UPM Annual Report 2016

30-31 / 176

UPM Annual Report 2016 UPM Annual Report 2016 30 31
In brief Strategy Stakeholders Governance Accounts Businesses
AN INNOVATION SO THIN IT VANISHES
UPM Raflatac, Saimaan Juomatehdas Brewery
and Auraprint printing house have joined forces
to develop the thin Vanish™ labelling material for
aluminium beverage cans that can be recycled.
Vanish allows self-adhesive labelling to be applied
to beverage cans, aluminium cans to be recycled and
the opportunity for beverage brands to personalise
and market small batches of special brews in
a cost-effective manner.
Previously, the labelled cans could not be recycled
because they contained so much other material
besides the recyclable aluminium. The Vanish label
is light enough to ensure that the quality of recycled
aluminium is not affected, allowing all of the
aluminium to be used again. Cans are also cheaper
for breweries to produce and for consumers to buy
than glass bottles.
Read more:
CONTENTS
OUR DIRECTION
• Profitable organic growth, potentially
complemented with acquisitions
• Widening product portfolio especially in high
value-added films and special label products
• Expanding customer reach through increased
distribution and sales and service coverage
OUR STRENGTHS
• Modern, strategically located and efficiently
scalable production assets
• Accurate and efficient supply chain and global
delivery network
• Global scale in R&D, quality development and
technical know-how
• Industry leader in sustainability and product safety
GROWTH DRIVERS
• Private consumption
• Urban lifestyle
• Population growth
• Higher standard of living
• E-commerce
• Legislation
• Self-adhesive labelling technology gaining
market share
• Brands and product innovations
Performance improved further
Global demand for self-adhesive label materials continued to grow in 2016.
In Europe and North America, demand growth remained on good level.
In Asia and Latin America growth picked up.
UPMRaflatac was able to capture the benefits of favourable market
development due to its commercial improvements, competitive production
platform and efficient distribution. Sales and service capabilities were
improved and distribution coverage was enhanced through improved
logistics solutions and new terminals. Cost efficiency was improved by
focused investments, better production efficiency and quality as well as
internal efficiency measures.
UPMRaflatac’s deliveries increased by 3% in 2016, and all regions
contributed to this. Growth in sales of films and special label products was
stronger. Profitability increased mainly due to the improved sales margins
and higher delivery volumes. Higher sales margins were mainly driven by
a more favourable product mix and improved operational efficiency.
Expansion to meet growing demand
In October, UPMRaflatac announced EUR 35 million investment in the label
stock factory inWroclaw, Poland. By introducing a new coating line together
with related reel handling and slitting capacity additions, UPMRaflatac aims
to meet the increasing demand for self-adhesive label stock in Europe.
The investment further leverages UPMRaflatac’s unique competencies,
end-use specific product offering and industry leading, optimally located
operating platform in Poland. Production of the new line is planned to
commence in the first half of 2018.
Enhancing growth through product development
UPMRaflatac’s capability to deliver innovative solutions to special end-use
needs drives growth in high added value segments. Close partnerships with
label printers and brand owners are an elementary part in building their
brand and product appeal. Developments in adhesive technologies and
product constructions for challenging end-use applications enhance growth
opportunities. Innovations also secure productivity gains and leaps forward
in responsibility and product safety.
The importance of sustainability is growing
Sustainability and product safety issues are growing in all markets. Brand
owners lead the way and the development creates new growth opportunities
for value creating partnerships throughout the self-adhesive label stock value
chain.
Being among the few operators with global scale and strong regional
positions and high standards, UPMRaflatac is well positioned to take share
and drive the key sustainability issues of recyclability and product safety
together with brand owners, converters and rawmaterial suppliers as well as
environmental organisations.
UPM Raflatac
Building on strengths
• Capital light converting business
• Engaged high performing people
• Sustainable raw materials such as
papers, films and chemicals
CAPITALS
Modern, efficient and strategically located
label stock factories
Efficient and accurate supply chain,
responsive distribution network
Global customer reach with sales and service
Technical know-how, product development
Responsible sourcing
UPM RAFLATAC
VALUE CREATED
• Safe and certified products
• Employment and work safety
• Recyclable products,
waste recycling concept
• End use brand appeal
• ROCE
• Growth
• Label printers
• Brand owners
• Home and personal care
• Food and beverages
• E-commerce and retail
• Transport and logistics
• Pharmaceutical
• Industrial, durables
END USES
CUSTOMERS
OUTCOMES
SOCIAL
IMPACT
ENVIRONMENTAL
IMPACT
ECONOMIC
IMPACT
KEY FIGURES 2016 2015
Sales, EURm 1,437 1,409
Comparable EBIT, EURm 133 102
Capital employed (average), EURm 524 581
Comparable ROCE, % 25.5 17.6
Personnel on 31 Dec. 3,062 2,894