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UPM Annual Report 2015
UPM Annual Report 2015
19
20
contents
Benefits from integrated production
In the UPMBiorefining business area, UPM combines integrated production
of pulp, renewable diesel and sawn timber with a joint supply chain of wood
rawmaterials. Energy, crude tall oil and turpentine are recovered in the pulp
production process. Pulp mills produce renewable energy in their recovery
boilers and provide fossil CO
2
-neutral biomass-based electricity. Crude tall oil
is the rawmaterial in UPM’s Lappeenranta Biorefinery producing wood-based
renewable UPMBioVerno diesel.
OUR DIRECTION
•
In Pulp, maintain cost competitiveness
through continuous operational improve-
ment, provide the most versatile pulp
product range aligned with top-notch
environmental standards and most
advanced technical service. Grow as a
cost efficient producer through debottle-
necking investments and potentially
through acquisitions.
•
In Biofuels, commercialise the investment
in the world’s first biorefinery producing
wood-based renewable diesel.
•
In Timber, enhance profitability
through efficient use of wood supply,
integrated full-production and sharpened
commercial strategy.
OUR STRENGTHs
•
Versatile range of pulp grades suitable
for a wide range of end uses
•
Own sales and service network for
the global customer base
•
Modern, efficient pulp mills and business
committed to growth
•
World-class logistics platform connecting
continents
•
Sustainable wood sourcing and
excellent environmental performance
•
Proprietary technology for wood-based
renewable diesel
•
Competitive sawmills with skilled global
sales
•
Synergistic operations from joint supply
chain of wood raw materials for sawn
timber, pulp and renewable diesel
UPM Biorefining
IN BRIEF
STRATEGY
BUSINESSES
GOVERNANCE
STAKEHOLDERS
ACCOUNTS
KEY FIGURES
2015
2014
Sales, EURm
2,272
1,937
Operating profit excl. special items, EURm
467
217
Capital employed (average), EURm
3,191
2,862
ROCE excl. special items, %
14.6
7.6
Personnel on 31 Dec.
2,593
2,529
500
400
300
200
100
0
2015
2014
2013
*)
excl. special items
Operating profit
*)
EUR million
Sawmills have a central role in the wood supply chain, as their by-products are
used in the production of pulp and energy. In UPMBiorefining, UPM benefits
from efficient use of wood rawmaterials and integrated production.
Business performance
In pulp operation, profitability increased mainly because of higher average pulp
sales prices. Variable costs decreased, partly because of improved cost efficiency.
Biofuels production ramp-up was slow in the first half of the year and improved
after the maintenance shutdown in the third quarter. Profitability reached break-
even by year-end.
Profitability in sawmill operations decreased due to stiffer price competition,
more than offsetting the positive impacts of increased delivery volumes and
improved production efficiency. UPMBiorefining’s return on capital employed
increased, exceeding the long-term target.
FORESTRY
AND WOOD
SOURCiNg
o
o
Professional
sourcing
organisation
o
o
UPM’s certified
forests in Finland
o
o
UPM’s certified
eucalyptus
plantations
in Uruguay
o
o
Forestry services
SALES
PULP
o
o
Multi-fibre pulp
product offering
o
o
World-class technical
service
o
o
Global sales
BIOFUELS
o
o
Regional sales
TIMBER
o
o
Skilled global sales
network
PRODUCTION
PULP
o
o
Large modern mills
o
o
Efficient production
o
o
Combined heat and
power production
BIOFUELS
o
o
Advanced renewable
diesel
o
o
World’s first biorefinery
producing wood-based
renewable diesel
o
o
IPR
TIMBER
o
o
Efficient sawmills
UPM Biorefining value created
Capital intensive
process industry
Engaged high
performing people
Sustainable forest
biomass from certified
sources and with full
traceability
Sustainable forest
management
Responsible sourcing
Intellectual property
rights
Community
engagement
Safe and sustainable
products
Renewable energy
Carbon storing products
Low emissions
Biodiversity
Employment
Work safety
Community wellbeing
ROCE
CUSTOMERS
PULP
o
o
Tissue,
o
o
Packaging board,
o
o
Specialty paper and
o
o
Graphic paper producers
BIOFUELS
o
o
Fuel distributors
TIMBER
o
o
Construction, furniture,
joinery industries
CAPITALS
OUTCOMES
Synergies in wood sourcing and raw materials
Synergistic operations in production integration
END USES
Significant improvement
in profitability