HELSINKI (News release) --

Q2 2026 highlights, continuing operations

• Sales totaled €2,355 million (2,341 million in Q2 2025)
• Comparable EBIT increased by 71% to €212 million, 9.0% of sales (124 million, 5.3%)
• All businesses improved their results from last year
• UPM and Sappi signed a definitive agreement on the graphic paper Joint Venture
• The Board approved a plan to demerge the Plywood business into a new listed company. The Extraordinary General Meeting to decide on the demerger plan will be held on August 31, 2026
• UPM achieved a Platinum rating from EcoVadis and an A score from CDP for its supplier engagement

H1 2026 highlights, continuing operations

• Sales totaled €4,781 million (4,914 million in H1 2025)
• Comparable EBIT increased by 17% to €471 million, 9.8 % of sales (404 million, 8.2 %)
• Strong performance in Decarbonization solutions businesses (UPM Energy and UPM Biofuels)
• Robust sales growth and performance in Advanced materials businesses (UPM Adhesive Materials and UPM Specialty Materials)
• Operating cash flow was €225 million (468 million)1)
• The first installment of the dividend for the year 2025 was paid in April, totaling €395 million
• Net debt was 3,313€ million at the end of June (3,310 million) and net debt to EBITDA ratio was 2.36 (2.12)1)

1) Operating cash, net debt and net debt to EBITDA ratio include continuing and discontinued operations.

UPM Plywood is presented as discontinued operations due to the proposed demerger

On April 29, 2026, the Board of Directors of UPM approved a demerger plan for the separation of the Plywood business into an independent listed company. As a result of the proposed demerger, the Plywood business is presented as a discontinued operation in accordance with IFRS 5. Unless otherwise stated, the commentary in this report relates to UPM's continuing operations. More information in Financial statement information Note 10 assets and liabilities classified as held for distribution to owners and discontinued operations.

Key figures, continuing operations

	Q2/2026	Q2/2025	Q1/2026	Q1-Q2/2026	Q1-Q2/2025	Q1-Q4/2025
Sales, € million	2,355	2,341	2,425	4,781	4,914	9,392
Comparable EBITDA, € million	356	250	375	732	659	1,254
% of sales	15.1	10.7	15.5	15.3	13.4	13.4
Operating profit (loss), € million	208	105	245	453	296	719
Comparable EBIT, € million	212	124	259	471	404	883
% of sales	9.0	5.3	10.7	9.8	8.2	9.4
Profit (loss) before tax, € million	182	83	226	409	249	660
Comparable profit before tax, € million	186	103	240	426	359	825
Profit (loss) for the period, € million	163	70	195	358	208	466
Comparable profit for the period, € million	163	87	203	366	305	684
Earnings per share (EPS), €	0.29	0.13	0.36	0.65	0.38	0.86
Comparable EPS, €	0.29	0.16	0.38	0.67	0.56	1.27
Return on capital employed (ROCE), %	5.9	3.2	7.2	6.6	4.2	5.4
Comparable ROCE, %	6.0	3.7	7.6	6.9	5.7	6.5
Capital employed at the end of period, € million	13,954	14,213	14,186	13,954	14,213	13,948
Personnel at the end of period	13,665	14,764	13,347	13,665	14,764	13,676

UPM presents certain measures of performance, financial position and cash flows, which are alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority (ESMA). The definitions of alternative performance measures are presented in UPM's » Annual Report 2025

Key figures, discontinued operations

The financial information presented for the discontinued operations is not representative of the historical or future profitability of the UPM Plywood business area as a standalone business. Information on UPM Plywood's performance is presented in the segment information.

	Q2/2026	Q2/2025	Q1/2026	Q1-Q2/2026	Q1-Q2/2025	Q1-Q4/2025
Sales, € million	84	59	80	164	132	264
Comparable EBITDA, € million	20	7	20	39	19	57
% of sales	23.3	11.9	24.8	24.0	14.8	21.5
Operating profit (loss), € million	9	2	10	20	9	30
Comparable EBIT, € million	18	2	15	33	9	38
% of sales	21.4	3.2	19.0	20.2	6.9	14.4
Profit (loss) before tax, € million	4	2	10	14	9	30
Comparable profit before tax, € million	18	2	15	33	9	38
Profit (loss) for the period, € million	3	1	5	9	7	24
Comparable profit for the period, € million	14	1	9	24	7	31
Return on capital employed (ROCE), %	21.7	3.9	22.0	21.9	9.8	16.4
Comparable ROCE, %	37.4	4.3	32.7	35.1	10.0	20.8
Capital employed at the end of period, € million	196	181	189	196	181	181
Personnel at the end of period	1,519	1,543	1,454	1,519	1,543	1,451

Key figures, UPM total

UPM total	Q2/2026	Q2/2025	Q1/2026	Q1-Q2/2026	Q1-Q2/2025	Q1-Q4/2025
Sales, € million	2,440	2,400	2,505	4,945	5,046	9,656
Comparable EBITDA, € million	376	257	395	771	678	1,311
% of sales	15.4	10.7	15.8	15.6	13.4	13.6
Operating profit (loss), € million	217	107	255	472	305	749
Comparable EBIT, € million	230	126	274	504	413	921
% of sales	9.4	5.2	10.9	10.2	8.2	9.5
Profit (loss) before tax, € million	186	85	236	422	258	690
Comparable profit before tax, € million	204	105	255	459	367	863
Profit (loss) for the period, € million	166	71	200	366	215	491
Comparable profit for the period, € million	177	89	213	390	312	714
Earnings per share (EPS), €	0.30	0.13	0.37	0.67	0.39	0.91
Comparable EPS, €	0.32	0.17	0.39	0.71	0.57	1.33
Return on equity (ROE), %	6.4	2.7	7.6	7.1	3.9	4.5
Comparable ROE, %	6.8	3.4	8.1	7.6	5.7	6.5
Return on capital employed (ROCE), %	6.1	3.2	7.4	6.8	4.3	5.5
Comparable ROCE, %	6.5	3.7	7.9	7.2	5.8	6.7
Operating cash flow, € million	136	179	89	225	468	1,405
Operating cash flow per share, €	0.26	0.34	0.17	0.43	0.88	2.66
Equity per share at the end of period, €	18.86	18.96	19.48	18.86	18.96	18.97
Capital employed at the end of period, € million	14,149	14,394	14,375	14,149	14,394	14,129
Net debt at the end of period, € million	3,313	3,310	2,962	3,313	3,310	3,004
Net debt to EBITDA (last 12 months)	2.36	2.12	2.30	2.36	2.12	2.29
Personnel at the end of period	15,184	16,307	14,801	15,184	16,307	15,127

Massimo Reynaudo, President and CEO, comments on the results:

"In the second quarter, we reached two important milestones in the transformation of UPM. We signed the definitive agreement to create the graphic paper joint venture with Sappi, and advanced the separation of the plywood business into the future WISA Group. Following these steps, UPM is positioned with stronger growth prospects and improved earnings quality.

During the quarter, all our businesses improved their results compared to the same period last year, with most also outperforming the previous quarter. Increased volumes, margin management and sustained efficiency measures supported our profitability in a business environment that turned inflationary.

In Q2, sales from our continuing operations were slightly up at €2,355 million, and comparable EBIT increased to €212 million, 71 percent higher than in the same period last year. Net debt at the end of the reporting period was €3,313 million, including both continuing and discontinued operations, and net debt to EBITDA ratio was 2.36.

In decarbonization solutions, UPM Biofuels recorded a strong quarter with good demand and healthy bio-premiums for advanced renewable fuels. Prices were further supported by higher fossil fuel reference prices. The ramp-up of our biorefinery in Leuna, Germany, continued. Customer deliveries of industrial sugars reached substantial volumes, and deliveries of renewable functional fillers and other lignin derivatives are expected to start during Q3. UPM Energy improved its results from last year, although the second quarter saw normal seasonality. Structurally, electricity consumption continued to grow year-on-year, and we are well positioned to create value by serving new large-scale consumers.

The markets for our advanced materials businesses, UPM Adhesive Materials and UPM Specialty Materials, showed robust growth in Europe and Asia. Both businesses succeeded in the markets, thanks to a focus on commercial excellence and product portfolio development, and sharpened competitiveness.

Our world-class pulp platform in Uruguay, UPM Fibres South, has consistently improved efficiency for several quarters in a row. In the second quarter, this helped us to fully offset the increases in logistics and other costs. Profitability was further improved by a moderate increase in pulp prices.

For the Fibres North platform in Finland, the business environment is challenging. Even though pulpwood prices have decreased, profitability remains low. The second quarter earnings were also impacted by the maintenance shutdown at the UPM Pietarsaari mill. We are planning temporary shutdowns of the UPM Kaukas pulp mill and potentially the UPM Pietarsaari pulp mill, to optimize production and wood sourcing, and ensure profitability.

UPM Communication Papers' business performance was broadly stable, with slightly improved margins. Preparations for the planned graphic paper Joint Venture continued. In late May we signed the definitive agreement with Sappi, and secured financing arrangements for the Joint Venture. The EU merger control process moved to Phase II, with final resolutions expected by the end of 2026.

UPM Plywood continued to perform well as the business prepared for separation into an independent listed company, WISA Group. In April, the Board of Directors approved the demerger plan. Subject to the decision of the Extraordinary General Meeting, trading in the shares of WISA Group on Nasdaq Helsinki is currently expected to commence in early November. By separating the plywood business onto its own growth path, we are strengthening its future prospects and streamlining UPM's business portfolio.

Following the planned graphic paper joint venture and plywood separation, UPM operates in structurally growing markets. The ongoing reshaping of UPM's portfolio highlights our position in businesses with stronger growth characteristics, and our direction going forward is towards higher value-added products and lower cyclicality."

Profit guidance, continuing operations

UPM's comparable EBIT in H2 2026 from continuing operations is expected to be approximately in the range of €375-575 million (€479 million in H2 2025, and €471 million in H1 2026). These figures exclude UPM Plywood, which is classified as discontinued operations.

Outlook

There continue to be significant uncertainties in geopolitics and trade.

In H2 2026, compared with H1 2026, UPM's performance is expected to be supported by moderately higher sales prices. Variable costs are expected to increase moderately. Energy refunds are expected to support UPM Communication Papers' result in Q4. Maintenance activity is expected to increase from the comparison period. The production ramp-up at UPM Leuna is expected to increase costs.

In H2 2026, compared with H2 2025, UPM's performance is expected to benefit from higher sales prices. Variable costs are expected to increase moderately. Fair value change of forest assets is expected to have a significantly smaller impact on comparable EBIT in H2 2026 than in H2 2025 (€131 million). The energy refunds to be booked in UPM Communication Papers in Q4 are anticipated to have a somewhat smaller positive impact than in 2025. Maintenance activity is expected to increase from the comparison period. The production ramp-up at UPM Leuna is expected to increase costs.

Sensitivity to pulp and electricity prices

UPM's comparable EBIT is sensitive to pulp and electricity prices. The figures below represent group earnings sensitivities on annual level.

UPM is a large producer and consumer of chemical pulp. A €50/tonne change in average pulp price would impact annual comparable EBIT by approximately €180 million (net impact: assuming no correlation between pulp and paper prices) to approximately €270 million (gross impact: assuming paper pricing would match changes in pulp costs).

UPM is a large producer and consumer of electricity in Finland and separately hedges part of its electricity sales and purchases. Based on UPM's estimated unhedged net electricity sales position in Finland in 2026, a €10/MWh change in average electricity market price in Finland would impact annual comparable EBIT by approximately €40 million.

Foreign exchange exposure

Fluctuations in monetary policies and economic conditions can significantly impact the value of various currencies, which in turn may affect UPM. Additionally, the escalation of global trade tensions could influence currency exchange rates. These currency fluctuations could impact UPM's cash flow, earnings, or balance sheet, and may also affect the relative competitiveness between different currency regions.

The Group's policy is to hedge an average of 50% of its estimated net currency cash flows on a rolling basis over the next 12-month period. At the end of Q2 2026, UPM's estimated net currency cash flows for the next 12 months totaled approximately €1.5 billion. USD was the largest exposure at approximately €1.4 billion, followed by UYU, GBP, CNY and JPY. In addition, the earnings of UPM's foreign subsidiaries are translated to euros in reporting. UPM has significant foreign subsidiaries in Uruguay, the U.S. and China. Foreign exchange risks are discussed in UPM's Annual Report 2025 on pages 313-314.