UPM The Biofore Company Investor Presentation July 218
Competitive businesses with strong market positions UPM BIOREFINING Pulp Biofuels Timber UPM ENERGY Electricity generation and trading UPM RAFLATAC Label materials for product and information labelling UPM SPECIALTY PAPERS Label papers, release liners, office papers and flexible packaging UPM COMMUNICA- TION PAPERS Magazine papers, newsprint and fine papers UPM PLYWOOD Plywood and veneer products BIOCHEMICALS BIOCOMPOSITES WOOD SOURCING AND FORESTRY 2 UPM The Biofore Company
Global businesses local presence 13% North America UPM s sales by market 217 EUR 1,1 million 62% Europe 2% Asia 54 production plants in 12 countries 12, customers in 12 countries 9, shareholders in 35 countries 5% Rest of the world 19,1 employees in 46 countries 25, b-to-b suppliers in 75 countries 3 UPM The Biofore Company
Operating on healthily growing markets UPM PLYWOOD Plywood, veneer ~3% UPM COMMUNICATION PAPERS Graphic papers ~ 4% UPM SPECIALTY PAPERS Label papers ~4% High-end office papers ~4% Comparable EBIT by business area 217 EUR 1,292m UPM BIOREFINING Pulp ~3% Biofuels strong Timber ~2% 4 UPM The Biofore Company UPM RAFLATAC Self-adhesive labels ~4% UPM ENERGY Electricity ~1% Demand trend growth, % pa
Sustainable and safe products for everyday use LABEL MATERIALS for food packaging, drinks bottles and for communicating information SPECIALTY PAPERS for food packaging ELECTRICITY everywhere PULP-BASED MATERIALS for packaging, transport, storage and hygiene products PUBLICATION PAPERS for reading and advertising WOOD MATERIALS for construction and design features OFFICE PAPERS for printing 5 UPM The Biofore Company WOOD MATERIALS for furniture and the home LABELS for food products
We create value by seizing the limitless potential of bioeconomy Sustainable and safe solutions for global consumer demand 22 23 Innovation Responsible operations and value chain Circular economy High performing people 6 UPM The Biofore Company Sustainable forestry
UPM strategic focus areas We create value by seizing the limitless potential of bioeconomy Performance Growth Innovation Responsibility > Continuous improvement > Earnings growth > Growth and competitiveness > Continuous improvement Portfolio > Develop businesses with strong long-term fundamentals and sustainable competitive advantage 7 UPM The Biofore Company
How to achieve the shareholder returns 8 UPM The Biofore Company
Spearheads for growth Specialty packaging materials High value fibre Molecular bioproducts Raflatac Specialty papers Forests Pulp Biofuels Biochemicals Communication papers Plywood Energy 9 UPM The Biofore Company
UPM in transformation 28 vertically integrated paper company 217 six separate businesses Operating model Promotes value creation Sales 1 % 8 % 6 % 4 % 2 % Paper Plywood Raflatac Sawmilling 1 % 8 % 6 % 4 % 2 % Communication Paper ENA Papers Plywood Energy Specialty Papers Raflatac Biorefining Others Business portfolio Increasing share of businesses with strong long-term fundamentals for profitability and growth % % Sales EBIT *) ROE *) EUR 9.5bn EUR 513m 3.5% EUR 1.bn EUR 1,292m 11.9% Business performance Continuous improvement in financial, social and environmental performance Net debt Market cap EUR 4.3bn EUR 4.7bn *) excluding special items for 28, comparable figures for 217 1 UPM The Biofore Company EUR.2bn EUR 13.8bn Disciplined capital allocation Driving value creation
UPM current investment portfolio for earnings growth Focused growth projects Raflatac speciality label expansion, in Q4 218, Finland Chudovo plywood mill expansion, +45k m 3 in Q3 219, Russia Jämsänkoski release liner expansion, +4kt in Q4 218, Finland Nordland PM2 conversion to release liner, +11kt in Q4 219, Germany Changshu release liner expansion, +4kt in Q1 22, China Transformative prospects Possible new 2mt pulp mill, Uruguay Second preparation phase: The permitting processes for the mill, rail and port, as well as rail tendering are proceeding as agreed Molecular bioproducts, possible biorefineries Basic engineering work regarding a potential 15kt biochemicals refinery, Germany Exploring next steps in biofuels, environmental impact study for a potential 5kt biorefinery, Finland 11 UPM The Biofore Company
Business area long-term return targets apply over investment and business cycles 3 28 26 24 22 2 18 16 14 12 1 8 6 4 2 UPM Energy ROCE % * ) 3 28 26 24 22 2 18 16 14 12 1 8 6 4 2 UPM Biorefining ROCE % UPM Specialty Papers 3 ROCE % 28 26 24 22 2 18 16 14 12 1 8 6 4 2 UPM Communication Papers 3 3 FCF/ 28 28 CE % 26 26 24 22 2 18 16 14 12 1 8 6 4 2 24 22 2 18 16 14 12 1 8 6 4 2 UPM Plywood ROCE % 3 28 26 24 22 2 18 16 14 12 1 8 6 4 2 UPM Raflatac ROCE % * ) shareholdings in UPM Energy valued at fair value 12 UPM The Biofore Company Long-term return target
Group financial targets and leverage policy EURm 1 6 Comparable EBIT % Comparable ROE 14 Net debt EURm 4 5 Net debt and leverage Net debt/ EBITDA (x) 3, 1 4 1 2 1 Target: EBIT growth 12 1 8 Target: 1% 3 75 3 Policy: 2x 2,5 2, 8 2 25 1,5 6 4 6 4 1 5 1, 2 2 75,5 213 214 215 216 217 LTM Comparable figures for 214 218, excluding special items for earlier years 13 UPM The Biofore Company 213 214 215 216 217 LTM 213 214 215 216 217 Q2/18 LTM,
5-year cumulative cash flow (213 217) disciplined capital allocation in action Strong operating cash flow EUR 6.4bn Focused investments EUR 1.9bn Deleveraging EUR 2.6bn Attractive dividend EUR 1.9bn Industry-leading balance sheet Net debt /EBITDA ~ x 14 UPM The Biofore Company
Illustrative capital allocation *) for next 5 years, assuming the Uruguay pulp mill investment Performance focus Strong cash flow Attractive dividend EUR ~3 4bn Industry-leading balance sheet High return investments EUR ~3 4bn Net debt /EBITDA < 2x Maintain headroom *) This is not a forecast 15 UPM The Biofore Company
Dividend EUR per share 1,4 1,2 1,,8,6,4,2 % of operating cash flow per share 7 6 5 4 3 2 1 Dividend policy UPM aims to pay an attractive dividend, 3 4% of operating cash flow per share Dividend for 217 EUR 1.15 (.95) per share, totalling EUR 613m 39% of 217 operating cash flow, 212 213 214 215 216 217 16 UPM The Biofore Company
Low investment needs in existing assets allow growth projects with modest total capex EURm 1 2 1 8 6 4 Uruguay acquisition Capital expenditure Myllykoski acquisition Strategic investments Depreciation 33 Estimate 35 Focused growth investments High returns and fast payback Low implementation risk Financed from operating cash flow Low replacement investments Asset quality in 486 all businesses, e.g. large competitive pulp mills UPM Communication Papers 2 Operational investments 29 21 211 212 213 214 215 216 217218E Modest total capex and attractive returns 17 UPM The Biofore Company
Value from responsibility We create value by seizing the limitless potential of bioeconomy Renewable, recyclable and safe products Responsible operations and value chain Value based leadership Compliance Renewable and biodegradable raw materials and recyclable products Product stewardship Open and transparent product communications Material efficiency and circular economy thinking Climate solutions and working towards carbon neutrality Responsible water use Sustainable land use Respecting human rights Value-based and inspiring leadership Safe and healthy working environment and wellbeing of employees Diversity and inclusion High performance and continuous professional development of employees Local commitment Decision making, management and operations guided by our values and UPM Code of Conduct Responsible business practises Reliable, credible and transparent reporting 18 UPM The Biofore Company
Industry leader in responsibility 19 UPM The Biofore Company
Q2 218: Commercial success drives growth in sales and earnings strong outlook for H2 218 Sales grew by 5% to EUR 2,589m (2,464m in Q2 217) Comparable EBIT increased by 24% to EUR 334m (27m) EURm 4 35 3 Comparable EBIT 27 334 Sales margins improved, as prices increased in all business areas, outweighing the impact of higher input costs Q2 performance was held back by several significant scheduled maintenance shutdowns Operating cash flow was EUR 329m (269m) 25 2 15 1 5 2 UPM The Biofore Company
Q2 218: Sales prices increased in all business areas, outweighing the impact of higher input costs UPM BIOREFINING Good market demand. Pulp deliveries -8%, production impacted by scheduled maintenance shutdowns Kaukas pulp mill expansion completed Pulp prices significantly higher UPM COMMUNICATION PAPERS Tight market, deliveries -3% Price increases more than offset the variable costs increases UPM SPECIALTY PAPERS Good demand, deliveries -3% Price increases offset part of the variable costs increases Two new focused growth projects announced UPM RAFLATAC Good demand, deliveries -2% Price increases more than offset input costs increases UPM ENERGY Electricity deliveries +15% Higher electricity market prices Power generation impacted by maintenance shutdown at the Olkiluoto power plant UPM PLYWOOD Good demand, deliveries -4% Price increases more than offset the variable costs increases 21 UPM The Biofore Company
Comparable EBIT by business area EURm 2 UPM Biorefining % of sales 3 EURm 12 UPM Energy % of sales 6 EURm 12 UPM Communication Papers % of sales 12 16 25 1 5 1 1 12 8 2 15 1 8 6 4 4 3 2 8 6 4 8 6 4 4 5 2 1 2 2-2 -2 EURm 5 UPM Specialty Papers % of sales EURm UPM Raflatac % of sales 12,5 5 12,5 EURm 25 UPM Plywood % of sales 2 4 1 4 1 2 16 3 7,5 3 7,5 15 12 2 5 2 5 1 8 1 2,5 1 2,5 5 4 22 UPM The Biofore Company
Comparable EBIT in Q2 218 vs. Q2 217 Increased prices in all businesses, higher input costs Fixed costs higher and production lower mainly due to several scheduled maintenance shutdowns Improvement in Biorefining, Energy, Raflatac, Communication Papers and Plywood EURm 6 EURm 6 5 4 3 2 27 11.% Prices Deliveries Fixed costs Variable costs Currency, net impact Depr., forests, plantations 334 12.9% 5 4 3 2 27 11.% Biorefining Energy Raflatac Communication Papers Specialty Papers Plywood Other operations and eliminations 334 12.9% 1 1 Q2/17 Q2/18 Q2/17 Q2/18 23 UPM The Biofore Company
Outlook for 218 UPM s comparable EBIT is expected to continue growing in 218 compared with 217. H2 218 comparable EBIT is expected to be significantly higher compared with H1 218. The fundamentals for UPM businesses in 218 are favourable. Sales price increases in 218 are expected to outweigh the increase in variable cost, compared with 217. H1 218 results were impacted by four significant maintenance shutdows and weather-related wood harvesting limitations. H2 218 is scheduled to have one significant maintenance shutdown. 24 UPM The Biofore Company
Developing our forest assets Investing in strategic forest assets, e.g. in Uruguay Releasing capital from forests far from our mills Productivity with active management and nurseries Strong commitment to sustainability UPM forests and plantations Forest and plantation land (own and rented) (1, ha) Forest growth (million m 3 ) Wood sourced from UPM forests and plantations (million m 3 ) % of UPM wood sourcing Value of forests and plantations, including land (EURm) 28 1,12 4.3 2.2 9% 1,27 217 97 8.6 4.7 17% 2,149 25 Area distribution 8% 8% 9% 59% 33% UPM The Biofore Company 28 217 US Finland Uruguay
UPM Biorefining Market pulp consumed in growing end-uses supply of alternative white fibres declines Global paper and board production Specialty Tissue and fluff Market pulp consumption in growing end-uses Cartonboard Stressed supply of white recycled fibre Graphic papers Containerboard Growing demand absorbing recycled fibre from all sources 26 UPM The Biofore Company
UPM Biorefining Demand-supply drivers of pulp market Demand Supply Short term Re- and destocking of inventories Maintenance stoppages Production issues End use demand Capacity closures Conversions New mill starts Debottleneck investments Regulation and product standards e.g. RCP Consolidation Sustainable, renewable and recyclable Food product safety Replacing plastics Decline of graphic paper production and scarcity of recycled fibre Long term Population growth Urbanisation Middle class expansion Aging demography Availability of competitive mill locations E-commerce Plantations, sustainable wood raw material Water availability Infrastructure 27 UPM The Biofore Company
UPM Biorefining Pulp demand outlook Increase in end use will drive fibre demand Mt/a Paper and board consumption Mt/a Fibre consumption 6 6 5 4 3 2 1 2 215 23 Containerboard Cartonboard Specialty Tissue & fluff Fine paper News & mags Decline in graphic papers Healthy growth in tissue, hygiene, specialties and packaging Strong growth in containerboards (brown fibre) 5 4 3 2 1 2 215 23 RCP Brown Unbleached pulp Non-wood Mechanical pulp RCP White Integrated pulp Market pulp Growth in market pulp vs. decline in Integrated pulp Declining white RCP availability Strong demand for brown fibre Source: UPM, Pöyry, RISI 28 UPM The Biofore Company
UPM Biorefining Few decided projects coming on stream in the short-term t/a 7 6 5 4 3 2 1-1 -2-3 -4 Entry of market bleached pulp capacity Completed projects Decided projects Min. construction time span??? 5-year-average exit rate 21 211 212 213 214 215 216 217 218 219 22 Exits New mill/line Other expansion Shipment increase Lack of decided pulp projects Exits take place Note: including BHKP, BSKP, PG-sulfites and non-wood grades, excluding fluff and dissolving Source: UPM, Pöyry 29 UPM The Biofore Company
UPM Biorefining Establishing a competitive operating platform in Uruguay we are now in preparation phase II Current operations Plantation base in West Uruguay Fray Bentos pulp mill 1.3 million tonnes ~1 km of river barging for outbound logistics Sea port in Nueva Palmira loading half vessels Ocean vessels to pulp markets Uruguay prospect Plantation base in Central and North Eastern Uruguay Potential new pulp mill about 2 million tonnes, on-site investment estimate EUR 2bn Railway with high technical standards Deep sea port in Montevideo loading full vessels Ocean vessels to pulp markets 3 UPM The Biofore Company
UPM Biorefining Second preparation phase for the potential new pulp mill in Uruguay proceeding Phase I Completed in Q4/17 Phase II Expected to take 1.5-2 years Phase III Discussions with the Government of Uruguay Prerequisites for a possible pulp mill investment Investment agreement signed in Q4/17 Permitting Pre-engineering Development of infrastructure Necessary conditions Potential UPM investment decision Investment project Development of infrastructure Main items in preparation phase II: Mill permitting, pre-engineering Rail permitting, tendering, start construction Port permitting, tendering, concession Roads Labour protocols, regulation Investment regimes Regional planning and development Energy and complementary items 31 UPM The Biofore Company
UPM Biorefining Chemical pulp market prices EUR/tonne 11 Pulp market prices, EUR USD/tonne 13 Pulp market prices, USD 1 12 9 8 11 1 9 7 8 6 7 5 4 6 5 4 3 3 BHKP, Europe, EUR BHKP, China, EUR NBSK, Europe, EUR NBSK, China, EUR BHKP, Europe BHKP, China NBSK, Europe NBSK, China Sources: FOEX Indexes Ltd, ECB 32 UPM The Biofore Company
UPM Energy UPM s power generation competitive in all market conditions UPM s power generation assets Condensing UPM in Finland UPM # 2 UPM in Nordics UPM Hydro Nuclear Others Others 33 UPM The Biofore Company
UPM Energy UPM Energy UPM Energy s power generation MW EURm Hydropower holdings 551 75 Nuclear power OL1 and OL2 584 1,82 Nuclear power OL3 under construction (494) 215 Condensing power 191 2 Cost of sourced electricity from shareholdings Illustration UPM Energy s shareholdings in total, valued at fair value 1,327 2,4 UPM own hydropower assets 16 UPM Energy s in total (excl. OL3) 1,487 UPM Energy capital employed 2,322 Sales Opex Depreciation Interest and Contribution to EBITDA from finance costs EBITDA from UPM ow n shareholdings hydropow er assets UPM EBITDA UPM Energy sources electricity from part owned energy companies at full cost (cost-price principle, mankala principle) 34 UPM The Biofore Company
UPM Energy Cost efficient generation enables robust profitability in challenging market environment MWh Market electricity prices vs UPM sales price 5 4 3 2 1 213 214 215 216 217 218 Helsinki Front Year System Front Year UPM average sales price UPM Energy profitability Comparable EBIT, EURm 213 214 215 216 217 H1/18 186 22 181 116 91 63 % of sales 39.9 43.5 43.6 32.7 28.8 32.8 35 UPM The Biofore Company
UPM Energy UPM Energy ROCE In UPM balance sheet, UPM Energy shareholdings are valued at fair value Energy market transformation is ongoing UPM Energy assets are competitive UPM Energy comparable ROCE: shareholdings at fair value UPM Energy ROCE if calculated based on acquisition cost Fortum Vattenfall Statkraft % 2 15 1 5 UPM Energy ROCE vs. Nordic peers 15% 11% 5% 4% 36 UPM The Biofore Company Source: Companies financial reports, UPM 216 217
UPM Raflatac Self-adhesive labels in end-use PHARMACEUTICALS WINE, SPIRITS & CRAFT BEVERAGE FOOD HOME & PERSONAL CARE DURABLES TRANSPORT & LOGISTICS RETAIL, OIL & INDUSTRIAL A4 & CUT-SIZE SECURITY & BRAND PROTECTION TYRE 37 UPM The Biofore Company
UPM Raflatac The self-adhesive labelstock market >EUR 8bn global market ~4% p.a. growth Private consumption driven Largest of the labelling technologies ~1/5 of total self adhesive materials markets Self-adhesive labelstock market All labelling technologies All self adhesive materials Other producers UPM Raflatac Other labelling technologies UPM Raflatac Self adhesive labelstock Other producers Other self adhesive materials UPM Raflatac Self adhesive labelstock Other producers 38 UPM The Biofore Company
UPM Raflatac Strategy for profitable growth Increased customer reach Wider product portfolio Winning operations Enabled by strong common capabilities and global operating model Potentially accelerated with M&A if feasible 39 UPM The Biofore Company
UPM Specialty Papers Focus on global Labelling materials, Packaging in Europe and Office paper in APAC LABELLING MATERIAL PACKAGING OFFICE PAPER APAC 4 UPM The Biofore Company
UPM Specialty Papers Strong position in growing end use markets LEADERSHIP POSITION IN LABELLING MATERIALS NICHE PLAYER IN CONSUMER PACKAGING MAJOR SUPPLIER OF OFFICE PAPER IN ASIA CASE: Siliconized release liner market, 51 Bn m 2 CAGR 5% Paper flexpack, million tonnes CAGR 2% Asian cutsize market, million tonnes CAGR 2 3% 51. 63.5 7% 1,9 2,1 2% 5.3 Other Asia 6.1 1 2% 2 3% 1 3% 5% China 217 222E 217E 222E 217 222E Asia North America Europe South America MEA Source: AWA; Pira, UPM 41 UPM The Biofore Company
UPM Specialty Papers Release liner opportunities in labelstock & other applications Product functions: Release liner carries the adhesive and face material: Prevents the adhesive from sticking permanently Important and often critical feature of a layered construction Medical 3 % Food & bakery 5 % Graphic film 5 % Others Envelope 2 % 3 % Hygiene 8 % Globally 48.7 Bn m 2 Labelstock 5 % Industrial 11 % Tapes 13 % Source: AWA 42 UPM The Biofore Company
UPM Specialty Papers Growth strategy Cost competitiveness Growth Growth Capacity investment Face paper Office papers Responsible Fibre & Nordic Origin Growth in high quality label papers Innovations in other applications LABELLING Release liner base paper FINE PAPERS Publication papers Capacity investments PACKAGING Packaging papers Growth Innovations 43 UPM The Biofore Company
UPM Communication Papers Delivering according to our strategy -13% -2% -12% -21% -49% 1 87 1 8 1 88 1 79 1 51 Paper Demand Production Capacity Deliveries Fixed Costs OHS (LTA s) 213 217 building the basis for continued profitable performance Efficient and modern assets Tight grip on costs Broad portfolio Strong geographical footprint Well-defended market position UPM Communication Papers What does it take to perform in challenging markets? Source: UPM, Euro-Graph, Pöyry 44 UPM The Biofore Company
UPM Communication Papers We expect a predictable market development in an economically stable environment We do not anticipate disruptive changes, but accept market reality: Direct Marketing continues to develop with variations from market to market, e.g. increasing in Germany while dropping in the UK Catalogues remain a means of consumer activation, cases of pure online-retailers and specialist stores investing in printed catalogues increase Magazine publishers continue to build on printed editions, decreasing circulations are partly offset by a continuous flow of new titles in niche segments Newspaper circulation is declining fast in main markets, with Germany being relatively resilient Fine papers continue playing an important role in private and office uses resulting in a relatively slow decline, regulatory changes remain a risk-factor. 45 UPM The Biofore Company
UPM Communication Papers Our focus: Strengthen industry leadership role 1 Uncompromising performance 2 Targeted innovation 3 Commercial excellence Continued focus on stringent capacity management and performance improvement. Zero accidents Targeted investments in innovation to drive performance, increase efficiencies and extend our position in the market. Leadership Optimize and evolve commercial interface and supporting processes to ensure supply security and customer value add. Focused on sustainability 46 UPM The Biofore Company
UPM Communication Papers Paper price vs. cash cost of marginal cost producer EUR/t Price Cash cost of a marginal producer 24 25 26 27 28 29 21 211 212 213 214 215 216 217 218 47 UPM The Biofore Company Sources: PPI, RISI, Pöyry
UPM Communication Papers Graphic paper prices EUR/t 1 Europe USD/t 11 North America USD/t 13 China 9 1 12 8 9 11 1 7 8 9 6 7 8 5 6 7 4 5 6 News SC LWC WFC WFU News SC LWC WFC WFU WFC r (1% chemical pulp) Uncoated Woodfree Reels (1% chemical pulp) Sources: PPI, RISI 48 UPM The Biofore Company
UPM Plywood UPM Plywood focuses on three end use segments Construction Vehicle flooring LNG shipbuilding 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 49 UPM The Biofore Company 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 UPM s position and direction Global leader 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 Plywood 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 Industrial applications Sales by category.8 UPM Plywood sales ~811tm 3 Construction / Panel Trading Relevant market ~5.1Mm 3 12 Low-end market EMEA plywood market ~12Mm 3 EMEA market ~12Mm 3 Non-footprint market 9 Global plywood market ~9Mm 3 5 UPM The Biofore Company
New horizons in bioeconomy Biomolecules Biofuels Biochemicals Fibres Pulp Paper Packaging Tissue Labelling materials Biocomposites Logs Sawn timber Plywood Trees Energy 51 UPM The Biofore Company
UPM Biofuels Strong renewable diesel demand growth, as markets evolve from rural development to decarbonisation E15 PACIFIC NORTHWEST California, Oregon, Washington, British Columbia (LCFS) Market driver: Shifting to transport decarbonisation E15 USA (RFS, RFS 2) Market driver: Rural development BRAZIL, ARGENTINA Market driver: Rural development EUROPE (RED, RED II) Market driver: Shifting to transport decarbonisation THE NORDICS Norway, Sweden, Finland (ESR) B7 E1 RED II A IX a (EU excl. ESR, +2Mt RD, ref. -3% GHG) Market driver: Transport decarbonisation CHINA Market driver: Energy security INDONESIA, MALAYSIA E1 Market driver: Rural development B2 E27 B1 AVIATION Global market driver: Transport decarbonisation Huge market potential in the 22s Ethanol, 22 Renewable diesel 22 Biodiesel, 22 Renewable diesel growth, 23 = 1 Mt Source: UPM 52 UPM The Biofore Company
UPM Biofuels The possible Kotka Biorefinery: an innovative and robust concept to scale up the business Competitive and sustainable feedstocks Lappeenranta Biorefinery 1kt Low-carbon fuels for road, aviation, shipping and petrochemicals Residual oils Residues, saw dust, bark Carbon farming (Carinata oil) UPM feedstocks Potential Kotka Biorefinery 5kt UPM renewable fuels 53 UPM The Biofore Company World-scale biorefinery leveraging UPM ecosystem Significant efficiency gains enabled by economy of scale and synergies with Lappeenranta
UPM Biochemicals Biochemicals products are sustainable and competitive alternatives to replace fossil materials FIXED TECHNOLOGY PLATFORM BIOREFINERY PROCESS VARIABLE FOR EACH BIOREFINERY 4% Cellulose 3% Hemicellulose BIOMASS STEP 1: SUGAR PULPING Disintegrating wood into sugars, lignin and green energy SUGARS STEP 2: CHEMICAL CONVERSION Conversion of sugars into targeted biochemicals Biochemical A... Biochemical N 2 % 25% Lignin Lignin GREEN ENERGY 54 UPM The Biofore Company
UPM Biochemicals Biochemicals biorefinery targeting to produce bio-meg, bio-mpg and lignin from hardwood bmeg Monoethylene glycol Existing fossil-based market Market demand > 26 m tonnes CAGR > 3% Application examples: bmpg Monopropylene glycol Existing fossil-based market Market demand > 2 m tonnes Monopropylene CAGR > 5% glycol Application examples: Lignin Biorefinery lignin Performance chemical Application driven Strong IP position Application examples: Textiles Composites Wood resins Bottles & packaging Pharma & cosmetics Plastics Deicing fluids Detergents Foams & coatings 55 UPM The Biofore Company