UPM annual report 2015

IN BRIEF

STRATEGY

BUSINESSES

STAKEHOLDERS

GOVERNANCE

ACCOUNTS

UPM – The Biofore Company

UPM Biorefining UPM Biorefining consists of pulp, timber and biofuels businesses. UPM has three pulp mills in Finland and one mill and plantation operations in Uruguay. UPM operates four sawmills in Finland. UPM‘s biorefinery producing wood-based renewable diesel started up in early 2015 in Finland. The main customers for UPM Biorefining businesses are tissue, specialty paper and board producers in pulp, joinery, packaging, distribution and construction industries in timber and fuel distributors in biofuels. UPM aims to grow as a reliable pulp supplier, intends to maintain full run operations in timber and seeks growth in advanced biofuels. UPM Energy UPM Energy creates value through cost competitive, low-emission electricity generation and through physical electricity and financial trading. UPM Energy is the second largest electricity producer in Finland and a frontrunner in reshaping the Nordic electricity market. UPM Energy is an active shareholder in major Finnish electricity companies such as Pohjolan Voima Oy (PVO), Teollisuuden Voima Oyj (TVO) (through PVO) and Kemijoki Oy. As a shareholder UPM is actively seeking shareholder value through decision making and asset management. UPM Raflatac UPM Raflatac manufactures self-adhesive label materials for product and information labelling for label printers and brand owners in the food, personal care, pharmaceutical 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 special labelstock products.

UPM Paper Asia UPM Paper Asia serves growing markets with labelling materials globally, fine papers in Asia and flexible packaging in Europe. The operations consist of the UPM Changshu and UPM Tervasaari mills in China and Finland as well as labelling and packaging materials production lines at the UPM Jämsänkoski mill 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 Paper ENA 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 merchants. UPM has a global paper sales network and an efficient logistics system. UPM Paper ENA focuses on cost leadership and improved profitability to maximise cash flow. UPM Plywood 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. Other operations Wood Sourcing and Forestry secures competitive wood and biomass for UPM businesses and manages UPM-owned and privately owned forests. In addition, UPM offers a wide range of forestry services to forest owners and forest investors who have purchased forestry land from UPM. UPM Biocomposites and UPM Biochemicals business units are also included in Other operations.

UPM’S BUSINESS PORTFOLIO IN FIGURES

Sales 2015 EUR 10,138 million

UPM Biorefining 20%

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 2015, UPM’s sales totalled EUR 10.1 billion. UPM has production plants in 13 countries and a global sales network. UPM employs approximately 19,600 employees worldwide. UPM shares are listed on the NASDAQ Helsinki stock exchange. At the end of 2015, UPM had approximately 85,000 shareholders.

Other operations 4% UPM Plywood 4%

UPM Energy 4% UPM Raflatac 13% UPM Paper Asia 10%

UPM Paper ENA 45%

Unconsolidated

EBITDA 2015 EUR 1,350 million

UPM Biorefining 45%

UPM Plywood 6% Other operations -1%

UPM Paper ENA 16%

UPM Paper Asia 10%

UPM Raflatac 10%

Vision As the frontrunner of the new forest industry

UPM Energy 14%

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. 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

Capital employed 31 Dec 2015 EUR 11,010 million

UPM Biorefining 29%

UPM Plywood 2% Other operations 12%

UPM Paper ENA 20%

UPM Energy 22%

UPM Paper Asia 10%

UPM Raflatac 5%

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UPM Annual Report 2015