Jussi Pesonen

President and CEO

25 April 2017

UPM Q1 2017 RESULTS

| © UPM2

UPM businesses delivered a strong Q1 2017

• Comparable EBIT increased by 8% to

EUR 305m (281m)

• Operating cash flow was strong at

EUR 396m (341m)

• Net debt decreased to EUR 807m (1,873m),

net debt/EBITDA to 0.52x (1.31x)

• Comparable ROE (LTM) increased to 11.1%

(10.0%)

• Operating cash flow (LTM) was

EUR 1,741m, EUR 3.26 per share 0

50

100

150

200

250

300

350

EURm

Comparable EBIT

305281

| © UPM3

Q1 2017 – strong operational efficiency and

good growth in deliveries

UPM PLYWOOD

• Record profits

• Deliveries +7%, favourable product mix

• Good demand, activity in construction

improved further

UPM PAPER ENA

• Another good quarter

• Sale agreements of hydropower assets

• Closed 305,000t of capacity

• Graphic paper deliveries –2%

UPM RAFLATAC

• Record profits

• Deliveries +6%

• Good demand growth, particularly in Asia

UPM ENERGY

• Hydropower generation below

long-term average

• Market prices depressed by mild

weather conditions

UPM BIOREFINING

• Record production in Pulp,

Biofuels and Timber

• Pulp deliveries +8%

• Good demand growth,

particularly in China

UPM SPECIALTY PAPERS

• Record profits

• Good progress in product mix

• Deliveries +3%

• Good demand growth, particularly in Asia

| © UPM

Serving the increasing customer demand

with the help of the growth initiatives

4

Fully contributing • Pietarsaari pulp mill expansion

• Fray Bentos pulp mill expansion

• Kymi pulp mill expansion

• Raflatac expansion in APAC, Poland

• Kaukas pulp mill efficiency

Contributing well in Q1 2017• Lappeenranta biorefinery

• Changshu speciality paper machine

• Otepää plywood mill expansion

Under construction• Kymi pulp mill expansion

• Raflatac expansion in Poland

| © UPM

Comparable EBIT by business area

5

0

2,5

5

7,5

10

12,5

0

10

20

30

40

50

0

5

10

15

20

25

0

30

60

90

120

150

0

10

20

30

40

50

60

0

20

40

60

80

100

120

0

2,5

5

7,5

10

12,5

0

10

20

30

40

50

-2

0

2

4

6

8

10

12

-20

0

20

40

60

80

100

120

0

4

8

12

16

20

0

5

10

15

20

25

EURm % of salesUPM Specialty Papers EURm % of sales

UPM Paper ENA

EURm % of salesUPM Plywood

EURm % of sales

UPM Raflatac

EURm % of salesUPM EnergyEURm % of salesUPM Biorefining

| © UPM

0

50

100

150

200

250

300

350

Q1/16 Q1/17

Comparable EBIT in Q1 2017 vs. Q1 2016

Raflatac

Specialty

PapersOther

operations

and

eliminations

Energy

BiorefiningPaper

ENA

Plywood

0

50

100

150

200

250

300

350

Q1/16 Q1/17

EURm

Prices

Variable

costs

Fixed

costs

Deliveries

Good growth in deliveries.

High operational efficiency.

Net impact of costs largely neutral.

EURm

Growth in deliveries in Biorefining, Raflatac,

Specialty Papers and Plywood. Mix

improvement. Cost control in Paper ENA.

28111.5%

30512.3%

Currency,

net

impact

Depr.,

forests,plantations

6

28111.5%

30512.3%

| © UPM7

Strong cash flow and balance sheet

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2011 2012 2013 2014 2015 2016 Q1/17

Net debt / EBITDA(trailing12 months)

Net debt

Net debt / EBITDA

0.52x

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2011 2012 2013 2014 2015 2016 Q1/17

Operating cash flow Net debt

807

1,741

Net debtEURm

Free cash flow

Operating cash flow

EURm

Q1/17

operating

cash flow

EUR 396m

Working

capital

decreased

by

EUR 36m

LTM LTM

| © UPM

Outlook for 2017

• UPM’s profitability improved significantly in 2016 and is

expected to remain on a good level in 2017.

• Demand growth is expected to continue for most of UPM’s

businesses, while demand decline is expected to continue

for UPM Paper ENA. The focused growth projects continue

to contribute gradually to UPM’s performance.

• Following a deflationary environment in recent years, 2017

is expected to show modest input cost inflation. UPM will

continue measures to reduce fixed and variable costs to

mitigate this.

• In Q2 2017, UPM’s performance will be impacted by higher

maintenance activity, especially in UPM Biorefining, UPM

Paper ENA and UPM Energy, compared with Q1 2017.

| © UPM8

| © UPM

Operating model

• Separate

businesses

• Top performance

• Corporate benefits

Performance

• Profit focus

• High performing

people

• Value-based

leadership and

responsibility

• Innovation

Capital allocation

• Attractive dividend

• Focused growth

investments

• Selected larger

investments

• Synergistic M&A

Growth

• Current growing

businesses

• New bio-based

businesses

Capability

• Strong cash flow

• Strong balance

sheet

• Corporate

structure

9

→ Better than

sum of parts

→ Continuous

improvement

→ Attractive

returns

→ Earnings growth

and valuation

→ Foundation for

opportunities

Direction: grow businesses with strong long-term

fundamentals and sustainable competitive advantage

| © UPM

| © UPM

Low investment needs in existing assets allow

growth projects with modest total capex

0

200

400

600

800

1 000

1 200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EURm

Operational investments

Capital expenditure

Strategic investments

Uruguay

acquisition

486

Estimate

326 350

Myllykoski

acquisition

11

| © UPM

Maturity profile and liquidity

Maturity profile of outstanding debt Committed credit facilities’ maturities EURm EURm

Liquidity

Liquidity on 31 March 2017 was EUR 1.5bn(cash and unused credit facilities)

Bilateral committed credit facilities EUR 656 million for general financing purposes

Committed credit facilities

0

200

400

600

800

0

200

400

600

800

12

| © UPM

15

20

25

30

35

40

45

50

55

60

65

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Chemical pulp market

Source: PPPC World-20 statistics

Pulp inventories

Days of

supply

300

400

500

600

700

800

900

1 000

1 100

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

USD/tonne

Q1 NBSK pulp price increased by 1% from Q4

Q1 BHKP pulp price increased by 4% from Q4

BHKP

NBSK

Source: FOEX Indexes Ltd.

Hardwood

inventories

Softwood

inventories

13

| © UPM14

UPM Energy profitability 2012 2013 2014 2015 2016 Q117

Comparable EBIT, EURm 217 186 202 181 116 22

% of sales 45.0 39.9 43.5 43.6 32.7 27.5

0

10

20

30

40

50

2012 2013 2014 2015 2016 2017

MWh Market electricity prices vs UPM sales price

Helsinki Front Year System Front Year UPM average sales price

Cost efficient generation enables robust profitability

also in challenging market environment

| © UPM

400

500

600

700

800

900

1000

News SC LWC

WFC WFU

15

Graphic paper prices

EUR/t

EuropeUSD/t USD/t

ChinaNorth America

Sources: PPI, RISI

500

600

700

800

900

1000

1100

WFC r (100% chemical pulp)

Uncoated Woodfree Reels (100% chemicalpulp)

500

600

700

800

900

1000

1100

News SC LWC

WFC WFU

| © UPM16

Demand-supply balance in European

graphic paper is visible in margins

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EUR/t

Sources: PPI, RISI, Pöyry

Cash cost of a marginal producer

Price