UPM RESULTS Q Jussi Pesonen President and CEO 26 July 2016

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1 UPM RESULTS Q2 216 Jussi Pesonen President and CEO 26 July 216

2 13 Q Q314 Q3 16 Q2 216 comparable EBIT increased by 21%, cash flow reaching new highs EBITDA increased by 21% + Cost efficiency measures resulted in significantly lower variable, fixed costs + Growth projects contributed to earnings + Realised currency hedges neutral EURm Comparable EBITDA Comparable EBIT increased by 21% to EUR 264m (219m) 25 2 Strong operating cash flow at EUR 434m (324m) 1 Net debt decreased by EUR 759m to EUR 1,876m (2,635m) 5 2 UPM

Mostly favourable market demand in Q2 216 Growing demand Pulp Advanced biofuels Self-adhesive label materials Label, pack and release materials

3 Mostly favourable market demand in Q2 216 Growing demand Pulp Advanced biofuels Self-adhesive label materials Label, pack and release materials Office papers in Asia Plywood Sawn timber Stable demand Electricity Fine papers in Asia Declining demand Graphic papers in Europe and North America 3 UPM

UPM continues its transformation Actions so far in 216 Great ramp-up at the UPM Kymi pulp mill s first expansion Ramp-up at UPM Changshu PM3 and the Lappeenranta biorefinery continues Closed the

4 UPM continues its transformation Actions so far in 216 Great ramp-up at the UPM Kymi pulp mill s first expansion Ramp-up at UPM Changshu PM3 and the Lappeenranta biorefinery continues Closed the Madison SC paper mill in the US Sold the UPM Schwedt newsprint mill in Germany Corporate structure changed to match the business structure In the pipeline UPM Kaukas pulp mill investment UPM Otepää plywood investment UPM Kymi pulp mill second investment EUR 98m, 17, tonnes 4 UPM

5 Comparable EBITDA in Q2 216 vs. Q2 2 EURm 5 UPM benefited from cost efficiency measures in a deflationary business environment Cost efficiency improved in all businesses. Biorefining, Raflatac and Paper Asia EURm showed growth in deliveries % Prices Deliveries Fixed costs Variable costs Currency, net impact 385.8% % Biorefining Energy Raflatac Paper Asia Paper ENA Plywood Other operations and eliminations 385.8% EBITDA Q2/ EBITDA Q2/16 EBITDA Q2/ EBITDA Q2/16 5 UPM

6 Comparable EBIT by business area EURm UPM Biorefining % of sales 25 EURm 8 UPM Energy % of sales 6 EURm 5 UPM Raflatac % of sales Q3 14 Q Q3 14 Q Q3 14 Q3 16 EURm 5 UPM Paper Asia EURm UPM Paper ENA % of sales EURm UPM Plywood % of sales % of sales 12, , , Q UPM Q Q3 14 Q Q3 14 Q3 16

7 11 Q211 Q311 Q Q212 Q312 Q Q213 Q313 Q Q214 Q314 Q414 Q2 Q3 Q4 16 Q216 Strong cash flow EURm Cash flow, trailing 12 months Cash flow after investing activities Operating cash flow Q2 216 operating cash flow was EUR 434m (324m) In Q2 216, working capital decreased by EUR 1m (EUR 31m) In the latest 12 months, operating cash flow was EUR 1,528m (1,194m), EUR 2.86 per share (2.24) 7 UPM

8 Balance sheet continued to strengthen Net debt, EURm 4 5 Net debt / EBITDA (trailing 12 months) 4, Net debt, EURm Gearing % , Net debt / EBITDA 3, 2, Gearing , , Net debt 1.3 1, 1 5 Net debt 1 1, UPM Liquidity was EUR 1.5bn at the end of Q2 216 Repayments total EUR.bn in 216

Growth projects ramping up and contributing to earnings in 216 and

pulp mill expansion 17,t Kaukas pulp mill efficiency improvement,

In operation and ramping up Q2 2 Q3 2 Q4 2 216 Q2 216 Q3 216

expansion in APAC, growth in filmic labelstock in Poland 9 UPM UPM

9 Growth projects ramping up and contributing to earnings in 216 and beyond Lappeenranta biorefinery 12m litres of renewable diesel Kymi pulp mill expansion 17,t Kaukas pulp mill efficiency improvement, paper and pulp decoupling completed Kymi pulp mill expansion 17,t 2 In operation and ramping up Q2 2 Q3 2 Q Q2 216 Q3 216 Investments EUR m Q Q2 217 Q3 217 Q4 217 UPM Raflatac 5% expansion in APAC, growth in filmic labelstock in Poland 9 UPM UPM Paper Asia Changshu new speciality paper machine 36,t UPM Plywood Otepää mill expansion to 9,m 3

10 Outlook for 216 is unchanged UPM s profitability improved in 2 and the improvement is expected to continue in 216. UPM s growth projects are expected to contribute positively to the company s earnings in 216, compared with 2. UPM continues its measures to reduce variable and fixed costs in 216. Currencies are expected to contribute positively as hedges roll over, assuming relevant currencies stay at about the same level as at the end of 2. 1 UPM

Summary Strong Q2 216 results further evidence of the business model Cost efficiency measures Growth projects Record strong cash flow and balance sheet UPM is well positioned Ramp-up

11 Summary Strong Q2 216 results further evidence of the business model Cost efficiency measures Growth projects Record strong cash flow and balance sheet UPM is well positioned Ramp-up of growth projects continues Cost efficiency measures continue Strong business model with six agile businesses, efficient capital allocation and an industry-leading balance sheet 11 UPM

12 Welcome to our Capital Markets Day in London! UPM s Capital Markets Day August 31 September 1 dinner with a keynote speech by the Chairman of the Board presentations and discussion with the CEO and the UPM management team More information: Register by ir@upm.com We have a strong business model with six agile businesses, efficient capital allocation and an industry-leading balance sheet. This ensures good opportunities for focused growth investments, continued strong cash flow and an attractive dividend. Jussi Pesonen, President and CEO 12 UPM

UPM strategic focus areas 1 Performance 2

improvement in performance Focused growth

target for growth projects EUR 2m Net debt

14 UPM strategic focus areas 1 Performance 2 Growth 3 Portfolio 4 Innovation Continuous improvement in performance Focused growth projects Business portfolio development and value creation New business and product development Cost efficiency measures EBITDA target for growth projects EUR 2m Net debt reduction EUR 759m Biofuels commercial ramp-up 14 UPM

15 Strengths of UPM s model Attractive dividend Focused investments Strong cash flow Top performance Industry-leading balance sheet UPM

16 Q2 216 comparable EBIT increased by 21%, cash flow reaching new highs Q2 216 vs. Q2 2: Sales EUR 2,445m -4% Comparable EBITDA EUR 385m +68m Comparable EBIT EUR 264m +45m Comparable profit before tax EUR 252m +57m Comparable EPS EUR Comparable ROE 1.2% +1.4pp Operating cash flow EUR 434m +11m Net debt EUR 1,876m -759m Net debt / EBITDA 1.25x -.75x Gearing 24% -11pp 16 UPM

17 Low investment needs in existing assets allow growth projects with modest total capex EURm 1 2 Capital expenditure Estimate 1 8 Myllykoski acquisition Depreciation 6 Uruguay acquisition 4 Strategic investments UPM Operational investments e

18 Maturity profile and liquidity Liquidity Liquidity on 3 June 216 was EUR 1.5bn (cash and unused credit facilities) Committed credit facilities Bilateral committed credit facilities EUR 1,75m EUR million 1 Maturity profile of outstanding debt EUR million 1 Committed credit facilities maturities UPM

19 UPM Biorefining EURm Q2 13 Q UPM Comparable EBIT Q Q2 14 Q3 14 Q4 14 Q2 Q3 Q4 16 Q2 16 % of sales Actions Pulp production capacity increased and production efficiency improved. Potential for further increases in production identified at UPM Kymi pulp mill; investment decision announced in July. Scheduled maintenance carried out at the Lappeenranta biorefinery. Cost efficiency improved.

20 UPM Energy EURm 8 Comparable EBIT % of sales 8 Actions Scheduled maintenance shutdown at Olkiluoto nuclear power plant units Q Q3 14 Q UPM

21 UPM Raflatac EURm 5 4 Comparable EBIT % of sales 1 8 Actions Improved product mix and operational efficiency enabled record strong profitability Q2 13 Q UPM Q Q2 14 Q3 14 Q4 14 Q2 Q3 Q4 16 Q

22 UPM Paper Asia EURm Comparable EBIT % of sales 12 9 Actions Production ramped up successfully at the new speciality paper machine at the UPM Changshu mill in China, contributing to solid growth in deliveries Q2 13 Q UPM Q Q2 14 Q3 14 Q4 14 Q2 Q3 Q4 16 Q

23 UPM Paper ENA EURm 8 6 Comparable EBIT % of sales 8 6 Actions Successful cash release as a result of profit improvement, reduction in working capital and sale of assets UPM 13 Q2 13 Q3 13 Q Q2 14 Q3 14 Q4 14 Q2 Q3 Q4 16 Q In line with the decision announced in March, paper production ceased at Madison Paper Industries in the US. According to the agreement announced on 26 April 216 the UPM Schwedt mill site and relevant assets were transferred from UPM to LEIPA Georg Leinfelder GmbH on 1 July 216.

24 UPM Plywood EURm 2 Comparable EBIT % of sales 2 Actions Strong performance. Otepää mill expansion proceeded. 1 1 UPM Pellos mills exceeded 1 million cubic meters in all-time total production Q2 13 Q UPM Q Q2 14 Q3 14 Q4 14 Q2 Q3 Q4 16 Q2 16 5

26 Chemical pulp market Q2 NBSK pulp price increased 1% from Q2 BHKP pulp price decreased 5% from USD/tonne 1 1 Days of supply 65 Pulp inventories 1 9 NBSK Hardwood inventories 8 7 BHKP Softwood inventories Source: FOEX Indexes Ltd. Source: PPPC World-2 statistics 26 UPM

27 Price development in the Nordic and Helsinki power markets EUR/MWh 7 Finnish and Nordic electricity prices Coal SRMC Front Year Helsinki Front Year System Front Year Source: Reuters 27 UPM

28 Graphic paper prices EUR/t 1 Europe USD/t 13 North America USD/t 13 China Jan-8 Jan-9 Jan-1 Sources: PPI, RISI 28 UPM Jan-11 Jan-12 Jan-13 Jan-14 Jan- Jan-16 News SC LWC WFC WFU Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan- Jan-16 News SC LWC WFC WFU WFC r (1% chemical pulp) Reels (mixed chemical/mechanical pulp) Uncoated Woodfree Reels (1% chemical pulp)

29 Demand-supply balance in European graphic paper is visible in margins EUR/t Price Cash cost of a marginal producer Sources: PPI, RISI, Pöyry 29 UPM

UPM RESULTS Q Jussi Pesonen President and CEO 28 October 2014

UPM RESULTS Q Jussi Pesonen President and CEO 28 October 2014 UPM RESULTS Q3 214 Jussi Pesonen President and CEO 28 October 214 Successful profit improvement programme prompted strong Q3 214 results Q3 214 vs. Q3 213: Sales EUR 2,415m -2% EBITDA EUR 346m +35m Operating