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UPM – we renew the everyday Investor presentation May 2025
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Our portfolio leverages competitive business platforms • Decarbonization solutions biochemicals biofuels, CO2-free energy • Advanced materials adhesive materials, specialty papers, plywood • Renewable fibres pulp, other bioproducts • Communication papers 2 | © UPM
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Attractive growth opportunities 3 | © UPM 5-year comparable EBIT % 32% 11% 15% 8% (*) UPM average comparable EBIT 2020–2024 was €1,351m 423 +++ ++ + - Market trend growth 5-year average comparable EBIT (*) by product group 276 384 427 291 - Capital intensity High Low High
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4 | © UPM Our balanced portfolio provides opportunities for further growth 5-year average € 1,351 Total sales 2024 Decarbonization solutions Advanced materials Communication papers Renewable fibres Other 5-year average € 10,183 Sales Comparable EBIT Europe Asia North America Rest of the World €10,3bn Sales by market 5-year average Total sales 2024
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We seek profitable growth through performance and capitalizing on our major investments 5 | © UPM Decarbonization solutions Advanced materials Renewable fibres Communication papers UPM comparable EBIT* *) The graphs are illustrative, not a forecast Europe Americas Asia RoW UPM sales*
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i Leading position in sustainability, leading global standards 6 | © UPM
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i Innovative products Scientifically verifying the climate impact of all our products Committed to climate-positive forestry and enhancing biodiversity -65% from own CO2 emissions -30% from CO2 emissions of supply chain Our climate commitment WE ACT THROUGH EMISSION REDUCTIONS WE ACT THROUGH PRODUCTS WE ACT THROUGH FORESTS 7 | © UPM
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i 8 | © UPM Towards net-zero emissions (UPM 2023) Research partners: LUKE, SYKE, IFEU
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UPM Forest Action WATERCLIMATE BIODIVERSITY The UPM Forest Action program takes a holistic view, covering the five fundamentals of responsible forestry: 9 | © UPM SOIL SOCIAL CONTRIBUTION
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-0,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0 -1 000 -500 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000 2012 2014 2016 2018 2020 2022 2024 Net debt/ EBITDA (x) Net debt and leverage Net debt EURm Group financial performance and targets 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 2 200 2012 2014 2016 2018 2020 2022 2024 EURm Comparable EBIT 0 2 4 6 8 10 12 14 2012 2014 2016 2018 2020 2022 2024 % Comparable ROE Target: 10%Target: EBIT growth Policy: ≤ 2x 10 | © UPM
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Business area long-term return targets 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 *) shareholdings in UPM Energy valued at fair value Long-term return target UPM Specialty Papers UPM Communication Papers UPM Plywood UPM RaflatacUPM Energy UPM Fibres 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 **) Year 2021 restated , UPM Biofuels moved into Other Operations as of 1 January 2022. FCF/CE %ROCE % *) ROCE % **) ROCE% ROCE % ROCE % 11 | © UPM
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0 200 400 600 800 1 000 1 200 1 400 1 600 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Depreciation Major investment cycle coming to an end 12 | © UPM Estimate Strategic investments Operational investments • Capex excluding acquisitions €400m • Operational investment needs consistently low €M Capital expenditure Capex 2025 estimate
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Our capital allocation direction 2024–2028* 13 | © UPM Performance focus Strong operating cash flow Attractive shareholder distribution € ~4–5 bn * Not a forecast Strong balance sheet Net debt/ EBITDA < 2 X Maintain headroomValue-enhancing investments € ~3–4 bn
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Q1 2025 in brief • Sales totaled €2,646 million (2,640 million in Q1 2024) • Comparable EBIT decreased by 14% to €287 million, 10.8% of sales (333 million, 12.6%) • Gradually improving markets in pulp and advanced materials • Actions to sharpen competitiveness started to bear fruit • UPM acquired Metamark, a UK-based company, to accelerate UPM Raflatac's growth • UPM Communication Papers plans to reduce paper capacity in Germany and streamline its structure • UPM repurchased 6 million shares for a total of approximately €160 million by April 8 Q1 2025: Good start to the year with actions to sharpen competitiveness 0 100 200 300 400 500 600 700 800 €M Comparable EBIT 14 | © UPM
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Improved markets for advanced materials and pulp in Q1 2025 Active consumers, decreasing confidence Moderate demand growth for advanced materials Cautious consumers Demand recovery continued for advanced materials Challenging markets for decarbonization solutions Cautious consumers Somewhat improving pulp market Solid demand for advanced materials 1 000 1 200 1 400 1 600 1 800 2 000 2 200 Source: FINAT M m2 Europe: market shipments of self-adhesive label materials recovered above pre-covid level Q1 2025: +1% y-o-y +13% q-o-qTotal Excl. Russia and Belarus 15 | © UPM
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Comparable EBIT in Q1 2025 0 50 100 150 200 250 300 350 400 450 0 50 100 150 200 250 300 350 400 450 €M €M 418 15.9% 287 10.8% 333 12.6% 287 10.8% 16 | © UPM
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Comparable EBIT by business area 0 3 6 9 12 15 18 21 24 0 10 20 30 40 50 60 70 80 -5 0 5 10 15 20 25 30 35 40 -40 0 40 80 120 160 200 240 280 320 0 3 6 9 12 15 18 21 24 0 10 20 30 40 50 60 70 80 -5 0 5 10 15 20 25 -60 0 60 120 180 240 300 % of sales UPM Specialty Papers % of sales UPM Communication Papers % of sales % of sales UPM Raflatac % of sales€M % of salesUPM Fibres *) 0 10 20 30 40 50 60 70 80 0 20 40 60 80 100 120 140 160 UPM Energy 0 5 10 15 20 25 30 0 10 20 30 40 50 UPM Plywood *) Year 2021 restated, UPM Biofuels moved to Other Operations as of 1 January 2022 €M €M €M €M €M 17 | © UPM
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• Net debt €2,954m at the end of Q1 2025 • Net debt / EBITDA 1.77 • Cash funds and committed credit facilities €3.0bn at the end of Q1 2025 • No financial covenants • UPM repurchased own shares for a total of €116 million in Q1 2025 • The first dividend instalment for year 2024 (€397m) was paid on April 8, 2025, the second will be paid in November Solid financial position -0,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0 -1 000 0 1 000 2 000 3 000 4 000 5 000 Net debt/ EBITDA (x) Net debt €M Net debt and leverage Policy: ≤ 2x 18 | © UPM
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• Profit guidance: UPM’s comparable EBIT in H1 2025 is expected to be approximately in the range of €400-625 million (€515 million in H1 2024). • Outlook: UPM’s performance in H1 2025 is expected to benefit from higher delivery volumes and lower fixed costs, but be held back by lower sales margins, compared with H1 2024. The year 2025 has started with lower pulp and electricity prices than 2024. • There are significant uncertainties in geopolitics and global trade relations, which may impact the development of UPM’s product deliveries, sales prices, various input cost factors and currency exchange rates. Outlook (* (* see UPM interim report Q1 2025 for the full Guidance and Outlook 19 | © UPM
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Direct impact of tariffs expected to be relatively limited UPM and tariffs • UPM produces self-adhesive label materials and communication papers in the U.S. • UPM imports communication papers, specialty papers and some eucalyptus pulp to the U.S. • Indirectly, tariffs may impact demand and trade flows, cause hesitation among customers, disrupt supply chains and weaken consumer confidence • Currency fluctuations are possible 20 | © UPM 14% of UPM sales in 2024 was to the US 40% locally produced 60% imported
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UPM hedges an average of 50% of the estimated net currency cash flow on a rolling basis for the next 12 months Foreign exchange exposure • At the end of Q1 2025, UPM’s estimated net currency cash flows for the next 12 months totaled approximately €1.6 billion • In addition, the earnings of UPM’s foreign subsidiaries are translated to euros in reporting. UPM has significant foreign subsidiaries in Uruguay, the US and China • Currency fluctuations could impact UPM’s cash flow, earnings, or balance sheet, and may also affect the relative competitiveness between different currency regions 21 | © UPM USD 1,190 UYU -290 GBP 230 CNY 190 JPY 110 Others 170 Total 1,600 Estimated 12-month net currency cash flow at the end of Q1 2025, before hedging, € million
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Maintenance shutdowns in 2024 and 2025 22 | © UPM Timing Unit Q1-Q2 24 Olkiluoto nuclear power plant OL3 Q2 24 Olkiluoto nuclear power plant OL1 and OL2 UPM Paso de los Toros pulp mill UPM Fray Bentos pulp mill UPM Pietarsaari pulp mill Q1-Q2 25 Olkiluoto nuclear power plant OL3 Q2 25 Olkiluoto nuclear power plant OL1 and OL2 UPM Paso de los Toros pulp mill UPM Kymi pulp mill Q3 25 UPM Kaukas pulp mill Q4 25 UPM Fray Bentos pulp mill Maintenance shutdowns have an impact on • Maintenance costs • Production volumes • Operational efficiency
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1 2 3 We act on three fronts 23 | © UPM Improve competitiveness Accelerate growth World-class businesses
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24 | © UPM Uruguay plantations “Fast turnover, low inventory” • Value €1.8bn • Continuous productivity improvement (pulp tonnes/ha) • Investing in strategic forest assets Finland and other northern forests “Slow turnover, high inventory” • Value €1.8bn (+42% since 2008, EUR/ha +140%) • Decreased area (-41% since 2008), focusing on forests close to mills • Improved growth (m3/ha) • Trend price (EUR/m3) Active forest strategy – UPM’s forest assets are increasingly productive and valuable 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 Land, forest Trees, forest Land, plantation (* Trees, plantation *) leased land included from 2019
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Renewable fibres for growing everyday needs 25 | © UPM
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i 0 5 10 15 20 25 30 35 40 45 50 2016 2018 2020 2022 2024 2026e 2028e 2030e -4 000 -3 000 -2 000 -1 000 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 Entry of market bleached pulp capacity Exits New mill/line Other expansion 26 Robust demand growth outlook for market pulp, limited net capacity addition in the coming years Note: including BHKP, BSKP, excluding fluff and dissolving ? Decided projects ? Net additional capacity, 1000 tonnes/annum ? Source: AFRY, PPPC, UPM analysis MARKET HARDWOOD PULP DEMAND million tonnes MARKET SOFTWOOD PULP DEMAND Market pulp demand trend OUTLOOK ACTUAL2023-2030 CAGR: ~2% 2023-2030 CAGR: ~1% | +850kt/a | +250kt/a Typical construction period ~3 years 5-year-average market pulp exit rate UPM Fibres 26 | © UPM
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Competitive and sustainable fibre supplier for growing global everyday needs • Competitive and sustainable operations in hardwood and softwood pulp • Global presence with strong market position: #1 multi-fibre and #3 market pulp supplier • Confidence on strong returns over the business and market cycles due to high Uruguay platform competitiveness • Target ROCE > 14% • Biostreams generated as part of pulp production can provide raw materials for new UPM businesses URUGUAY Pietarsaari Kymi KaukasEUROPE CHINA FINLAND NORTH AMERICA • 5 modern pulp mills with annual production capacity of 5.8 million tonnes of hardwood and softwood pulp • Over 500 000 hectares of plantations in Uruguay under UPM management • Over 520 000 hectares of forests owned by UPM in Finland Fray Bentos Paso de los Toros UPM Fibres 27 | © UPM
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i Uruguay: world-leading competitiveness Best available technologies Efficient logistics • Continuous development in plantation productivity • Optimizing inbound logistics • Efficiencies of scale • Competitive mill concept • Biostreams development potential • World-class outbound logistics • Direct rail connection • Own port terminal Competitiveness UPM BEKP cash cost development Actual Outlook Average annual cost reduction 2009-2023 nearly -6% Real USD/t, (2022=100) Highly productive plantations UPM Fibres 28 | © UPM
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i 29 Finland: focus on profitability and value maximization Tight wood market Focus on competitiveness • Nordic forest-based industry is facing tight wood supply and elevated wood costs • Absence of Russian wood imports and peers’ investments created a structurally tight wood market • Competitive business platform and margin management are key • UPM has a strong track record in business turnaround 2009 2024 2.4 mt/a2.1 mt/a Well-maintained pulp capacity in Finland UPM Fibres 29 | © UPM
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2009 2019 2024 By 2030 2035+ Growth ambition in hardwood pulp Source: UPM UPM Pulp BEKP (eucalyptus) capacity Maximized competitiveness and debottlenecking Further long-term organic growth under consideration Fray Bentos development & debottlenecking Paso de los Toros ramped up to nominal capacity 1.1 mt/a Fray Bentos acquired 1.3 mt/a 3.4 mt/a ~4 mt/a UPM Fibres 30 | © UPM
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UPM Fibres: Chemical pulp market prices 300 500 700 900 1100 1300 1500 1700 $/tonne BHKP, Europe NBSK, Europe BHKP, China NBSK, China 300 500 700 900 1100 1300 1500 1700 €/tonne BHKP, Europe, EUR NBSK, Europe, EUR BHKP, China, EUR NBSK, China, EUR Pulp market prices, U.S. dollarsPulp market prices, euros Source: FOEX Indexes Ltd 31 | © UPM
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Decarbonization solutions 32 | © UPM
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i 33 • Flexible hydro power crucial to balance the volatile energy system • Reliable nuclear power to support the electrification of the society UPM Energy UPM’s electricity generation portfolio is clean and efficient to match the future needs • Near term: electric heating (large scale electric boilers and heat pumps), data centers and traffic • Longer term: industrial decarbonization and electrification UPM Energy electricity generation is 99% CO2-free Electricity demand is expected to grow significantly (*) Statistics Finland, Fingrid predictions and UPM analysis UPM Energy Hydro Nuclear Thermal 12TWh each year 0 50 100 150 200 250 CAGR +3-5% pa 2045 2024 2010 Electricity demand growth requires reliable CO2-free baseload 33 | © UPM
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UPM Energy: Electricity market prices 0 20 40 60 80 100 120 140 160 180 200 220 240 2020 2021 2022 2023 2024 2025 €/MWh Market electricity prices vs UPM sales price Helsinki Front Year System Front Year UPM average sales price UPM Energy profitability 2020 2021 2022 2023 2024 Q1 2025 Comparable EBIT, EURm 171 270 381 182 181 49 % of sales 45.0 51.3 52.0 29.0 28.9 28.7 UPM Energy 34 | © UPM
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Global renewable fuels demand outgrows planned capacity as of 2030 20 ’25 ’30 29 34 ’25 ’30 23 38 Global sustainable fuels demand, Mtoe ’25 ’30 44 66 Bio- / e-SAF HVO / e-diesel Road Other (Biodiesel, Ethanol) 1) Including Norway and UK; Road demand 2030 estimate including upside from RED III implementation – current regulations ~12 Mtoe demand ’25 ’30 37 20 ’20 ’25 ’30 ’40 ’50 0 1 5 24 41 ’20 ’25 ’30 ’40 ’50 3 4 18 36 29 EU SAF1, Mtoe EU Road Renewable Fuels1, Mtoe Synthetic Bio Synthetic Bio Regulated demand increase accelerating as of 2030 RED III driven demand until 2030 and fleet mix will require low-GHG fuels until well beyond 2050 Source: UPM Analysis based on Bloomberg NEF, Goldman Sachs Research, IEA, McKinsey, Neste, Wood Mackenzie UPM Energy 35 | © UPM
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36 | © UPM UPM Biofuels differentiation comes from competitive feedstock base and proprietary technology UPM Biofuels Addressing markets with 7,3 Gt* GHG emissions p/a Proven technology High value products Strategic access to competitive biomass * UPM Analysis based on World Resources Institute, 2020 & International Energy Agency, 2020 ** share of global GHG emissions
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i 37 | © UPM We continue pursuing growth for Biofuels while focusing on the recovery of existing business Current Biofuels operations are a strong basis for profitable performance in growing markets Basic engineering for a second refinery in Rotterdam is progressing, technology platform chosen Testing UPM technology for processing integrated feedstocks at larger scale takes approx. 2 years UPM Biofuels 37 | © UPM
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UPM Biochemicals – multiple end-uses Bio-Monoethylene Glycol (Bio-MEG) Renewable Functional Fillers (RFF) 38 | © UPM
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Scope 3: relative -55% by 2030 Scope 3: -30% by 2030 2040 2038 2039 2060 Scope 3: -25% by 2030 2050 2040 95% non-fossil ingredients by 2030 2039 2040 Biobased chemicals are central to the transition away from high-CO2 materials The shift away from fossil feedstocks will rely on bio-based solutions as first option to scale Net-zero commitments of major global brands will reflect on demand for sustainable chemicals Biobased chemicals PtX Recycled chemicals Fossil feedstock 2030 2050 2040 UPM Biochemicals 39 | © UPM
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UPM Biochemicals is a frontrunner in sustainable chemicals offering a distinct product value add Strategic partnerships with leading players in various regions and industries confirm high demand for UPM products * Considering the biogenic carbon from our feedstock & purchasing 100% green electricity UPM Biochemicals value add CO2 negative from day one* High GHG reduction Renewable carbon Certified, sustainable biomass Fully certified and traceable, non-food feedstocks Regional value chains Enhanced product performance Additional technical performance 100% biogenic feedstock Supply security and credible social sustainability Average sustainable chemical UPM Biochemicals 40 | © UPM
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Microsoft Excel Worksheet We address markets and segments with high future demand for sustainable solutions Leverage strong future need for sustainable materials in automotive, packaging, textiles Valorise strong advantage of negative CO2 product footprint, weight-reduction etc. in various applications, from automotive to packaging Global functional filler market Total demand >35 mt(1 1 source: OrbiChem 360 demand database 2 source: Notch Consulting: Carbon Black World data book 150 kt renewable/recycled functional filler supply Global MEG market 25 kt current renewable glycols supply Total demand 16 mt(2 UPM Biochemicals 41 | © UPM
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i 42 | © UPM After reaching full capacity, Leuna will focus on capacity increase, cost optimization and side stream valorization UPM Biochemicals Sequential production start in Q4 2024 100% capacity utilization as of 2027 Positive EBIT in 2027 Biochemicals business long-term ROCE target 14%
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Advanced materials for growing end uses 43 | © UPM
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i 44 | © UPM UPM #1 in Europe, LNG globally • Strong customer partnerships, high quality and service, optimised supply, sustainability leadership, low total cost of ownership • 5-year average ROCE 22% UPM #2 globally in PSL • Global scale & customer reach, world-class manufacturing and distribution, sustainability leadership, adhesive technology • 5-year average ROCE 28% UPM #1 globally in release papers • Technically demanding papers, world-class operations and global supply, sustainability leadership, competitive and flexible assets • 5-year average ROCE 16% Strong position on fast growing markets Adhesive materials market growth Pressure sensitive labels +3-4% Graphics solutions +4-5% Specialty tapes +4-5% Specialty papers market growth Release base papers +3-4% Label face papers +2% Flexible packaging +2-4%(*) Plywood market growth Plywood construction +2% Plywood vehicle floors +3-4% Plywood LNG shipping +8-9%(**) (*) mainly plastics (**) fleet growth
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The self-adhesive label stock market • >EUR 10bn global market • ~3-4% p.a. growth • Private consumption driven • Largest of the labelling technologies • <25% of total self-adhesive materials markets 45 All labelling technologiesSelf-adhesive labelstock market Other producers UPM Raflatac Other producers Other labelling technologies All self adhesive materials Other producers Other self adhesive materials UPM Raflatac UPM Raflatac Self adhesive labelstock Self adhesive labelstock UPM Raflatac 45 | © UPM
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Entering attractive adjacent markets • Graphics solutions market entry through AMC acquisition • Expanded product and technology portfolio through Grafityp and Metamark acquisitions • Further potential in specialty tapes Self-adhesive labels Others Self- adhesive materials Self- adhesive labels Other self-adhesive materials Raflatac UPM Raflatac 46 | © UPM
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Renewable, recyclable papers for labeling and packaging Sales 1,467 M€ in 2024 EBITDA 208 M€ in 2024 ROCE 17.1% in 2024 Sales by market* APAC EMEIA North America & LATAM Sales by product* Fine Label & release Packaging *2021 figures UPM Specialty Papers 47 | © UPM
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UPM Specialty Papers growth strategy Release base papers Face papers Office papers Graphic papers PACKAGING Packaging papers Co-creating remarkable products Brand based value Globally recognized leadership Committed value creation Special by nature Focused, committed and agile UPM Speciaty Papers 48 | © UPM
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Glassine Other liners Entering attractive adjacent markets • Flexible packaging entered through innovation & co-creation • Further portfolio expansion in label & release papers Global release materials Global flexible packaging Paper Plastics ? UPM Specialty Papers 49 | © UPM
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UPM’s position and direction • Leading position in high and medium range standard products in Europe through well established distribution network providing easy access to WISA® plywood • Uncompromised sustainability, certified products and operations • New growth sought by strengthening position in selected emerging markets UPM’s position and direction • Leading supplier in LNG plywood • Competitive edge based on right quality and accurate on-time deliveries • Long term commitment and benchmark service level • Focus to secure leading position in LNG carriers and to extend offering into related applications using the same technologies (e.g. land storage tanks) UPM’s position and direction • Leading position in Europe • Competitive edge built on smoothly running operations and needs-based product design creating value to both vehicle manufacturers and operators • Growth sought by expanding to new markets and related end use segments LNG shipbuildingConstruction Vehicle flooring 50 UPM Plywood focuses on three end use segments UPM Plywood 50 | © UPM
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UPM’s key markets are in the high and mid segments primarily in EMEA region Strategic choices 1. Demanding industrial applications 2. High and medium range standard products 3. Selected customers 4. EMEA region and LNG business globally Low-end market Non-footprint market Global plywood market ~90Mm3 EMEA plywood market ~12Mm3 UPM Plywood sales ~500tm3 Relevant market ~5.1Mm3 EMEA market ~12Mm3 Sales by category 90120.5 Industrial applications Construction / Panel Trading UPM Plywood 51 | © UPM
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Driving the value of paper 52 | © UPM
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The market's widest range of graphic papers, for various end-uses and purposes Newspapers and supplements Envelopes and direct mail Office, manuals, arts Books and education Advertising and direct mail Catalogues and brochures Magazines Fine papers News & UMIO SC Coated mechanical UPM Communication papers 53 | © UPM
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54 | © UPM UPM Communication Papers: Graphic paper prices 300 400 500 600 700 800 900 1000 1100 1200 1300 News SC LWC WFC WFU €/t Europe $/t $/t ChinaNorth America 500 600 700 800 900 1000 1100 1200 1300 1400 WFC r (100% chemical pulp) Uncoated Woodfree Reels (100% chemical pulp) 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 News SC LWC WFC WFU Sources: PPI, RISI
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Paper price vs. cash cost of marginal cost producer 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 EUR/tonne Sources: UPM, PPI, Fastmarkets RISI, AFRY Price Cash cost of a marginal producer 55 | © UPM