Upm and Sappi announced intented graphic joint venture, UPM aims to position the communication paper business for continued value creation for its customers in a way that benefits UPM shareholders. Assuming the Joint Venture is formed, UPM would achieve a stronger growth profile, improved margins and leverage, with no direct sales exposure to the declining European and North American graphic paper markets. Assuming the Joint Venture is formed, the future UPM would have an attractive business portfolio focused on renewable fibres, advanced materials and decarbonization solutions that all operate on growing markets.
Across these businesses UPM has shown a strong track record of realized growth above GDP, with an aggregate annual sales growth of about 4.4% (CAGR) during the past decade (2014-2024). These businesses are leading in their fields and aim for world-class performance. The company has global market presence, which enables its businesses to capture opportunities in faster-growing markets, serving them from competitive production platforms. UPM Fibres offers globally sustainable, high-quality hardwood and softwood pulp and sawn timber products.
Its strong asset base and capabilities offer opportunities for increasing capital efficiency and strong cash generation. Fibres South forms a world-class pulp platform with competitive mills, productive plantations and efficient logistics infrastructure, with further value creation potential through cost optimization and low-capex debottlenecking oportunities. Fibres North adds softwood pulp to the customer offering.
Large, well-maintained assets and flexible operating mode enable competitiveness. The advanced materials businesses offer technically demanding materials for growing end uses. The businesses are capital-light in comparison to other UPM businesses and are in good position to take focused growth steps in the coming years.
UPM Adhesive Materials supplies high-quality self-adhesive paper and film products globally and has established a solid offering of graphic solutions. UPM Specialty Papers offers specialty packaging materials for flexible packaging, labelling and industrial release liners globally and fine papers in the Asia-Pacific region. Decarbonization solutions: long-term growth potential with unique solutions; Decarbonization solutions address the growing need to reduce climate emissions, offering solutions from the electrification of society to low-emission traffic and bio-based chemicals.
UPM Energy's CO2-free power generation assets supply reliable base load nuclear power and flexible value-adding hydropower to the growing electricity consumption. UPM Biorefining offers innovative solutions to decarbonize traffic and aviation, and renewable, bio-based chemicals, with significant long-term growth potential. The business has established a solid market presence in European advanced renewable fuels markets.
In renewable chemicals, UPM is in the process of launching an exciting new business, with the first-of-its-kind biorefinery in Leuna, Germany, set to start first customer deliveries in Fourth Quarter 2025. It is currently expected that the closing of the intended Joint Venture of UPM Communication Papers would take place by the end of 2026, subject to the regulatory approvals and other closing conditions. See further information in the release.
UPM Plywood is currently under strategic review to assess options for maximizing the long-term potential and value creation of the business. The strategic review of UPM Plywood is expected to be concluded by the end of 2026. During the strategic review of UPM Plywood and until the closing of the Joint Venture of UPM Communication Papers and Sappi Europe graphic paper business, UPM continues to operate and develop the plywood and communication paper businesses forward, with unwavering commitment to their customers.
Addition to the strategic portfolio projects mentioned above, UPM will focus on further improving competitiveness, increasing capital efficiency, and strengthening its balance sheet. Following the recent investments, the company has a strong asset base to capture focused market growth opportunities in a capital-efficient way. UPM aims to allocate capital in a balanced way, by developing the company with focused investments, offering attractive shareholder distribution and maintaining a strong balance sheet.
