Review by the President and CEOJussi Pesonen

President and CEO

31 March 2020

| © UPM| © UPM| © UPM

Milestone year since last AGM

• Uruguay pulp mill investment

• Biochemicals refinery investment

• Climate commitment for 1.5ºC with tangible actions

• Good business performance maintained

• Record-strong cash flow and balance sheet

• Distinguished recognitions for our responsibility performance

2

| © UPM| © UPM| © UPM3

Contents

• Financials 2019

• Future beyond fossils

– Biofore strategy

– Climate commitment

– UPM Paso de los Toros

– UPM Biochemicals

• Effective capital allocation

Financials 2019

| © UPM

2019: good performance and record cash flow

5

EBITDA

EUR 1,851m –17m

Comparable EBIT

EUR 1,404m –109m

2019 vs. 2018:

Net debt

EUR –453m –142m

Operating cash flow

EUR 1,847m +517m

Comparable EPS

EUR 2.07 –0.17Net debt / EBITDA

–0.24x –0.07x

Sales

EUR 10,238m – 2%Comparable ROE

11.2% –1.7pp

| © UPM

Comparable EBIT in 2019 vs. 2018

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2018 2019

EURm

Prices

Variable

costs

Fixed

costs

Deliveries

1,51314.4% 1,404

13.7%

Currency,

net impact

Depr.,

forests,

plantations,

other

Comparable EBIT

6

Successful margin

management

| © UPM

0,0

2,5

5,0

7,5

10,0

12,5

15,0

0

50

100

150

200

250

300

2014 2015 2016 2017 2018 2019

0,0

2,5

5,0

7,5

10,0

12,5

15,0

0

100

200

300

400

2014 2015 2016 2017 2018 2019

EURm % of sales

UPM Communication Papers

Comparable EBIT by business area

0,0

2,5

5,0

7,5

10,0

12,5

15,0

0

50

100

150

200

250

300

2014 2015 2016 2017 2018 2019

0

5

10

15

20

25

30

0

150

300

450

600

750

900

2014 2015 2016 2017 2018 2019

0,0

2,5

5,0

7,5

10,0

12,5

15,0

0

50

100

150

200

250

300

2014 2015 2016 2017 2018 2019

EURm % of salesUPM Specialty PapersEURm % of salesUPM Biorefining

0

10

20

30

40

50

60

0

50

100

150

200

250

300

2014 2015 2016 2017 2018 2019

% of salesUPM RaflatacEURm % of salesUPM Plywood EURmEURm % of salesUPM Energy

7

| © UPM

Business area returns and long-term targets

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30ROCE%

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30ROCE % *)

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30ROCE %

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30ROCE %

*) shareholdings in UPM Energy

valued at fair valueLong-term return target

UPMSpecialty Papers

UPMCommunication

PapersUPM

Plywood UPM Raflatac

UPMEnergy

UPMBiorefining

FCF/CE %

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

30ROCE %

8

| © UPM

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

-750

0

750

1 500

2 250

3 000

3 750

4 500

2014 2015 2016 2017 2018 2019

Net debt/EBITDA (x)

Net debt and leverage

Net debtEURm

Group financial performance

9

0

200

400

600

800

1 000

1 200

1 400

1 600

2014 2015 2016 2017 2018 2019

EURm Comparable EBIT

0

2

4

6

8

10

12

14

2014 2015 2016 2017 2018 2019

% Comparable ROE

Target: 10%Target: EBIT growth

Policy: ≤ 2x

| © UPM

Consistently strong cash flow

10

• 2019: record annual operating cash flow

at EUR 1,847m (1,330m)

• Working capital decreased by EUR 276m

(increased by 209m)

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2014 2015 2016 2017 2018 2019

Cash flow

Free cash flow

Operating cash flow

EURm

| © UPM

Dividend proposal: EUR 1.30 per share

11

0

10

20

30

40

50

60

70

80

0,00

0,20

0,40

0,60

0,80

1,00

1,20

1,40

1,60

2013 2014 2015 2016 2017 2018 2019*

EUR per share

% of operating cash flow per share

Long term dividend policy

• UPM aims to pay an attractive dividend,

30–40% of operating cash flow per share

Dividend proposal for 2019

• EUR 1.30 (1.30) per share,

totalling EUR 693m

• 38% of 2019 operating cash flow

*) Board’s

proposal

| © UPM

Industry leaderin responsibility

12 | © UPM

| © UPM

2020 and the COVID-19 pandemic

During Q1/20 UPM businesses have not been adversely impacted by the pandemic

and the customer demand has been on expected level.

UPM’s financial position is strong. UPM has net cash in the balance sheet and high

liquidity reserves.

UPM is taking extensive precautions to protect the health and safety of its employees

and to ensure business continuity.

Despite these efforts it is possible that during an extended pandemic the operation of

one or more units or the supply chain and logistics could be disrupted.

Although many UPM products serve essential everyday needs, it is likely that the

customer demand for some UPM products would deteriorate due to the slowing world

economy.

13

Future beyond fossils

| © UPM

Biofore strategy

15 | © UPM

We create value by seizing the

limitless potential of bioeconomy

PERFORMANCE

INNOVATION

GROWTH

RESPONSIBILITY

Strong long-term fundamentals for

demand growth and high barriers to entry

| © UPM

We act through EMISSIONS

65% less CO2 emissions

We act through PRODUCTS

Innovate novel products

We act through FORESTS

Climate-positive forestry

16

Driving long-term value creation – mitigating climate change

| © UPM

Our focus areas for growth

17 | © UPM

UPM Paso de los TorosUPM invests in a world class pulp mill in Uruguay

| © UPM

UPM invests in a world class pulp mill in Uruguay

• A highly competitive new pulp mill with annual

production capacity of 2.1 million tonnes of

eucalyptus pulp

• Mill investment of USD 2.7 billion

• Investments in port operations in Montevideo, local

facilities in Paso de los Toros of USD 350 million

• Scheduled start-up in H2 2022

• Industry-leading safety and sustainability

performance of the value chain from plantations to

customers

19

UruguayArgentina

Brazil

| © UPM

Transformative step in UPM’s pulp business and in UPM’s future earnings

• Significant step for UPM’s future earnings

– One of the most competitive mills in the world

– Expected cash cost level of USD 280 per

delivered tonne of pulp(*

– Attractive returns in various market scenarios

– Carefully prepared to ensure long-term

competitiveness and to minimise risks both in the

project phase and during continuous operations

• Step change in UPM’s pulp business

20*) including variable and fixed costs of plantation operations, wood

sourcing, mill operations and logistics delivered to the main markets

2019 2023

UPM Pulp capacity

3.7mt/a

Northern

softwood

Northern

hardwood

Eucalyptus

5.8mt/a

| © UPM

UPM BiochemicalsSwitch from fossil raw materials to renewable solutions

21 | © UPM

| © UPM

UPM invests in next generation biochemicals

• EUR 550 million investment in an industrial

scale biorefinery at Leuna, Germany

• 100% wood-based biochemicals provide

alternatives to fossil materials in various

consumer-driven end-uses

• Total annual capacity of 220,000 tonnes

• Scheduled to start up by the end of 2022

• Safety and sustainability of the value chain

based on UPM’s high standards

22 | © UPM

| © UPM23 | © UPM

UPM creates a totally new sustainable business with large growth potential

• Major milestone in UPM’s transformation

• UPM biochemicals respond to the customers’

increasing needs for renewable alternatives

• Current supply is limited and high-quality

biochemicals are priced at a premium

• Sustainable wood supply, unique technology,

existing infrastructure and proximity to customers

enables a good cost position

• Attractive returns: ROCE target of 14% once

the facility is fully ramped up and optimized

| © UPM

Renewable product range

2424 | © UPM

• Bio-monoethylene glycol (bMEG): textiles, PET bottles, packaging, deicing fluids

• Renewable functional fillers:rubber applications, a sustainable, light-weight and

high-purity alternative to carbon black and silica

• Bio-monopropylene glycol (bMPG): composites, pharma, cosmetics, detergents

• Industrial sugars:various applications in chemicals industry

Effective capital allocation

| © UPM

5-year cumulative cash flow (2015–2019)– efficient capital allocation in action

26

Net debt/

EBITDA

< 0x

Industry-leading

balance sheetDeleveraging

EUR 3.2bn

Strong operating cash flow

EUR 7.6bn

Attractive dividend

EUR 2.6bn

Focused investments

EUR 1.8bn

| © UPM

Illustrative capital allocation *) for the next 5 years

27

Performance focus

Strong cash flowAttractive dividend

EUR ~3.5–4bn

High return

investments

EUR ~4–4.5bn Maintain headroom

Net debt/

EBITDA

< 2x

Industry-leading

balance sheet

*) This is not a forecast