPM Biorefining consists of pulp, timber and biofuels businesses. UPM has three pulp mills in Finland and one mill and plantation oper- ations in Uruguay. UPM operates four saw- mills in Finland. UPM‘s biorefinery producing wood-based renewable diesel started up in early 2015. The main customers are tissue, specialty paper and board producers in pulp, fuel distributors in biofuels and con- struction and joinery industries in timber. UPM aims to grow as a reliable pulp supplier and seeks growth in advanced biofuels.

UPM Raflatac manufactures self-adhesive label materials for product and information labelling for label printers and brand own- ers in the food, personal care, pharmaceuti- cal and retail segments, for example. UPM Raflatac is the second-largest producer of self-adhesive label materials worldwide. UPM Raflatac aims to advance in growth markets and strengthen its position in film and specialty labelstock products.

UPM Paper ENA produces magazine papers, newsprint and fine papers for a wide range of end uses in 17 efficient paper mills in Europe and the United States. The main customers are publishers, cataloguers, retailers, printers and distributors. UPM has a global paper sales network and an effi- cient logistics system. UPM Paper ENA focuses on cost leadership and improved profitability to maximise cash flow.

Wood Sourcing and Forestry secures competitive wood and biomass for UPM businesses and manages UPM- owned forests. In addition, UPM offers a wide range of wood trade and forestry services to forest owners and forest investors. UPM Biocomposites and UPM Biochemicals business units are also included in Other operations.

OTHER OPERATIONS

UPM’S BUSINESS PORTFOLIO IN FIGURES

KEY PERFORMANCE INDICATORS

Operating profit *) EUR 847 million +24%

Lost time accident frequency 4.4 –18% Operating cash flow per share EUR 2.33 +68%

Share of certified wood 83% +3pp EPS *) EUR 1.17 +29%

ROE *) 8.3% +1.9pp

Gearing 32% –9pp

Capital employed 2014 EUR 10,944 million

Sales 2014 *) EUR 9,868 million

EBITDA 2014 EUR 1,287 million

UPM Biorefining 26%

UPM Biorefining 18%

UPM Biorefining 28%

UPM Plywood 2% Other operations 13%

Other operations 4% UPM Plywood 4%

UPM Plywood 5% Other operations -2%

UPM Energy 4%

UPM Paper ENA 21%

UPM Raflatac 11%

Employee engagement 63% +3pp

Supplier Code qualified supplier spend 67% +3pp

Share of ecolabelled products 76% +1pp

UPM Paper ENA 49%

UPM Paper ENA 30% UPM Paper Asia 14%

UPM Energy 16%

UPM Energy 25%

UPM Paper Asia 10%

UPM Paper Asia 8%

UPM Raflatac 9%

UPM Raflatac 5%

*) Unconsolidated

*) excluding special items

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UPM Annual Report 2014

UPM Annual Report 2014