​​​​​UPM in transformation

UPM is going through a transformation to ensure sustainable value creation in the long term. The aim is to improve profitability, generate growth and increase the value of the company’s business portfolio. UPM has been transforming its business model, business portfolio and business performance. 


 

Business model

UPM has changed its business model from a vertically integrated forest industry model into a company with six separate business areas, each targeting top perfromance in their respective markets. The business areas are competitive, with strong market positions. Five of them are operating on healthily growing markets. 

 

UPM’s business portfolio

Important Image

 The business model change has yielded benefits: 

  • Transparency and accountability – commercial strategies, benchmarking, target setting, incentives
  • Cost competitiveness – agility, improved efficiency, optimised sourcing
  • Growth – focused investments with attractive returns and clear competitive advantage

Capturing corporate benefits

UPM group aims to add value to its separate businesses and thereby to its stakeholders with:

  • Competitive and responsible wood sourcing, forestry and plantation operations
  • Value adding, efficient and responsible global functions, compliance
  • Continuous improvement (Smart) programmes
  • Global platform to build on
  • Disciplined capital allocation

Decision making on the right level

Each business area is responsible for executing its own strategy and achieving targets. Group direction and support from global functions enable the businesses to capture benefits from UPM’s brand, scale and integration, while navigating the complex operating environment. Capital allocation decisions take place on the group level.


Separate roles of Group and Businesses

Clear Roles and Responsibilities

Transforming the business portfolio

UPM’s top-line has been nearly constant at EUR 10 billion over recent years. However, sales in the graphic paper business UPM Paper ENA have decreased, while the five other business areas have grown significantly through focused investments.

 

 

 

 

Disciplined capital allocation

  • UPM aims to pay an attractive dividend
  • UPM aims to maintain a strong balance sheet to mitigate risks and enable strategic opportunities to be captured
  • UPM invests in projects with attractive and sustainable returns, supported by clear competitive advantage
  • In UPM Paper ENA, UPM aims for strong cash flow and releasing capital


Increasing share of businesses with strong fundamentals for profitability and growth 

Increasing share of businesses with strong fundamentals

Transforming performance

UPM has achieved a clear improvement in its financial performance. Profitability has improved, shareholder returns have increased and the balance sheet has strengthened. At the same time, social and environmental performance has also improved.

2016 compared with 2008

Strategy in action

Shifting gear in the UPM transformation

UPM business areas

Driving for top performance in all business areas

UPM as an investment

Targeting attractive total return
Investor Relations: +358 (0)204 15 0033, ir@upm.com