UPM the BIOFORE COMPANY Mika Mikkola VP, Investor Relations UPM in Transformation

UPM THE BIOFORE COMPANY Mika Mikkola VP, Investor Relations UPM in transformation

Business 2003: 2008: 2013: portfolio, integrated towards market- six separate sales paper company driven businesses businesses

Sales EUR 9.9bn EUR 9.5bn EUR 10.1bn EBIT (* EUR 429m EUR 513m EUR 683m Net debt EUR 4.9bn EUR 4.3bn EUR 3.0bn Market cap EUR 7.9bn EUR 4.7bn EUR 6.5bn Personnel 34,500 25,000 21,000 2 | © UPM *) excluding special items UPM today

UPM Biorefining

UPM Plywood UPM Paper Asia

Sales EUR 10 bn Market cap EUR 6,7 bn Personnel 21 000 Production in 14 countries

UPM Paper ENA UPM Raflatac

UPM Energy

3 | © UPM UPM businesses by EBITDA generation and capital employed

EBITDA LTM Capital employed EUR 1,259m EUR 11.7bn

UPM Plywood UPM Other operations UPM Biorefining Biorefining UPM Plywood UPM Paper ENA

UPM Paper ENA

UPM UPM UPM UPM Paper Asia Energy Paper Asia Energy UPM UPM Raflatac Raflatac 4 | © UPM Shifting gear in UPM transformation

Biofuels: Lappeenranta biorefinery Pulp: 10% EBITDA target for capacity increase growth initiatives Business portfolio EUR 200m development and UPM Biorefining value creation UPM Paper Labelling materials Asia Changshu expansion New businesses UPM Profit improvement Self-adhesive labels: Plywood advancing in growth BIOFUELS programmes markets and in higher EUR 200 + 150m value added products BIOCHEMICALS UPM Paper UPM Raflatac BIOCOMPOSITES ENA UPM Energy

5 | © UPM Previous profit improvement programme achieved its target in Q3 2014

EUR million 102% 250 achieved in Q3/14 200

150 EUR 200m of 100 annualised fixed and variable cost 50 savings

0 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115

6 | © UPM Improved profitability

% of sales Operating profit excluding special items 12

10 8,2 8,4 8 6,8 6,8

6 5,4 5,3

4 3,5

0 2008 2009 2010 2011 2012 2013 9M/2014

7 | © UPM Operating profit (* by business area EURm UPM Biorefining % of sales EURm UPM Energy % of sales EURm UPM Raflatac % of sales 100 20 100 50 50 10

80 16 80 40 40 8

60 12 60 30 30 6

40 8 40 20 20 4

20 4 20 10 10 2

0 0 0 0 0 0 Q3Q4Q1Q2Q3Q4Q1Q2Q3 Q3Q4Q1Q2Q3Q4Q1Q2Q3 Q3Q4Q1Q2Q3Q4Q1Q2Q3 12 12 13 13 13 13 14 14 14 12 12 13 13 13 13 14 14 14 12 12 13 13 13 13 14 14 14

EURm UPM Paper Asia % of sales EURm UPM Paper ENA % of sales EURm UPM Plywood % of sales 50 12,5 75 6 20 12

40 10 50 4 15 9

30 7,5 25 2 10 6

20 5 0 0 5 3

10 2,5 -25 -2 0 0

0 0 -50 -4 -5 -3 Q3Q4Q1Q2Q3Q4Q1Q2Q3 Q3Q4Q1Q2Q3Q4Q1Q2Q3 Q3Q4Q1Q2Q3Q4Q1Q2Q3 12 12 13 13 13 13 14 14 14 12 12 13 13 13 13 14 14 14 12 12 13 13 13 13 14 14 14 8 | © UPM *) excluding special items Strong cash flow

EURm Operating cash flow 1 400

1 200 EUR 1,041m

1 000

800

600

400

200

0 2008 2009 2010 2011 2012 2013 12M Q3/14

9 | © UPM Strengthening balance sheet

Net debt / EBITDA Net debt, EUR million (trailing 12 months) Net debt, EUR million Gearing % 5 000 4,5 5 000 90

4 500 4,0 4 500 80 Net debt / EBITDA Gearing 4 000 3,5 4 000 70

3 500 3,0 3 500 60

3 000 2,5 3 000 50 2.2 2 500 2,0 2 500 40 36 2 000 Net debt 1,5 2 000 Net debt 30

1 500 1,0 1 500 20

2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014 Liquidity was EUR 1.7bn at the end of Q3 2014 10 | © UPM Repayments total EUR 0.5bn in 2014 New profit improvement plan targeting EUR 150m of fixed and variable cost savings

EUR million 200 Full annualised EUR 150m impact of the plan is expected by the end of 2015, as compared with the Q3/14 results UPM targets: 150 EUR 95m of other fixed and 100 variable cost savings

50 EUR 55m of fixed cost savings from 0 planned Q314 Q414 Q115 Q215 Q315 Q415 Q116 closures (* *) UPM plans permanent closures of four paper machines,

11 | © UPM 800,000 tonnes of publication paper capacity in Europe Growth projects Lappeenranta biorefinery nearing its start

• Sales agreement with NEOT signed in June

• Construction of the biorefinery was completed in July

• Commissioning process has proceeded well, and the commercial production of advanced renewable diesel is expected to start during Q4 2014

12 | © UPM Growth projects 10% expansion in pulp production capacity

• Pietarsaari pulp mill modernisation and 70,000t capacity expansion completed in June

• Fray Bentos pulp mill production permit allows a further 100,000t of production.

• Kymi pulp mill 170,000t capacity expansion proceeding well, start-up by the end of 2015

• Further debottlenecking potential at the Kaukas pulp mill

13 | © UPM Growth projects Advancing in growth markets

• Investment in labelling materials and woodfree speciality papers at the UPM Changshu mill in China proceeding well, capacity 360,000t, start-up by the end of 2015

• 50% increase in self-adhesive labelstock coating capacity in APAC, start-up in Q1 2015

• Expansion of filmic labelstock production in Poland, start-up in Q1 2015

EUR million Capital expenditure Estimate 1 200

Myllykoski 1 000 acquisition

Depreciation 800

Uruguay 600 acquisition 450 Strategic investments 400 329

200

Operational investments 0 2008 2009 2010 2011 2012 2013 2014e 15 | © UPM Business 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

Annual patent filings 2009–2013 • Biofuels renewable drop-in 350 diesel suitable for all diesel 300 engines 250

• Biochemicals renewable 200 drop-in alternatives for oil- 150 based chemicals 100

50 • Biocomposites for injection 0 moulding to replace oil-based 2009 2010 2011 2012 2013 raw materials

EUR per share Dividend 0,80 Dividend policy

0,70 • at least 1/3 of net cash flow from 0.60 0.60 0.60 operating activities less 0,60 0.55 operational capital expenditure

0,50 0.45 0.40 0,40 • net cash flow calculated as an average over three years 0,30

0,20

0,10

Attractive dividend

Strong cash flow Focused investments

Industry leading Top performance balance sheet