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UPM Annual Report 2014
UPM Annual Report 2014
27
28
CONTENTS
Consistent
work delivered
results
Business performance
Operating profit increased significantly due to
a clear improvement in sales margins resulting
from both higher sales prices and lower variable
costs. Fixed costs remained on the previous
year’s level.
Business development
UPM Plywood’s performance has consistently
improved thanks to past years’ restructuring and
streamlining measures and a renewed commer-
cial strategy. In 2014, UPM Plywood proceeded
with measures to further improve performance
in several areas, focusing particularly on sales
management and service offering as well as
operational efficiency and work safety.
UPM Plywood made further progress in its
customer-oriented approach in 2014. A clear
definition of the value proposition to custom-
ers in 2013 enabled UPM Plywood to enhance
its technical support, services tailored to end-
use needs and services to improve customers’
process efficiency.
Through its improved customer focus, UPM
Plywood has successfully increased sales to
demanding end-use industrial applications such
as LNG (liquefied natural gas) vessels and
trailer manufacturers. Investment activity in the
LNG industry is high and the outlook remains
good. In the area of road freight applications,
UPM Plywood has provided expertise to fur-
ther reduce the weight of trailers in co-opera-
tion with trailer manufacturers and has
launched the WISA Bonded Floor plywood
solution. The new application brings about
both economic and environmental benefits.
UPM Plywood’s increasingly value-oriented
customer offering improved average sale prices
compared to the previous year.
In 2014, UPM Plywood also succeeded in
further improving its operational efficiency.
Fixed costs remained at the previous year’s level
as the benefits of a new maintenance model and
strict cost control offset the impact of cost
inflation. A shorter maintenance shutdown at
the Finnish mills improved production flexibil-
ity and enabled UPM to respond to customer
demand with increased production. Intensified
PRODUCTION
PLYWOOD MILLS
(SPRUCE)
PLYWOOD MILLS
(BIRCH)
VENEER MILL
SALES
o
o
Leading supplier in
demanding end uses
o
o
High quality
o
o
Supply chain services
o
o
Professional technical
services
o
o
Reliable supplier
o
o
Strong brand
UPM PLYWOOD VALUE CREATED
Moderately labour and capital
intensive industry
Engaged high performing people
Community engagement
Responsible sourcing
Sustainably sourced wood from
certified sources with full traceability
Sustainable energy
Safe and certified
products
Carbon storing products
Employment
Work safety
Vitality of local
communities
Low emissions
ROCE
CUSTOMER
INDUSTRIES
CAPITALS
OUTCOMES
Product and process development
Construction
LNG shipbuilding
Vehicle flooring
Parquet
Other industrial
manufacturing
efforts in supply chain and production manage-
ment resulted in improved quality, higher
delivery assurance and lower unit costs.
In 2014, production efficiency improved in
particular at the Savonlinna birch plywood mill
in Finland. Since the extension and modernisa-
tion work was completed in 2012, production
efficiency has gradually improved and the mill
offers further improvement potential.
Safety issues have been made an integral
part of the business management system and
daily activities, and thanks to a continued
systematic approach and readiness to intervene
in risk situations, safety results have improved
considerably, reaching world class industry
levels in 2014.
Markets and drivers
• Plywood demand is driven by activity in
the building and construction and furniture
industries as well as industrial end-use
segments such as transportation.
• Plywood demand in Europe is estimated
to have increased slightly in 2014. Demand
was slightly higher in industrial applications
than in construction-related end-use
segments.
• The plywood market in Europe was in
balance in 2014, and sales prices increased
slightly.
OUR DIRECTION
•
Profitable growth through
operational excellence and
customer-oriented service
•
Strengthen market position in
selected businesses by increasing
value and service offering
OUR STRENGTHS
•
Leading supplier in demanding
end-use segments
•
Reliable supplier with consistent
high quality
•
Superior customer service
•
Strongest brand in the market – WISA
®
END USES
UPM Plywood
CO-OPERATION DRIVES WELLBEING AT WORK
UPM Kalso veneer mill in Kouvola, Finland has focused on the development of leadership,
management skills and solution-oriented decision-making, and the results are beginning to
show. The changes have been driven by rapid changes in the veneer business, personnel
reductions and concern for the mill’s future, which could be seen in the Employee Engage-
ment Survey feedback.
The mill identified relevant development areas in workshops and created clear action plans
based on them. The business and mill management team, together with the employees,
began to systematically change old practices and fix identified issues. From the beginning,
shop stewards had a significant role in the improvement of the work environment and
wellbeing of the employees.
The main action points for the mill were the development of multiple skills and job rotation.
Changes were made to meeting practices and content, decision-making, information flow
and communication. In addition, the mill has focused on improving people management,
working conditions and wellbeing reviews.
KEY FIGURES
2014
2013
Sales, EURm
440
429
Operating profit excl. special items, EURm
44
21
Capital employed (average), EURm
268
286
ROCE excl. special items, %
16.4
7.3
Personnel on 31 Dec.
2,441
2,455
50
40
30
20
10
0
2014
2013
2012
*)
excl. special items
Operating profit
*)
EUR million
BUSINESSES 15–30