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Capital allocation

UPM directs capital to drive long-term value—investing in growth, ensuring strong returns, maintaining financial stability, and generating shareholder value.

Effective capital allocation

Capital allocation is key to attractive long-term returns, as well as developing the business portfolio in areas with the best long-term value creation potential. At UPM, capital allocation decisions take place at the corporate level.

We plan to allocate capital in order to:

Invest to grow the company and its earnings. We invest in sustainable businesses with strong long-term fundamentals for demand growth and a clear competitive advantage or high barrier to entry for superior returns. We target growth in comparable EBIT and comparable return on equity exceeding 10%.
Pay attractive dividends. We aim to pay attractive dividends, targeting at least half of the comparable earnings per share over time. The targeted earnings growth drives dividend growth over time.
Maintain a strong balance sheet. According to UPM’s leverage policy, net debt to EBITDA ratio is to be less than 2. An investment grade rating is an important element in the financing strategy.
Share buybacks. They are a complementary tool that can be used contingent on investment opportunities and company valuation.

5-year capital allocation* (2024-2028)

Investment cycle

AT UPM, a major investment cycle is coming to an end. We ramp up our strategic growth projects and continue to lay the foundation for future growth.