UPM-KYMMENE / UPM-KYMMENE ADR : Unlocking Profit Momentum

Research evidence excerpt

UPM-KYMMENE / UPM-KYMMENE ADR : Unlocking Profit Momentum

EQUITIES

PAPER & PACKAGING

UPM­KYMMENE OUTPERFORMPRICE* EUR25.3  TARGET PRICE EUR30 (UPSIDE 19%)

UPM­KYMMENE ADR OUTPERFORMPRICE* USD29.0  TARGET PRICE USD35 (UPSIDE 21%)

Unlocking Profit Momentum

We see a transformation of UPM’s growth profile ahead. On the one hand, lower-growth businesses9 JUNE 2026

Securities Research Report will be shed through the JV in communication paper with Sappi and the spin-off of the plywood

Production time: 16:46* (London time)

business. On the other hand, we expect organic growth to be driven by: 1) lower cash costs in the

Research Analysts & Publishing Entities

pulp business, 2) ramp-up of the biofuels / biochemicals business, and 3) strong demand in the

Francisco Ruiz Finnish energy market. Our DCF-based TP points to EUR30 (~20% upside); the disposals could addBNP Paribas SA

(+34) 91 114 83 06 EUR4 to our TP. We initiate coverage of UPM with an Outperform rating, our Top Pick in the sector.

francisco.ruizmartin@bnpparibas.com

On a path towards accelerating growth

The upcoming spin-off of the plywood business and JV with Sappi will improve UPM’s growth profile.

Even excluding this scope impact, lower wood costs in the Finnish pulp operations (50% of

purchased wood) combined with vertical integration of new assets in Uruguay, stronger energy

demand in Finland (driven by data centres) and the ramp-up of the biofuels and biochemicals

business (currently in the red), should support an ~17% EBIT CAGR 2026-28, which, excl.

communication paper and plywood, could rise to ~19%. Our forecasts are MSD to HSD above cons.

JV with Sappi and Plywood spin-off should be positive catalysts

H2’26 will likely be event-rich for UPM. The plywood spin-off is expected in October, and the