Review by Jussi Pesonen, President and CEO


The pandemic turned 2020 into a year of global uncertainty. We focused on securing safety, performance and progress in growth projects with good success.

In 2020, the global pandemic caused an abrupt and severe economic shock that put all societies and businesses to the test. Despite high uncertainty, our focus was clear: secure the safety of our people, the performance of our operations and the successful implementation of our two strategic growth projects in Uruguay and in Germany, both of which proceeded on schedule and on budget.

In the exceptional circumstances our performance was satisfactory. Our sales decreased by 16% and comparable EBIT by 32%. However, we succeeded in keeping our EBIT margin above 11% and our operating cash flow was strong enough to more than cover our accelerating growth investments.

The star performers of the year, UPM Raflatac and UPM Specialty Papers, benefited from favourable market demand driven by changes in consumer behaviour, as well as growth in e-commerce and retail. Both businesses also showed good margin performance from the beginning of the year, due to consistent commercial and efficiency measures taken to improve profitability.

At the same time, the COVID-19 containment measures taken by governments significantly decreased demand for graphic papers. Furthermore, market prices for pulp stayed at cycle low levels for most part of the year.

We took several measures to decrease fixed costs. The closures of the Chapelle and Kaipola paper mills and the Jyväskylä plywood mill and streamlining in several businesses and functions were timely and necessary for the competitiveness of the business.

Sustainability is at the core of everything we do. During the year, we committed to the UN Business Ambition for 1.5°C and to the science-based measures to mitigate climate change. We were recognised as an industry leader in several renowned sustainability listings. We also established a Green Finance Framework and issued our first Green Bond. Our syndicated revolving credit facility is also linked to biodiversity and climate targets.

I would like to sincerely thank both UPMers and our partners for making an extra effort to ensure both safety and successful business during the exceptional year.

Committed to providing more sustainable choices

We are well positioned to respond to global megatrends and growing demand for renewable products. We enable our customers and consumers to make more sustainable choices. Our purpose is to create a future beyond fossils.

Our strategy remains unchanged: We seek sustainable growth in businesses with strong long-term market fundamentals and high barriers to entry. Performance, innovation and responsibility continue to be the cornerstones we build on. We will also ensure that our employees have the competence and drive to make our strategy come true.

Our spearheads for growth are clear: high-value fibre, specialty packaging materials and molecular bioproducts. We innovate climate-positive products and turn them into growing businesses. We

source from sustainably managed forests and reduce our emissions. We also 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.

Our objective is earnings growth. We will maintain our high standards when it comes to return requirements for growth investments. The year 2021 will be an intensive year of construction for the pulp mill in Uruguay and for the biochemicals refinery in Germany. We have also started the basic engineering phase of a next-generation biorefinery for high-quality renewable fuels. The planned biorefinery would scale up UPM’s successful biofuels business to a new level.


Financial position continues to be strong

Creating shareholder value is at the core of our strategy, and we believe that this also benefits other stakeholders and society in the long term. UPM’s Board of Directors is proposing an unchanged dividend of EUR 1.30 per share for 2020. The proposal reflects UPM’s strong financial position and confidence in future cash generation.

The global economy is expected to start recovering in 2021 from the deep downturn experienced in 2020. Demand for most UPM products is influenced by overall economic activity and therefore depends on the shape and rate of economic recovery. We will do our utmost to ensure business continuity and performance as well as secure safety and successful implementation of our growth projects.

The long-term outlook for our businesses is strong. UPM is well positioned to grasp the opportunities that bioeconomy offers for value creation and business growth.

Jussi Pesonen
President and CEO

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

Page modified 02.03.2021