Tapio Korpeinen

CFO

September 2014

UPM – THE BIOFORE COMPANY

| © UPM

UPM in transformation

2

0 %

20 %

40 %

60 %

80 %

100 %

2013

Paper ENA

Plywood

Energy

Paper Asia

Raflatac

Biorefining

0 %

20 %

40 %

60 %

80 %

100 %

2003

Sold units

Paper

Plywood

Raflatac

Sawmilling

2003:

integrated

paper company

2008:

towards market-

driven businesses

2013:

six separate

businesses

Sales

EBIT (*

Net debt

Market cap

Personnel

EUR 9.9bn

EUR 429m

EUR 4.9bn

EUR 7.9bn

34,500

EUR 9.5bn

EUR 513m

EUR 4.3bn

EUR 4.7bn

25,000

EUR 10.1bn

EUR 683m

EUR 3.0bn

EUR 6.5bn

21,000

Business

portfolio,

sales

*) excluding special items

0 %

20 %

40 %

60 %

80 %

100 %

2008

Sold units

Paper

Plywood

Raflatac

Sawmilling

| © UPM3

EBITDA LTM

EUR 1,224m

Capital employed

EUR 11.4bn

UPM

Energy

UPM

Biorefining

UPM

Raflatac

UPM

Paper Asia

UPM

Paper ENA

UPM

Plywood

Other operations

UPM

Energy

UPM

Biorefining

UPM

Raflatac

UPM

Paper Asia

UPM

Paper ENA

UPM Plywood

UPM businesses by EBITDA generation and

capital employed

| © UPM

Profit

improvement

programme

EUR 200m

Shifting gear in UPM transformation

4

UPM

Biorefining

UPM

Paper

Asia

UPM

Raflatac

UPM

Energy

UPM

Paper

ENA

UPM

Plywood

EBITDA target for

growth initiatives

EUR 200m

Biofuels:

Lappeenranta

biorefinery

Pulp: 10%

capacity increase

Labelling materials

Changshu expansion

Self-adhesive labels:

advancing in growth

markets and in higher

value added products

Business portfolio

development and

value creation

BIOCHEMICALS

BIOCOMPOSITES

BIOFUELS

New businesses

| © UPM

Profit improvement programme

progressing fast

0

50

100

150

200

250

Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115

5

EUR million

Full impact of the programme is expected by the end

of 2014 as compared with the Q2/13 results

94%

achieved

in Q2/14EUR 200m of

annualised

fixed and

variable cost

savings

| © UPM

Growth projects

Lappeenranta biorefinery nearing its start

• Sales agreement with NEOT signed

in June

• Construction of the biorefinery was

completed in July

• Testing and commissioning process

is ongoing

• Commercial production of renewable

diesel is expected to start during the

autumn

• Earnings impact is expected to be

minor during H2 2014

6

| © UPM

Growth projects

10% expansion in pulp production capacity

• Pietarsaari pulp mill modernisation

and 70,000t expansion completed in

June

• Kymi pulp mill 170,000t expansion

proceeding on schedule, start-up by

the end of 2015

• Fray Bentos pulp mill received an

increased production permit, allowing

a further 100,000t of production. Minor

investments are planned for H2/14

• Further debottlenecking potential at

the Kaukas pulp mill

7

| © UPM

Growth projects

Growth in developing markets

• Investment in labelling materials and

woodfree speciality papers at the

UPM Changshu mill in China,

capacity of 360,000t, start-up by the

end of 2015

• 50% increase in self-adhesive

labelstock coating capacity in APAC,

start-up by the end of 2014

• Expansion of filmic labelstock

production in Nowa Wies, Poland,

start-up in Q1 2015

8

| © UPM

Low investment needs in existing assets allow

growth projects with modest total capex

9

0

200

400

600

800

1 000

1 200

2008 2009 2010 2011 2012 2013 2014e

EUR million

Operational investments

329

Capital expenditure

Strategic investments

Depreciation

Uruguay

acquisition

Myllykoski

acquisition

450

Estimate

| © UPM

Portfolio development and value creation

• Performance: targeting top performance in

each business

• Grow: focused high-return growth

investments and synergistic M&A

• Simplify: best value realisation for UPM

• Consolidation in European paper market,

without increasing capital

10 | © UPM

| © UPM| © UPM

• Biofuels renewable drop-in

diesel suitable for all diesel

engines

• Biochemicals renewable

drop-in alternatives for oil-

based chemicals

• Biocomposites for injection

moulding to replace oil-based

raw materials

0

50

100

150

200

250

300

350

2009 2010 2011 2012 2013

Annual patent filings 2009–2013

11

New businesses based on UPM’s

development work

FINANCIALS

| © UPM

Sales

EUR 2,441m -3%

EBITDA

EUR 298m +40m

Successful profit improvement programme

prompted strong Q2 2014 results

Operating cash flow

EUR 479m +292m

Net debt

EUR 2,925m -599m

(* excluding special items13

Operating profit (*

EUR 186m +48m

Profit before tax (*

EUR 169m +49m Gearing

40% -8pp

Net debt / EBITDA

2.4x -0.6x

Q2 2014 vs. Q2 2013:

EPS (*

EUR 0.26 +0.06

Operating profit (*

EUR 382m +100m

H1 2014 vs. H1 2013:

| © UPM

0

2

4

6

8

10

12

2008 2009 2010 2011 2012 2013 H1/14

Operating profit excl. special items

Profitability over two economic slowdowns

% of sales

14

5.4

3.5

8.2

6.8

5.3

6.8

7.8

| © UPM

Operating profit *) by business area

15

0

2

4

6

8

10

0

10

20

30

40

50

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

0

4

8

12

16

20

0

20

40

60

80

100

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

0

10

20

30

40

50

0

20

40

60

80

100

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

0

2

4

6

8

10

0

10

20

30

40

50

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

-4

-2

0

2

4

6

-40

-20

0

20

40

60

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

-3

0

3

6

9

12

-5

0

5

10

15

20

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

EURm % of salesUPM Paper Asia EURm % of salesUPM Paper ENA EURm % of salesUPM Plywood

EURm % of salesUPM RaflatacEURm % of salesUPM EnergyEURm % of salesUPM Biorefining

*) excluding special items

| © UPM

0

200

400

600

800

1 000

1 200

1 400

2008 2009 2010 2011 2012 2013 Q2/14

Strong cash flow

16

Operating cash flow

Cash flow

after investing

activities

Cash flowEUR million

LTM

| © UPM

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

2008 2009 2010 2011 2012 2013

Cash flow based dividend

EUR per

share

0.40

0.45

0.55

17

Dividend policy

• at least 1/3 of net cash flow from

operating activities less

operational capital expenditure

• net cash flow calculated as an

average over three years

Minimum dividend by the

policy

• EUR 0.45 per share

Dividend for 2013

• EUR 0.60 (0.60) per share

0.60 0.60 0.60

Dividend

| © UPM

Strengthening balance sheet

18

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

2008

2009

2010

2011

2012

2013

2014

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

Net debt, EUR millionNet debt / EBITDA(trailing 12 months)

Net debt

Net debt / EBITDA

2.4

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500

2008

2009

2010

2011

2012

2013

2014

20

30

40

50

60

70

80

90

Net debt, EUR million Gearing %

Net debt

Gearing

40

Liquidity was EUR 1.8bn at the end of Q2 2014

Repayments total EUR 0.5bn in 2014

| © UPM

UPM business outlook is broadly stable (*

*) See complete wording of the "Outlook"

in the Q2 2014 interim report

• In H2 2014, UPM’s performance is expected to be underpinned by similar or slightly better performance in UPM Paper ENA, UPM Paper Asia, UPM Raflatac, UPM Plywood and UPM Energy, when compared to H2 2013.

• UPM Biorefining performance in H2 2014 compared to H2 2013 continues to be impacted by lower chemical pulp prices.

• Commercial production of renewable diesel at the Lappeenranta biorefinery is expected to start during the autumn 2014. The impact on UPM Biorefining earnings is expected to be minor during H2 2014.

| © UPM19

| © UPM

Summary

• UPM transformation continues

• Strong Q2 2014 results thanks to fast implementation

of the profit improvement programme

• Strong cash flow and further strengthening balance

sheet

• Solid progress in growth projects

20