GROWTH BASED ON EFFICIENT PLATFORM Jussi Vanhanen President Engineered Materials Business Group
GROWTH BASED ON EFFICIENT PLATFORM
Jussi VanhanenPresident
Engineered Materials Business Group
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LABEL
Achievements in key targets
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1 Large scale platform is ready• Major investment programme completed in China, US, Poland 2007-08• European restructuring and profitability turn-around
2 Increasing focus on emerging markets• Acquisition of Brazilian labelstock coating and slitting operations• New slitting and distribution terminals in Russia, Turkey, India
and Latin America
3 Product renewal• Introduction of new tailored solutions and speciality products• Speciality label production line in the US• Acquisition of the business operations of Gascogne Laminates Switzerland SA• Fit-for-purpose material constructions and improved utilisation of recycling
opportunities
4 Further growth opportunities• Seeking possibilities for future growth through organic growth and M&A• New product development towards more specialised applications
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UPM RaflatacAvery Dennison
Other competitors
Other main competitor
US & Canada
Latin America
Europe
Sub-Saharan Africa
South of Asia
South EastAsia
Greater China
Japan & Korea
Oceania
Sources: UPM Raflatac estimates, FINAT, TLMI
Asia including only high & medium quality segment
7-9%
~2%~3%
15-20%
12-15%1-2%
3-5%
10-12%
2-4%
2001-2011 annual growth estimations:
LABEL Labelstock is a ~6 bn EUR growing business globally, UPM has the #2 position in most markets
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LABEL
Consistent growth
4
0
300
600
900
1 200UPM Raflatac salesEURm
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Scarborough UK
Barcelona, Spain
Mills River, NC
Dixon, IL
Johor, Malaysia
Changshu, China
Durban,South Africa
Tampere, Finland
Nancy, France
Melbourne, Australia
Wroclaw, Poland
Rio de Janeiro, Brazil
Factory
Terminal
Fletcher, NC
LABEL
UPM Raflatac global operating platform
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0
20
40
60
80
100
120
2003 2004 2005 2006 2007 2008 2009 2010 2011
LABEL
On the back of the investments in 2006-08, the business can be developed with low capex
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Capital expenditure and depreciationEURm
Capex
Depreciation
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LABEL
Wroclaw factory in Poland – start-up 2008
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LABEL
Growth in emerging markets
8
0
50
100
150
200
250
300
350
400
450
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Emerging markets
14% 12%
CAGR 01-11 07-11
Maturemarkets
4% 2%
Sales (indexed)
2001 = 100
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LABEL
A wealth of end-use areas offers growth potential in tailored solutions
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Tyre labelling
Wine labelling
Securitylabelling
Logistics & Transport labelling
Oil & Industrial Chemical labelling
Foodlabelling
Beveragelabelling
Home & personal carelabelling
Pharmaceutical labelling
Retaillabelling
A4 &Cut-sizelabelling
Durableslabelling
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LABEL
Mastering product complexity deriving out of customers' specialized needs is key to a profitable labelstock operation
10
Volume Added value # of products # of products
Standard
Specials
TAILORED:Products engineered or modified for customer's specific needs
END-USE:Products for specific end-use needs, e.g. pharma, security
MENU:Customer chooses face/adhesive/backing combinations
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LABEL
In mature markets, UPM seeks growth in higher value added special products
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Higher value-added products
8% 4%
CAGR 01-11 07-11
Standard products
3% 1%
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sales in mature markets (indexed)
2001 = 100
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LABEL
New special products production line in the US – start-up 2012
12
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LABEL
RafCycle – maximising the reuse of raw materials and minimising the amount of waste paper
UPM’s RafCycle waste management concept gives a second life to self-adhesive labelby-products that would otherwise be incinerated or landfilled.
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LABEL
Summary
• Label will continue to grow in emerging markets and in special products with relatively low investments
• Product renewal and value chain development support the long term growth targets
• Complementary acquisitions can speed the development
14 | © UPM