8-9 / 150
UPM Annual Report 2014
UPM Annual Report 2014
5
6
CONTENTS
NEW BUSINESS DEVELOPMENT
FOR LONG-TERM GROWTH
UPM is developing new businesses based on its
extensive know-how and strong position in the
forest biomass sourcing and processing value
chain. Ecodesign represents business opportunities
with large target markets and high added value.
BIOFUELS
Advanced renewable diesel suitable for
all diesel engines
BIOCOMPOSITES
Renewable materials to replace oil-based
materials e.g. in injection moulding
BIOCHEMICALS
Renewable performance chemicals and
drop-in alternatives for oil-based chemicals
2
MID-TERM FOCUSED
GROWTH PROJECTS
3
3
BUSINESS PORTFOLIO DEVELOPMENT
AND VALUE CREATION
4
4
UPM’s strategy includes
short-term actions to drive
performance, mid-term
projects to capture high-
return growth opportunities
and long-term development
work to create new high
value added growth.
The company is developing
its business portfolio in
order to increase its value
and to create growth.
SHORT TERM PROFITABILITY
PROGRAMMES
UPM is implementing profit improvement
actions in all businesses to further improve
cost competitiveness and advance towards
top performance in the businesses’
respective markets.
• The profit improvement programme, launched
in August 2013, achieved its target of EUR
200 million of annualised fixed and variable
cost savings in Q3 2014. This was reflected in
UPM’s 2014 operating profit, up 24% from
2013.
• UPM announced a new profit improvement
programme in November 2014, targeting EUR
150 million of fixed and variable cost savings
by the end of 2015. The plan includes the
permanent closure of four publication paper
machines in Europe.
UPM is investing EUR 680 million in 2013–
2016 in the following four growth projects,
targeting an EBITDA impact of EUR 200
million when all the projects are fully
operational.
• Pulp: 10% (340,000 t) capacity increase in
the existing pulp mills
• Biofuels: Lappeenranta biorefinery and
the start of the UPM Biofuels business
• New labelling materials and speciality papers
production unit in China
• Self-adhesive labels: 50% increase in self-
adhesive labelstock production capacity in Asia
Pacific and expansion of high-value-added
filmic labelstock production capacity in Poland
UPM aims to develop its business portfolio
to increase its value and to create growth.
• Performance: targeting top performance in
each business
• Grow: focused high-return growth investments
and synergistic mergers and acquisitions
• Simplify: best value realisation for UPM
• Consolidation in European paper market
without allocating more capital
A year of progress
Shifting gear in UPM transformation
1
SELF-ADHESIVE LABELS:
Advancing in growth markets
and in higher value added
products
BIOFUELS:
Lappeenranta
biorefinery
PULP:
10% capacity increase
LABELLING MATERIALS:
Changshu expansion
2
UPM
Energy
UPM
Raflatac
UPM
Paper
Asia
UPM
Biorefining
UPM
Paper
ENA
UPM
Plywood
1
STRATEGY IN ACTION
New labelling materials and speciality
paper production unit at UPM Changshu
in China is scheduled to be completed
by the end of 2015.