Label Day UPM Labelstock Business Heikki Pikkarainen May 11, 2005 Heikki Pikkarainen 11.5.2005 Page 1
Contents Introduction Worldwide labelstock market Raflatac UPM Rafsec Conclusions Heikki Pikkarainen 11.5.2005 Page 2
Labelstock Business is an integral part of UPM Group Executive Team President & CEO Jussi Pesonen Kari Toikka EVP and CFO Magazine Papers Division Jyrki Ovaska President Newsprint Division Hartmut Wurster President Fine & Speciality P. Division Matti Lievonen President Wood Products Division Harald Finne President Converting Division Speciality Coating Business Matti J Lindahl President Labelstock Labelstock Business Business Heikki Heikki Pikkarainen Pikkarainen President President Heikki Sara EVP, Strat. Development Markku Tynkkynen EVP, Resources Pirkko Harrela EVP, Communications Hans Sohlström EVP, Marketing Pauli Hänninen EVP, Business Dev. Riitta Savonlahti EVP, Human Resources Heikki Pikkarainen 11.5.2005 Page 3
Divisional information Sales and operating profit 2004 100% 90% 80% 70% 60% 14% 16% 5% Other operations Wood products 50% 40% Converting 30% Papers 20% 10% 0% Sales Operating profit * Capital employed * Operating profit excl. non-recurring items and amortiziation of goodwill Heikki Pikkarainen 11.5.2005 Page 4
UPM Labelstock Business = Raflatac + UPM Rafsec Heikki Pikkarainen 11.5.2005 Page 5
Strategic role of UPM Labelstock Business within UPM Group Integral part of UPM Group Growth business: Profitability & Growth Interesting growth opportunities Raflatac UPM Rafsec Heikki Pikkarainen 11.5.2005 Page 6
Contents Introduction Worldwide labelstock market Raflatac UPM Rafsec Conclusions Heikki Pikkarainen 11.5.2005 Page 7
World demand for labels Total market worldwide: 28.3 billion m 2 ROW 6% 20% Asia Pacific North America 35% 4% South America 35% Europe Source: Alexander Watson Associates, Labelling Markets Sourcebook 2004: 2003 statistics Heikki Pikkarainen 11.5.2005 Page 8
Market share of different labelling techniques 13% Sleeving 1% In-Mould Others 3% Pressure sensitive 45% 38% Glue applied Source: Alexander Watson Associates, Labelling Markets Sourcebook 2004: 2003 statistics Heikki Pikkarainen 11.5.2005 Page 9
Pressure sensitive labels manufactured from pressure sensitive labelstock Matrix Face material Pressure sensitive label Adhesive Release coating (Silicone) Release liner Heikki Pikkarainen 11.5.2005 Page 10
End-use areas Food labelling Beverage labelling Personal Care labelling Home Care labelling Pharmaceutica l labelling Retail, Logistics & Transport labelling Oil & Industrial Chemical labelling Digital printing labelling Heikki Pikkarainen 11.5.2005 Page 11
Contents Introduction Worldwide labelstock market Raflatac UPM Rafsec Conclusions Heikki Pikkarainen 11.5.2005 Page 12
Raflatac We are in the business of pressure sensitive solutions for branding and information transfer. Heikki Pikkarainen 11.5.2005 Page 13
Raflatac Turnover: about EUR 800 million Personnel: 2,200 9 factories in five continents Global market position: Nr. 2 Heikki Pikkarainen 11.5.2005 Page 14
Raflatac s turnover 1985-2004 MEUR 900 600 300 0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000 2001 2002 2003 2004 Heikki Pikkarainen 11.5.2005 Page 15
Raflatac factories, terminals and sales offices Europe Tranby, Norway Tampere, Finland Factory Terminal Sales Office Scarborough, the UK Dublin, Ireland Lisbon, Portugal Düsseldorf, Germany Nancy, France Zürich, Switzerland Milan, Italy Barcelona, Spain Helsingborg, Sweden Ishoj, Denmark De Meern, the Netherlands Warsaw, Poland Prague, Czech Republic Wien, Austria Tatabánya, Hungary Istanbul, Turkey Moscow, Russia Kiev, Russia Heikki Pikkarainen 11.5.2005 Page 16
Raflatac factories, terminals and sales offices USA, Canada & México Greenville, WI Montreal, QC Toronto, ON Wilkes-Barre, PA Ontario, CA Fletcher, NC Mexico City, MX Factory Terminal Sales Office Heikki Pikkarainen 11.5.2005 Page 17
Raflatac factories, terminals and sales offices Asia-Pacific Beijing Shanghai Hong Kong Thailand Singapore Johor, West Malaysia Factory Terminal Sales Office Adelaide, Australia Melbourne, Australia Brisbane, Australia Sydney, Australia Heikki Pikkarainen 11.5.2005 Page 18
Raflatac factories, terminals and sales offices Africa & India India Johannesburg, South Africa Durban, South Africa Factory Terminal Sales Office Capetown, South Africa Heikki Pikkarainen 11.5.2005 Page 19
Contents Introduction Worldwide labelstock market Raflatac UPM Rafsec Conclusions Heikki Pikkarainen 11.5.2005 Page 20
UPM Rafsec Established in 1997 Headquarters in Tampere, Finland Production in Jyväskylä, Finland New factory in the US will start-up Q4/2005 USD 24M investment program Heikki Pikkarainen 11.5.2005 Page 21
UPM Rafsec investment in the USA A new state-of-the art RFID tag production facility in Fletcher, North Carolina in the USA Specialization in high-quality UHF (ultra high frequency) tags Part of a USD 24 million investment program Start-up during Q4/2005 Annual capacity of one billion RFID tags when investment fully implemented Heikki Pikkarainen 11.5.2005 Page 22
UPM Rafsec tags Heikki Pikkarainen 11.5.2005 Page 23
End-use areas Pharmaceutical industry Logistics Fashion industry Retail Libraries Returnable transit items Heikki Pikkarainen 11.5.2005 Page 24
Some early adopters of RFID Heikki Pikkarainen 11.5.2005 Page 25
RFID market projection Volume Market is moving to wide scale piloting phase in 2005 2003 2004 2005 2006 2007 2008 Time Implication s to supply capabilities Piloting & coping with variety Platform development for ramp-up Fast execution of the ramp-up Heikki Pikkarainen 11.5.2005 Page 26
Contents Introduction Worldwide labelstock market Raflatac UPM Rafsec Conclusions Heikki Pikkarainen 11.5.2005 Page 27
Strategic growth target Grow strongly in films Continue to grow in North America Strengthen position in Emerging markets in Eastern Europe/Russia Asia Latin America Secure global market leadership in RFID tags Heikki Pikkarainen 11.5.2005 Page 28
Conclusions Targeted annual turnover growth above market average Disciplined focus on continuous improvement and profitability CapEx 1.5 2 times depreciation Successful commercialisation of UPM Rafsec Heikki Pikkarainen 11.5.2005 Page 29
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