UPM aims higher with renewed long-term financial targets

UPM renews its long-term financial targets. In the new targets, the business area return targets and the comparable ROE target have been increased. Comparable EBIT growth has been introduced as a new group-level target. A new financial policy on leverage based on net debt/EBITDA has been introduced the cash flow-based dividend policy remains unchanged.

\"Since adopting the current business model of six separate businesses in 2013, we have achieved a clear improvement in our financial performance. The set-up has simultaneously opened attractive growth opportunities for us, as well as enabled us to improve competitiveness in all of the businesses. Now, we are confident we can continue to aim higher,\" says Jussi Pesonen, President and CEO of UPM.

Business area long-term return targets increased

• On the business-area level, UPM has increased the long-term return targets for five of the six business areas.
• \"The new return targets reflect our increased ambition for business performance. They are credible and sustainable in the long term, over business and investment cycles,\" says UPM\'s CFO Tapio Korpeinen.

Growth target introduced for group comparable EBIT

A new target has been introduced on the group level: UPM aims to grow its comparable EBIT over the long term.

UPM has a portfolio of five businesses that operate on growing markets and one business that faces declining demand. All of our businesses are competitive and have strong market positions.

\"We aim to grow the businesses with strong long-term fundamentals for growth and profitability. At the same time, we aim to maintain strong performance also in the European and North American paper business.

However, we prioritise earnings growth over top-line growth. We will invest in projects with attractive and sustainable returns, supported by a clear competitive advantage or barriers to entry. We also aim to capture opportunities to develop our business and product mix and further improve our cost competitiveness,\" says Korpeinen.

Aiming for attractive shareholder returns

UPM has increased its ROE target, now aiming for a 10% return on equity. The previous target was variable: 5 percentage points over a ten-year risk-free investment.

\"ROE is a good measure for UPM on the group level, as it also takes into account the financing, taxation and capital structure of the group,\" says Korpeinen.

UPM maintains its cash flow-based dividend policy. UPM aims to pay an attractive dividend: 30-40% of the company\'s annual operating cash flow per share.

Maintaining a strong balance sheet

UPM aims to maintain a strong balance sheet. Investment grade rating is an important element in UPM\'s financing strategy. UPM has introduced a new financial policy on leverage:

UPM targets a net debt/EBITDA ratio of approximately 2 times or less.

The previous maximum gearing limit of 90% has been discontinued as redundant.

UPM is building a sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Paper ENA and UPM Plywood. Our products are made of renewable raw materials and are recyclable. We serve our customers worldwide. The group employs around 19,300 people and its annual sales are approximately EUR 10 billion.

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