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UPM Annual Report 2015
7
contents
*)
not a complete list
IN BRIEF
STRATEGY
BUSINESSES
GOVERNANCE
STAKEHOLDERS
ACCOUNTS
Business area
Strategic targets
Actions in 2015
Actions planned for 2016 *)
UPM BIOREFINING
Grow as a cost competitive pulp producer
providing the most versatile pulp product
offering
Commercialise the biorefinery investment
Benefit from integrated full-production
Capacity expansion completed at UPM Kymi pulp mill
2
Commercial production started at UPM Lappeenranta
Biorefinery
2
4
UPM Kaukas pulp mill investment decision
2
Debottlenecking investments at sawmills
1
Reduction in variable costs
1
Capture benefits of pulp capacity expansions
2
Complete UPM Kaukas pulp mill investment
2
Continue production ramp-up in
UPM Lappeenranta biorefinery
2
4
Participate in variable cost savings
1
UPM ENERGY
Create value in power generation and
physical and financial trading
Profitable growth on the Nordic CO
2
emission-free electricity market
Optimal use of hydropower assets and hedging
1
Continued OL3 construction
2
Continued the refurbishment of hydropower plants
2
Continue OL3 construction and
refurbishment of hydropower plants
2
Grow energy management services
2
Continue optimal use of
1
hydropower assets
UPM RAFLATAC
Profitable growth through organic growth,
product portfolio development and synergistic
acquisitions
Growth in high value added films and special
products
Expand presence in developing markets
Started up expanded production in China,
Malaysia and Poland
2
Strengthened product portfolio in films and
special products
1
2
4
Reduction in variable costs
1
Continuous product portfolio
development
1
2
4
Ramp up production in new units
2
Plan new slitting and distribution
terminals in growth markets
2
Participate in variable cost savings
1
UPM PAPER ASIA
Profitable growth in labelling materials globally
and in high quality office papers in Asia-Pacific
Exceptional customer experience and leading
sustainability performance
Completed construction of the third
production unit at UPM Changshu, China
2
Reduction in variable costs
1
Ramp up of the third production
unit at UPM Changshu, China
2
Participate in variable cost savings
1
UPM PAPER ENA
Improve profitability and maximise cash flow
through a customer-focused sales strategy
Make use of optimisation opportunities in
the extensive low-cost operations
Leverage on simplified, customer segment-based
organisation
1
Closure of four paper machines
1
Reduction in variable and fixed costs
1
Improved market position
1
Strengthen customer relationships
1
Participate in variable cost savings,
fixed cost savings
1
Study the possible sale of
1
3
UPM Schwedt in Germany
UPM PLYWOOD
Profitable growth through customer-oriented
service and operational excellence
Strengthen market position in selected
businesses by increasing value and service
offering
Increased deliveries to demanding end-use segments
1
2
Otepää plywood mill investment decision in Estonia
2
Improved production flexibility
1
Competitiveness improvement programme at
the Finnish birch plywood mills
1
Reduction in variable costs
1
Complete Otepää mill investment
in Estonia
2
Participate in variable costs savings
1
WOOD SOURCING AND
FORESTRY
Secure competitive wood
Reduction in wood costs
1
Sold 63,670 hectares of forest land in Finland
3
Sale of Tilhill Forestry Limited
3
Continue forest land sales
3
Participate in variable costs savings
1
BUSINESS Portfolio
development and
VALUE creation
Grow with synergistic acquisitions
Simplify with best value realisation for UPM
Studied M&A opportunities, no significant
transactions materialised
3
Sold the SMARTRAC share
3
Continue to look for value enhancing
M&A opportunities
3
NEW BUSINESS
DEVELOPMENT
UPM Biocomposites: business creation and
continued growth
UPM Biochemicals: further application
development and piloting
Commercialise technology and IPR innovations
for core-related activities
Industrial concept development proceeded in biochemicals
4
Significant EU funding for biochemicals concept
demonstration
4
Active management of patent portfolio, attractive
partnerships with start-up companies enhanced
3
4
Continue to expand UPM ProFi product port-
folio. Continue to commercialise UPM Formi
4
Continue to develop biochemicals
4
Continue technology and IPR commerciali-
sation, search collaboration opportunities
4
in bioeconomy/circular economy
Responsibility
Comply with laws and regulation
Mitigate risks and capture opportunities
Enhance competitiveness
Continuous improvement
Code of Conduct renewed
1
New 2030 responsibility targets established
1
Efficiency and safety improved
1
Responsible sourcing management strengthened
1
Code of Conduct launch and training
1
Efficiency and safety further improved
1
Diversity initiative to be launched
1
UPM’s sponsorship and donations
programme
1
UPM Annual Report 2015
8
events IN 2015
12 Jan:
UPM announces that
its Lappeenranta Biorefinery
is in commercial production
producing wood-based renew-
able diesel
19 Jan:
UPM is listed as indus-
try leader with Gold Class
Distinction in RobecoSAM’s
sustainability assessment
20 Jan:
UPM announces the
permanent closure of three
paper machines in Finland
and in the UK as part of the
profit improvement programme
launched in Nov 2014
3 Feb:
UPM introduces a new
cash flow-based dividend
policy
23 Apr:
UPM announces an
EUR 40 million investment to
expand its Otepää plywood
mill in Estonia
6 May:
Renewable and locally
produced UPM BioVerno diesel
fuel becomes available at cer-
tain Finnish service stations
11 June:
UPM’s ValChem
project receives EUR 13.1 mil-
lion in funding from the EU to
demonstrate an integrated bio-
chemicals process from wood
to chemicals value chain
16 June:
UPM announces a
EUR 50 million investment to
further improve the efficiency
and competitiveness of its
Kaukas pulp mill
22 June:
UPM permanently
closes paper machine 3 at
UPM Chapelle Darblay in
France as part of the profit
improvement programme
launched in Nov 2014
24 June:
Teollisuuden Voima
Oyj decides not to apply for
a building permit for the Olki-
luoto 4 nuclear power plant
project
1 Sept:
UPM marks one hun-
dred years of listing on the
stock exchange
2 Sept:
UPM sells Tilhill Forest-
ry Limited to the BSW Timber
Group
10 Sept:
UPM is listed as
industry leader on the global
Dow Jones Sustainability Index
16 Sept:
UPM announces that
its FSC® group certification
scheme for private forest own-
ers in Finland has exceeded
100,000 hectares of certified
forest
2 Oct:
UPM joins China
Sustainable Paper Alliance to
promote responsibly sourced
pulp and paper
7 Oct:
UPM Plywood announc-
es a competitiveness improve-
ment programme at its Finnish
birch plywood mills
12 Oct:
UPM announces an
increase in the IFRS fair value
of its forests in Finland
27 Oct:
UPM announces the
successful ramp-up of the ex-
pansion in the UPM Kymi pulp
mill in Finland
4 Nov:
UPM is listed on the
CDP Nordic Disclosure Leader-
ship Index (CDLI) for the 7th
time
17 Nov:
UPM and LEIPA an-
nounce discussions on the
potential sale and conversion
of the UPM Schwedt mill into
liner production in Germany
3 Dec:
Finnish Market Court
makes decision on biofuels-
related patent dispute between
UPM and Neste for UPM’s
benefit
10 Dec:
UPM announces its
plan to change its corporate
structure in Finland to better
match its current business
structure
22 Dec:
UPM announces the
sale of its 10.6% SMARTRAC
share to OEP Technologie
Holding B.V.
Performance improvement and transformation
continued in 2015
1
performance
2
growth
3
PORTFOLIO
4
innovation