UPM annual report 2014

UPM Annual Report 2014

CONTENTS

Increasing efficient use

of resources

In 2014, UPM spent EUR 112 million (155

million) on research and development work

equating to 9.0% (21.1%) of UPM’s operating

cash flow. On top of the direct R&D expenditure

of approximately EUR 35 million (38 million),

the figures include negative operating cash flow

and capital expenditure in developing businesses.

Versatile use of wood biomass

UPM’s Biofore strategy is based on the versatile

use of renewable wood biomass, combined with

innovation, resource efficiency and sustainability.

The purpose is to replace non-renewable materi-

als with renewable, recyclable and low-impact

alternatives – the main drivers for bioeconomy.

Improvements in material efficiency make

it possible to consume fewer resources and raw

materials in production processes. Therefore,

UPM’s R&D work has expanded its focus to

the more efficient use and reuse of side streams.

The most recent examples are UPM’s Elurit and

Cinerit construction products that are made of

fly ash from the thermal recovery of biogenic

waste materials.

UPM has a global network of research cen-

tres to support the businesses and their business

development goals. All of UPM’s businesses and

R&D centres have adopted ecodesign in their

product development processes. This means that

environmental aspects are systematically inte-

grated into product design at an early stage.

Wide-scale collaboration

in new businesses

UPM is a shareholder in the Finnish Bioecono-

my Cluster (FIBIC). The Cluster’s research

programmes focus on the bioeconomy and prod-

ucts based on renewable materials, thus support-

ing UPM’s internal R&D activities. Moreover,

Innovations and R&D

UPM is a shareholder in the Finnish CLEEN

Ltd research company that is focusing on energy

and environmental research.

The research clusters support the Finnish

bioeconomy and cleantech strategies with the

aim of increasing sustainable businesses in

Finland. The clusters’ research projects are in

line with the research and implementation

activities of UPM’s Biofore strategy.

In July 2014, EU and industry leaders

launched a new European Joint Undertaking on

Bio-based Industries (BBI) in which UPM acted

as one of the founding members in industrial

consortium part.

This Public Private Partnership (PPP) aims

to trigger investments and create competitive

market for bio-based products and materials

that are sourced locally. For UPM, the PPP is an

important funding element for speeding up the

implementation of future investments in new

areas such as biochemicals, biocomposites and

biofuels.

In 2014, UPM received approximately EUR

2.1 million (3.8 million) from Tekes (the Finnish

Funding Agency for Technology and Innova-

tion) for its research projects. These projects

were carried out in co-operation with research

institutes, universities and other companies.

UPM’s intellectual property rights applica-

tions have increased significantly during the last

few years. The importance of patent registration

highlights the progress made in new businesses.

UPM’s biocomposites combine

natural fibres and plastic

The UPM Biocomposites business unit devel-

ops, manufactures, markets and sells high qual-

ity composite products and granulates for a wide

range of consumer and industrial applications.

The objective of UPM’s R&D programmes and business development

is to create new technologies and products, provide support to

and ensure the competitiveness of its businesses.

The share of R&D work increased in new technologies and growth

businesses such as developing biofuels, biocomposites, biochemicals,

biofibrils, pulp and CO

-neutral energy in 2014. UPM Biofuels

entered its commercialisation phase in 2014 and is included in

the UPM Biorefining business area.

UPM ProFi and UPM Formi composites

combine the best characteristics of natural fibres

and plastic. Their principal ingredients are

cellulose fibres and polymers, which can be

either virgin or recycled. The non-toxic compos-

ites can be recycled.

UPM ProFi products are used for decking

and other outdoor end uses. They are made

mainly from the surplus paper and plastic left

over from the production of self-adhesive label

materials.

UPM Formi composite is used to replace

plastic in many applications, from furniture to

consumer electronics. UPM Formi is manufac-

tured from cellulose fibre and plastics. Around

half of the oil-based plastic is replaced with

cellulose fibres in the biocomposite.

Products manufactured from UPM Formi

comply with food contact material requirements

stipulated in the EU and US Food and Drug

Administration (FDA) regulations.

The composite also complies with EU toy

safety regulations.

UPM Biochemicals has profound

know-how in lignin-based products

The UPM Biochemicals unit develops wood-

based chemical building blocks, performance

chemicals and biofibrils.

Chemical building blocks are a cost competi-

tive replacement for fossil-based monomers and

chemicals such as intermediates to bioplastics.

Performance chemicals utilise the basic structure

of the natural biopolymers of wood, such as

lignin and hemicellulose.

Biofibrils™ products and lignin, the binding

agent of wood, are examples of UPM’s perfor-

mance chemicals. Biofibrils are cellulose micro-

and nanofibril products that can be used for

shaping materials and giving them new charac-

teristics. Lignin for example can be used in

various resin mixtures and adhesives.

In 2014, UPM Biochemicals worked with

Renmatix to test the company’s water-based

Plantrose™ process. The goal is to convert

woody biomass into intermediates for subse-

quent downstream processing into biochemicals.

In addition, UPM Biochemicals signed

a lignin supply contract with Domtar Inc. to

develop the market and offer sustainable, value-

added products for a growing variety of end

uses.

UPM Biochemicals has developed profound

know-how and intellectual property in the area

of lignin-based products, e.g. resins, which are

typically used as binders in wood-based prod-

ucts. UPM BioPiva™ lignin for resin formula-

tions, based on UPMs proprietary activation

technology, is one example of this kind of

product.

Product development at UPM Biochemicals

is at the pre-commercial phase, with UPM

actively developing and testing industrial appli-

cations with its partners in order to create

mill-scale industrial concepts.

PARTNERSHIPS HELP BRING

ADDED VALUE TO SIDE-STREAMS

In December 2014, UPM announced its

agreement with Indicatorium Oy for the

international commercialisation of the food

freshness indicator technology developed by

UPM. Food freshness indicator is a smart

label that reacts to certain chemicals and

helps to determine whether a food product

is still fresh and safe to eat.

The co-operation is a good example of UPM

actively using its extensive patent portfolio,

by which it is seeking business development

and innovative partnerships for various

bioeconomy projects and the development

of by-product utilisation. With the help of

co-operation, UPM is aiming to develop new

business models and utilise patents that

would otherwise be neglected.

UPM is looking for partners among other

industrial companies, start-ups, research

institutes (e.g. FIBIC) and various other

entities that facilitate the commercialisation

of technologies (VTT, Sitra). Occasionally,

UPM also forms partnerships with its

customers, like in the case of the RafCycle

label waste recycling concept.

These partnerships help UPM divide the

workload, bringing more flexibility and

agility to its operations. UPM’s contributions

to the projects include transferring and

sharing its know-how on technology and

environment.

Read more:

www.upm.com

UPM’s patent filings have grown

significantly in past years. The filings

are mainly related to UPM’s developing

businesses such as biofuels,

biocomposites and biochemicals.

EVENTS IN 2014

4 March:

UPM’s Biofore Concept

Car demonstrating versatile use

of biomaterials premieres at the

Geneva International Motor Show

11 March:

Fortum, UPM and Val-

met announce their plan to jointly

develop technology to produce

advanced biomass-based fuels

19 March:

UPM Plywood and

Finnish furniture manufacturer Isku

sign a partnership agreement on

thermo-formable UPM Grada wood

material to cut Isku’s form press

times by half

400

320

240

160

Annual patent filings 2010–2014

150

120

Includes negative operating cash flow

and capital expenditures

■

Developing businesses

■

Mature businesses

Of operating cash flow

UPM’s development expenditure

EURm

Read more on the reuse of materials (p.50).

BUSINESSES 15–30