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UPM Annual Report 2016
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In brief
Businesses
Stakeholders
Governance
Accounts
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UPM Annual Report 2016
Strategy
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not a complete list
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Performance
improvement
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transformation
continued
in 2016
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BUSINESS AREA
STRATEGIC TARGETS
ACTIONS IN 2016
ACTIONS PLANNED FOR 2017 *)
UPM BIOREFINING
Grow as a responsible and cost competitive pulp
producer providing the most versatile pulp product
offering
Provide unique wood-based advanced biofuels, achieve
top performance and evaluate opportunities for scaling
up biofuels business
Enhance profitability through efficient use of wood
supply, integrated full-production at sawmills and
sharpened commercial strategy
Investment completed at UPM Kaukas pulp mill
UPM Kymi pulp mill investment decision, discussions with the
Government of Uruguay started
Developed forest plantations in Uruguay
Production ramp-up continued at UPM Lappeenranta Biorefinery,
evaluation of scaling up the biofuels business started
Measures to improve production efficiency at sawmills
Reduction in variable costs
Capture benefits of pulp expansions
Complete UPM Kymi pulp mill investment
Continue discussions with the Government of Uruguay
Further optimisation of the UPM Lappeenranta Biorefinery,
continue evaluate growth opportunities in biofuels
Continuous cost efficiency improvement
UPM ENERGY
Create value in electricity generation and physical
and financial trading
Profitable growth on the Nordic electricity market with
CO
2
emission-free generation
Start-up of new turbine and continued refurbishment of existing
two turbines at Harjavalta hydropower plant
Continued OL3 construction
Complete refurbishment of Harjavalta hydropower plant
Continue OL3 construction
UPM RAFLATAC
Profitable organic growth, potentially complemented
with acquisitions
Widen product portfolio especially in high value-added
films and special label products
Expand customer reach through increased distribution
and sales & service coverage
Improved cost and capital efficiency
Strengthened product portfolio in films and special products
Improved sales capabilities and logistics solutions
Construction of the factory expansion in Poland
Capture growth opportunities and develop product portfolio
Expand distribution coverage in attractive markets
Continuous cost efficiency improvement
UPM SPECIALTY PAPERS
Profitable growth in labelling materials globally and
in high quality office papers in Asia
Widen product offering in specialities and through new
product development, seek opportunities in existing and
new end uses
Ramp-up of the new production line at UPM Changshu, China
Reduction in variable costs
Continue optimisation of the third production line at
UPM Changshu, China
Develop more value added specialty products segments
Continuous cost efficiency improvement
UPM PAPER ENA
Maximise cash flow through differentiated commercial
strategies and a disciplined performance management
Make use of optimisation opportunities in the extensive
low-cost operations
Continued systematic performance management
Closure of Madison Paper Industries and sale of Schwedt
Reduction in variable and fixed costs
Plan to close two paper machines in Germany and Austria
Strengthen customer relationships
Taking opportunities in certain end uses and segments
Continuous cost efficiency improvement
Closure of two paper machines in Germany and Austria
UPM PLYWOOD
Profitable growth through superior customer experience
and operational excellence
Strengthen market position in selected businesses
by increasing value and service offering
Increased deliveries to demanding end-use segments
Investment completed at UPM Otepää mill in Estonia
Competitiveness improvement programme at the Finnish
birch plywood mills continued
Production ramp-up at UPM Otepää mill in Estonia
Continuous process efficiency improvement programmes
Strengthening the supply chain service models
WOOD SOURCING
AND FORESTRY
Secure competitive wood
Sold 63,000 hectares of forest land in Finland
Reduction in wood costs
Continue forest land sales
Continuous cost efficiency improvement
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
Continue to look for value enhancing M&A opportunities
NEW BUSINESS
DEVELOPMENT
UPM Biocomposites: business creation
and continued growth
UPM Biochemicals: further application
development and piloting
Commercialise technology and IPR
innovations
Industrial concept development proceeded in biochemicals.
An innovation unit was established at the Biomedicum research
and educational centre
Active management of patent portfolio, attractive partnerships
with start-up companies enhanced
Continue to expand UPM ProFi product portfolio
Continue to commercialise UPM Formi
Continue to develop biochemicals towards commercial phase
Continue technology and IPR commercialisation, search
collaboration opportunities in bioeconomy/circular economy
RESPONSIBILITY
Legal compliance; responsible
and ethical practices
Mitigate risks and capture
opportunities
Enhance competitiveness
Continuous improvement
UPM Code of Conduct renewed
New 2030 responsibility targets established
Resource efficiency and work safety improved
Responsible sourcing management strengthened
Supplier and Third Party Code implementation and training
Continue internal human right assessment
Resource efficiency and work safety further improved
Proceed with selected key responsibility projects such as the
China More with Biofore (p. 38)
CONTENTS
PERFORMANCE
GROWTH
PORTFOLIO
INNOVATION
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