UPM Reports 2025 Results with Strategic Portfolio Transformation and Continued Investments in Renewable Solutions

UPM reported resilient performance in 2025 despite a challenging operating environment characterized by geopolitical tensions, trade disruptions and volatile market conditions. The company maintained strong cash generation and continued to execute its strategic transformation toward renewable materials, advanced solutions and decarbonization technologies.

Sales for 2025 amounted to €9.7 billion, representing a 7% decline from the previous year. Comparable EBIT totaled €921 million, down 25% year-on-year, reflecting weaker market demand and price volatility in several business segments. Operating cash flow increased slightly to €1.4 billion, demonstrating the company’s ability to generate solid cash even during difficult market conditions. Capital expenditure during the year totaled €621 million as UPM continued investing in strategic growth areas.

UPM maintained a strong balance sheet with net debt of €3.0 billion and a net debt-to-EBITDA ratio of 2.29. The Board of Directors proposed an unchanged dividend of €1.50 per share for 2025. In addition, the company completed a share buyback program for six million shares worth €160 million during the year, reinforcing its commitment to shareholder returns.

During 2025, UPM continued implementing major strategic portfolio initiatives aimed at strengthening its growth profile and improving profitability. The company signed a non-binding letter of intent with Sappi to form a joint venture combining UPM’s Communication Papers business with Sappi’s European graphic paper operations. The proposed joint venture would include eight UPM paper mills and four Sappi mills and is expected to generate approximately €100 million in annual synergies through operational and logistics optimization. The transaction is subject to regulatory approvals and is expected to close by the end of 2026.

UPM also initiated a strategic review of its plywood business to evaluate alternatives for maximizing shareholder value. Options under consideration include a potential divestment, partial demerger or initial public offering. The review is expected to conclude by 2026 while operations continue normally.

In the Communication Papers segment, the company implemented structural cost reductions in response to declining demand. UPM permanently closed paper production at the Kaukas mill in Finland and the Ettringen paper mill in Germany during the fourth quarter of 2025. The closures reduced capacity by approximately 13% and are expected to deliver annual fixed cost savings of around €70 million.

UPM continued advancing its renewable materials strategy through significant innovation and investment. The company made progress in ramping up its biochemicals refinery in Leuna, Germany, which represents an investment of approximately €1.3 billion. The facility will produce 220,000 tonnes of wood-based renewable biochemicals annually, including bio-glycols, renewable fillers and industrial sugars. First commercial deliveries of industrial sugars were completed in 2025, and the plant is expected to reach full production and positive EBIT by 2027.

In renewable fuels, UPM Biofuels improved profitability during the year due to stronger production efficiency and improving market conditions. The company also discontinued the development of a potential second biomass-to-fuels refinery project in Rotterdam, focusing instead on optimizing its existing assets.

UPM strengthened its advanced materials business with the acquisition of Metamark, a UK-based company specializing in graphics solutions for the labeling and advertising markets. The acquisition supports the company’s strategy to expand in high-growth labeling and specialty materials markets.

The company also invested in modernizing paper production capacity, including more than €10 million in upgrades at the Tervasaari mill in Finland. Additional investments were announced in label materials production capacity in Malaysia and the United States to support growing demand for advanced labels.

UPM continues to position itself as a global provider of renewable material solutions across several business areas including renewable fibres, advanced materials, decarbonization solutions and communication papers. Its portfolio includes pulp production capacity of 5.8 million tonnes annually, renewable electricity generation capacity of nearly 2,000 MW and biofuel production at its Lappeenranta biorefinery in Finland.

Looking ahead, the company expects market conditions to gradually stabilize while continuing to focus on improving competitiveness, increasing capital efficiency and strengthening its balance sheet. With a major investment cycle now largely completed, UPM plans to pursue disciplined growth opportunities in renewable chemicals, advanced materials and decarbonization technologies while maintaining strong shareholder distributions.

UPM believes that increasing global demand for sustainable materials, renewable energy and bio-based chemicals will create significant long-term growth opportunities. The company aims to build a portfolio of world-class businesses operating in growing markets while delivering attractive returns to shareholders.