UPM annual report 2015

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UPM Annual Report 2015 UPM Annual Report 2015 33 34
contents
Efficient use of resources
Innovations and R&D
Innovations are at the forefront in the
creation and development of new
products that can be used to replace
non-renewable materials with renewable,
recyclable and low-impact alternatives
and provide resource efficient alternatives
for the future.
The aim 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.
By co-operating with selected value chain
partners UPM aims to increase its speed,
agility and effectiveness.
15 14 13 12 11
150
120
90
60
30
0
25
20
15
10
5
0
*) Includes negative operating cash flow
and capital expenditures
■ Developing businesses*)
■ Mature businesses
Of operating cash flow
UPM’s development expenditure
EURm %
In 2015, UPM spent EUR 63 million (112 million) on research and development work
equating to 5.3% (9.0%) of UPM’s operating cash flow. The focus was on new technolo-
gies and developing businesses. On top of the direct R&D expenditure of approxi-
mately EUR 37 million (35 million), the figures include negative operating cash flow
and capital expenditure in developing businesses.
Versatile use of wood biomass
UPM is seeking business development and innovation in various bioeconomy projects
through collaboration. The special focus areas are new biobased products, develop-
ment of by-product utilisation, resource efficiency and the circular economy.
UPM’s side stream efficiency research is looking for solutions to better utilise the
side streams of UPM’s integrated pulp and paper mills; sludge, ash, various rejects and
waste heat. The aim is to reduce costs and increase the value of side streams by finding
new business opportunities in industrial symbioses.
In the UPMKaukas mill, studies have been done to produce biogas from sludge in
co-operation with the Lappeenranta city experts and other external partners.
Fertilizer development and nutrient recirculation is also part of UPM’s circular
economy solutions. Other studies relate to new end uses for ash in construction appli-
cations. Also good saving ideas have been found in mills’ heat efficiency.
UPMhas a global network of research centres to support the businesses and their
development goals. Environmental aspects are systematically integrated into product
design at an early stage.
Wide-scale collaboration
in new businesses
UPM is one of the founding members of the industrial consortium part of the Euro-
pean Joint Undertaking on Bio-based Industries (BBI). This Public Private Partner-
ship (PPP) aims to trigger investments and create a 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.
UPM is a shareholder in the Finnish CLIC Innovation, which focuses on bioec-
onomy and cleantech research. The Cluster’s research programmes focus on bioec-
onomy as well as energy and environmental research, thus supporting UPM’s internal
R&D activities.
In 2015, UPM received approximately EUR 1.4 million (2.1 million) fromTekes
(the Finnish Funding Agency for Technology and Innovation) for its research projects.
These projects were carried out in co-operation with research institutes, universities
and other companies.
UPMworks together with a wide network of universities and research institutes as
well as technology suppliers and startups. Partnerships enable us to develop new
solutions and get to the market faster, especially in new businesses.
UPM’s intellectual property rights applications remained on a significant level.
The high level of patent registration highlights the progress made in new businesses.
UPM actively manages its patent portfolio and evaluates the applicability and
commercial value of its patents. UPM is trying to seek new commercialisation
partners for patents not suitable for our businesses.
Biocomposites combine best properties of natural fibres
and high performance polymers
UPMBiocomposites develops, manufactures and sells high quality composite
products for a wide range of consumer and industrial applications.
UPMProFi’s Design Deck range is one of the leading composite decking
brands in Europe. Through patented recycling technology, UPMBiocomposites
recovers the cellulose fibres and polymers found in label material waste and
gives them a second life.
UPMFormi is the engineered range of pure cellulose and virgin polymer
compounds suitable for various applications from furniture to consumer elec-
tronics. The products have a considerably lower carbon footprint than those
made with pure plastics.
Biochemicals offer a sustainable alternative
to fossil-based solutions
UPMBiochemicals offers and develops innovative, sustainable and competitive
wood-based biochemicals. The product segments are chemical building blocks,
lignin products, biofibrils and biomedical products.
Chemical building blocks are made from lignocellulosic biomass offering
a cost competitive replacement for fossil-based monomers and chemicals such
as intermediates to bioplastics.
Lignin is one of nature’s most abundant materials and an ideal bio-based
substitute for various petro-based products e.g. resins and binders. UPM
BioPiva™, based on UPM’s proprietary lignin-resin technology, allows resin
producers to substitute up to 70% of their fossil-based rawmaterials with
a non-toxic, 100% bio-based, and cost effective alternative.
Biofibrils are cellulose micro- and nanofibril products that can be used for
shaping materials and giving them new characteristics. Biofibrils products can
be used as a suspension aid and rheology control agent or reinforcement and
barrier element in different uses.
GrowDex is a novel wood-based cellulose nanofibril hydrogel for 3D cell
culturing and other biomedical applications. It is highly biocompatible with
human cells and tissues.
In 2015, UPM’s ValChem project received a EUR 13.1 million funding from
the European Union. ValChem stands for Value Added Chemical Building Blocks
and Lignin fromWood. The aim is to demonstrate the technical and economic
viability of an integrated biochemical process, covering the whole value chain
fromwood rawmaterials to a selected platform for chemical and lignin-based
performance chemicals.
Product development at UPMBiochemicals is at the pre-commercial phase,
with UPM actively developing and testing industrial applications with its part-
ners in order to create mill-scale industrial concepts.
IN BRIEF STRATEGY BUSINESSES GOVERNANCE STAKEHOLDERS ACCOUNTS
Commercialising innovations
Green Campus Innovations (GCI), an investment
company established in 2012 by Lappeenranta
University of Technology (LUT), is one of UPM’s
partners in commercialising innovations that cannot
directly be used in UPM’s core business areas. The
collaboration between the university, the investment
company and UPM enables the partners to combine
their competencies in bioeconomy, industrial
engineering and management.
In 2015, UPM and LUT signed a license contract
concerning the Biokenno technology developed by
UPM. LUT has applied and received funding for the
further development and commercialisation of the
licensed technology from Tekes, the Finnish Funding
Agency for Technology and Innovation. GCI will play
an important role in commercialising the Biokenno
technology and in developing the business around it.
The Biokenno technology has been licensed to
the university which will assemble a research group
for carrying out further research. BioKenno is a
biodegradable, board-based growing medium that
market gardens can use to replace materials such
as rock wool.
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R&D’s role in different businesses
R&D’s role is to support
development in following focus areas:
UPM Biorefining
Pulp and plantations optimisation for various needs
Biofuels
UPM Energy
Energy conversion technologies for a wide range
of biomass and fuel mixtures
CO 2-neutral energy sources
Opportunities arising from the evolution of
the electricity market
UPM Raflatac
Expansion of product range and market support
UPM Paper Asia
Effective support for paper businesses in
growth markets and new products
UPM Paper ENA
Cost competitive and resource efficient solutions
and new products
UPM Plywood
Products with special customer value
Process efficiency
New businesses
Supporting the development of new opportunities
building on synergies
Developing competencies and a common infrastructure