Review by Jussi Pesonen, President and CEO


Good performance continued with record cash flow. The year ended with an exceptionally strong financial position. Investments in Uruguay pulp mill and next generation biochemicals in Germany build company value and strengthen our position in climate change mitigation.

The year 2019 was a milestone year in UPM’s strategic transformation. The decision to build the second UPM pulp mill in Uruguay will result in a step change in scale of the pulp business and UPM’s future earnings. Growth initiatives in biomolecular businesses made good progress and will open totally new markets for UPM with large growth potential for the future.

Our business performance continued at a good level despite the slowing economic growth. We were able to maintain stable margins throughout the year and achieved a record-strong cash flow. This was a good achievement given the erosion of our product prices during the second half of the year.

Our sales decreased by 2% and comparable EBIT fell by 7% in 2019. Our operating cash flow increased by more than half a billion euros to EUR 1,847 million and we finished the year with a record-low negative net debt of EUR -453 million.

I would like to sincerely thank all UPMers and our partners for making 2019 a success.

Future beyond fossils

Our strategic guidance remained unchanged: Our portfolio consists of six competitive businesses with strong market positions and performance. We grow businesses that are having long-term fundamentals for demand growth and high barriers to entry. Performance, growth, innovation and responsibility continue to be the four cornerstones we build on.

We have clearly defined the spearheads for our growth: high-value fibre, specialty packaging materials and molecular bioproducts will pave our way.

In the beginning of 2020 UPM committed to UN Business Ambition for 1.5°C. We have a unique opportunity to make a positive impact and contribute to limiting climate change. We innovate climate-positive products and turn them into growing businesses. We source from sustainably managed forests and reduce our emissions. Furthermore, we limit risks from climate mitigation policies and the physical impacts of the changing climate to our businesses and assets. All this is important for the long-term value of the company.

We believe that customers, investors and other stakeholders value responsible operations that keep risks under control and add to our business opportunities. During the year, UPM was invited as a UN Global Compact LEAD participant. We have received several top recognitions for its sustainability performance, including the global Dow Jones Sustainability Index, MSCI AAA rating and CDP Triple A listing.

Our objective is earnings growth. We will maintain our high standards when it comes to return requirements for any growth investments. In addition to executing various low-risk, focused growth investments, we started implementing our transformative projects that provide us with unique opportunities for significant long-term earnings growth.

In UPM Biorefining, the implementation of the pulp mill project in Uruguay is making rapid progress. In UPM Biochemicals, we made the decision on the first industrial-scale biochemicals refinery in Germany in January 2020. Biochemicals has the potential to provide UPM with a significant growth platform for decades to come. In UPM Biofuels, we have completed the environmental impact assessment for a possible biofuels refinery in Finland.


Shareholder value at the core

Creating shareholder value is at the core of our strategy, and we believe that our Beyond fossils actions also benefit other stakeholders and society in the long term.

UPM’s Board of Directors is proposing a dividend of EUR 1.30 (1.30) per share for 2019, representing 38% of operating cash flow per share. The proposal reflects UPM’s exceptional financial position and confidence in future cash generation.

Over the next few years, we can allocate more capital to growing and transforming the company while simultaneously paying an attractive dividend to our shareholders and maintaining our strong balance sheet. We will also ensure that our employees have the competence, integrity and drive to make our strategy come true.

Global economic growth is expected to continue in 2020, albeit at a modest level. Growth is expected to be slow in Europe. The long-term outlook for our businesses is strong. It is driven by global consumer megatrends, more sustainable consumer choices and the need to reduce reliance on fossil resources. UPM is ready to grasp the limitless opportunities that bioeconomy offers for value creation and business growth.

We have many things to look forward to in 2020. We have exciting transformative projects either in progress or in planning, which will drive the company’s future earnings and value. UPM’s financial position is exceptionally strong, which enables us to make these opportunities real.


Jussi Pesonen
President and CEO

Investor Relations contacts: +358 (0)204 15 0033,

Page modified 28.02.2020