UPM annual report 2014

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UPM Annual Report 2014 UPM Annual Report 2014 15 16
CONTENTS
OUR STRENGTHS
• Modern, efficient pulp mills and
business committed to growth
• Versatile range of pulp grades
suitable for a wide range of
end uses
• Own sales and service network
for the global customer base
• World-class logistic platform
connecting continents
• Sustainable fibre sourcing and
outstanding environmental
performance
• Proprietary technology for
wood-based renewable diesel
• Competitive sawmills with skilled
global sales
• Synergistic operations from joint
supply chain of wood raw materials
for sawn timber, pulp and
renewable diesel
FORESTRY AND
WOOD SOURCING
PRODUCTION SALES
PULP
• Tissue,
• Packaging board,
• Specialty paper and
• Graphic paper producers
PULP
ooGlobal sales
ooStrategic sales
co-operation
ooWorld-class technical
service
BIOFUELS
• Fuel distributors
BIOFUELS
ooRegional biofuels
sales
TIMBER
• Construction, furniture,
joinery industries
TIMBER
ooSkilled global sales
network
UPM BIOREFINING VALUE CREATED
Capital intensive process
industry
Engaged high performing
people
Sustainable forest biomass
from certified sources and
with full traceability
Sustainable forest
management
Responsible sourcing
Intellectual property rights
Community engagement
Safe and sustainable
products
Renewable energy
Carbon storing products
Low emissions
Biodiversity
Employment
Work safety
Community wellbeing
ROCE
CUSTOMERS END USES CAPITALS OUTCOMES
ooProfessional sourcing
organisation
ooUPM’s certified forests
in Finland
ooUPM certified
eucalyptus plantations
in Uruguay
ooForestry services
Synergies in wood sourcing and raw materials
BUSINESSES 15–30
OUR DIRECTION
• In Pulp, maintain cost competi-
tiveness through continuous
operational improvement, grow
as a cost efficient producer
through low-risk, high-yield
debottlenecking investments,
strategic sales co-operation and
potentially through acquisitions
• In Biofuels, commercialise the
investment in the world’s first
biorefinery producing wood-
based renewable diesel and
further develop UPM’s proprie-
tary technology
• In Timber, enhance profitability
through efficient use of wood
supply, operational excellence
and sharpened commercial
strategy
PULP
ooLarge modern mills
ooEfficient production
ooCombined heat and
power production
BIOFUELS
ooWorld’s first biorefinery
producing wood-based
renewable diesel
ooProprietary technology
ooIPR
TIMBER
ooEfficient sawmills
UPM Biorefining
Business performance
Operating profit decreased mainly due to lower
hardwood pulp prices. Fixed costs increased
due to maintenance shutdowns carried out at
the UPM Kaukas and UPM Pietarsaari pulp
mills in the first half of the year and ramp-up
of the Biofuels organisation. The commission-
ing phase of the biorefinery started in July, and
commercial production of advanced renewable
diesel began in January 2015. Profitability in
sawmill operations improved thanks to
further development in sales and production
management.
Growth in pulp
and start-up of the biorefinery
Benefits from integrated production
In the UPM Biorefining business area, UPM
combines integrated production of pulp, renew-
able diesel and sawn timber with a joint supply
chain of wood raw materials. Pulp mills pro-
duce renewable energy in their recovery boilers
and provide CO2-neutral biomass-based elec-
tricity. As a residue of the pulp production,
mills produce crude tall oil, which is the raw
material in the biorefinery producing wood-
based renewable diesel. Sawmills have a central
2014 2013
Sales, EURm 1,937 1,988
Operating profit excl. special items, EURm 217 300
Capital employed (average), EURm 2,862 2,825
ROCE excl. special items, % 7.6 10.6
Personnel on 31 Dec. 2,529 2,376
KEY FIGURES
Commercial
production of
wood-based
renewable diesel
began in Lappeen-
ranta, Finland in
January 2015.
Synergistic operations in production integrates
300
240
180
120
60
0
2014 2013 2012
*) excl. special items
Operating profit*)
EUR million