UPM annual report 2014

UPM Annual Report 2014

OUR STRENGTHS

•

Accurate supply chain and efficient

delivery network

•

Modern strategically-located

production assets

•

Second largest supplier in most

markets with global scale in R&D,

quality development and technical

know-how

OUR DIRECTION

•

Profitable growth through

organic growth, product

portfolio development and

synergistic acquisitions

•

Growth in high value added

films and speciality label

products

•

Expand presence in rapidly-

growing developing markets

Business performance

Operating profit increased mainly due to

higher delivery volumes and lower fixed

costs, more than offsetting the adverse sales

margin and currency impacts.

ogy is increasing its market share among

labelling solutions.

• In 2014, global demand for label materials

is estimated to have increased by 4%

compared to the previous year.

• Label materials have a wide range of end

uses, of which 80% is driven by private

consumption and 20% by industrial appli-

cations.

• Growth rates are strongest in Asia, Latin

America and Eastern Europe, thanks to

faster urbanisation, an expanding middle

class and increasing income levels.

Demand is further supported by the rapid

development of retailers, distributor

networks and automated product label-

ling.

• In the mature markets of Western Europe,

the United States and Japan, growth is

mainly driven by product renewal and

tailored solutions. Increased private con-

sumption also increases demand.

In April, UPM Raflatac announced plans to

increase production capacity by more than 50%

in Asia. The investment of approximately

EUR 14 million is part of UPM’s focused

growth projects.

Both growth investments are expected to be

completed in Q1 2015.

UPM’s labelstock business has seen a rapid

growth in Asia and the planned capacity allows

UPM to respond to the increasing demand

with improved quality and cost competitive-

ness. UPM Raflatac’s sales increased by a

strong 10% in growth markets in 2014 com-

pared to 2013.

Markets and drivers

• The global label materials market has a

robust growth outlook, driven by an

expanding middle class and the private

consumption of branded and packaged

goods. Thanks to its versatility and brand

appeal, self-adhesive labelling as a technol-

Stable profitability

and growth

in deliveries

SALES AND

SERVICES

Loyal relationships

Global scale

Technical know-how

SELF-ADHESIVE

LABELSTOCK

FACTORIES

Modern

Efficient

Strategically

located

DISTRIBUTION

AND SLITTING

NETWORK

Optimised

distribution and

slitting network

Efficient and

responsive

UPM RAFLATAC VALUE CREATED

Capital light

converting business

Engaged high

performing people

Responsible sourcing

Face paper

Release paper

Films

Adhesives

Silicones

Safe and certified

products

Brand appeal

Work safety

Employment

Recyclable products

RafCycle – waste

recycling concept

ROCE

LABEL USING INDUSTRIES

CUSTOMERS

END USES

CAPITALS

OUTCOMES

New concepts and products, sustainability through the lifecycle

Home & Personal care

Food & Beverage

Retail

A4 and cut-size

Pharmaceutical

Transport & Logistics

Durables

Tyres

Label printers

Business development

In parallel with the implementation of its

growth strategy, UPM Raflatac has continued

with efficiency improving measures in order to

make full use of its production platform and

distribution network. Investments and restruc-

turing have taken place to reflect market

demand in developed and growth markets and

maximise cost competitiveness.

In developed markets such as Western

Europe and North America, UPM Raflatac

has continuously strengthened its offering in

films and speciality products. Efforts have

focused on distribution, marketing and prod-

uct development in parallel with complemen-

tary acquisitions which have enhanced growth.

In April, to secure cost competitive growth

in films, UPM Raflatac announced plans to

increase production capacity for its film label-

stock business in Europe by investing in a new

coating line in Nowa Wies, Poland. This

growth investment of approximately EUR 13

million is part of UPM’s focused growth

projects. Following this investment, a silicon-

ising line in Tervasaari, Finland was closed.

As part of UPM Raflatac’s efficiency

improving measures, the sheet labelstock busi-

ness closed down coating operations and

reduced capacity in sheet finishing in Polinya,

Spain. Sheet coating is being centralised at

Nowa Wies, Poland.

The coating operations in Melbourne,

Australia and in Polinya, Spain were also

closed.

In growth markets such as Eastern

Europe, Latin America and Asia, UPM

Raflatac has significantly enhanced its service

and manufacturing network by investing in

new technology and opening new slitting and

distribution terminals in past years. In 2014 a

new terminal was opened in Mexico, and

more openings are planned for growth mar-

kets in 2015.

UPM Raflatac

100

2014

2013

2012

excl. special items

Operating profit

EUR million

INVISIBLE NEVER LOOKED SO GOOD

UPM Raflatac launched a new VANISH™ range of ultra-thin, invisible clear

film labelstocks in 2014.

VANISH™ clear PET films are ideal for beverage, personal care and food

package labelling. These labels fit perfectly in applications where resistance

against water, oil and chemicals is important, as they offer the exceptional

combination of strength, good stability and excellent chemical resistance.

With new VANISH™ labels, brand owners can maximize brand representation

as well as realise new productivity gains and reductions in packaging materials

throughout their processes.

Read more:

www.upmraflatac.com/vanish

KEY FIGURES

2014

2013

Sales, EURm

1,248

1,213

Operating profit excl. special items, EURm

Capital employed (average), EURm

530

532

ROCE excl. special items, %

15.1

14.1

Personnel on 31 Dec.

2,847

2,869

BUSINESSES 15–30

CONTENTS