UPM annual report 2014

UPM Annual Report 2014

CONTENTS

DRIVERS FOR UPM’S BUSINESSES

The world around us is changing rapidly and

the future will bring both opportunities and

challenges that we have never before experi-

enced. Global demand for resources – oil, food,

water and energy – is surging, driven by global

population growth, urbanisation and an

expanding middle class in the emerging markets.

Climate change has already emerged as a major

global phenomenon. Furthermore, the shifting

of economic power from West to East and the

increasing pace at which business is conducted

and digital technologies are becoming integrat-

ed into our everyday lives is changing the oper-

ating environment considerably.

UPM’s Biofore strategy fits well into this

changing world.

Renewables:

UPM’s products are based on

sustainably-sourced renewable raw materials.

More with Biofore:

Making more out of

less is central to UPM’s resource efficiency as

well as a major source of cost efficiency and

competitiveness.

Recycling:

Most of UPM’s products are

recyclable and UPM recycles many of them into

new products such as paper, biocomposites and

energy.

Energy:

In energy generation, whether in

electricity, heat or biofuels, UPM’s operations

are based on reliable, low-emission and cost

competitive energy sources. UPM is continu-

ously improving its energy efficiency.

Growth markets:

UPM has an attractive

platform for growth in Asia, Latin America and

Eastern Europe in its pulp, paper, label materi-

als and wood products businesses – serving

growing consumption in a sustainable way.

Efficient operations:

Cost efficiency and

scalable operations are important in all busi-

nesses, but form the cornerstone of success in

the mature European and North American

graphic paper business.

Innovation:

UPM’s know-how and strong

position in the wood processing – or biorefining

– value chain is utilised to innovate new sustain-

able businesses with large target markets and

higher added value. Many of these new renew-

able alternatives will replace non-renewable

products.

Responsibility:

UPM applies the same high

standards for environmental performance,

safety at work, responsible sourcing and code

of conduct everywhere in the world.

The majority of the global change drivers

support UPM’s businesses in the long term, but

they do not affect all UPM businesses equally.

This means that strategic direction, targets and

actions vary throughout different UPM busi-

nesses in order to capture opportunities and

mitigate challenges in both short and long term.

Low-emission and

renewable energy

Fast moving consumer

goods, retail

Advertising, office

communication

Bio-based

materials

Uncertain energy prices and security of

supply

Integrating European markets

Climate change

Global population growth

Ageing population in developed markets

GDP growth, urbanisation and expanding

middle class in developing markets

Change in consumer behaviour

Digitalisation – from print to screen

Change in economic gravity from mature

to emerging markets

Raw material scarcity

Sustainability and renewability

Access to clean water

Biodiversity loss

Replacing oil-based materials

Increasing regulation, uncertain rules

for energy markets

Preferential treatment of renewable

energy

Cost for emissions

Growth opportunities for pulp and

value-added labelling solutions in

developed markets

Attractive growth prospects for pulp,

label materials, wood products and office

papers in developing countries

Declining graphic paper consumption in

mature markets

Different decline rates in different paper

end uses

Higher demand growth for most of UPM’s

products in developing markets

Increasing raw material costs and

uncertain availability

Increasing interest for sustainable products

and solutions

New business opportunities with

ecodesign

Focus on cost competitive low-emission

energy sources

Increase energy efficiency

Grow in advanced biofuels

Plywood solutions for LNG tankers

Grow in cost competitive pulp

Grow in labelling materials and self-

adhesive labelstock in developing markets

Grow in higher value-added labelstock

products in developed markets

Grow in office papers in APAC

Supply wood products outside Europe

Continuous improvement in cost competi-

tiveness

Focus on more attractive paper end-use

segments

Adjust graphic paper production capacity

to profitable customer demand

Use of renewable raw materials

Responsible sourcing

Increase materials efficiency

Recycling and reuse of production waste

UPM’s global biodiversity programme

Develop new businesses in biofuels,

biochemicals and biocomposites

THEME

TRENDS

IMPACT

ON UPM

UPM’S

RESPONSE

Biofore strategy in a changing

operating environment

The world’s first biorefinery

producing wood-based renewable

diesel has started up in Lappeen-

ranta, Finland.