Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

Risk Reward – UPM-Kymmene Oyj (UPM.HE)

KEY EARNINGS INPUTS

Drivers Dec 2025 Dec 2026e Dec 2027e Dec 2028e

Pulp sales volume (Kt) 5,163 5,394 5,611 5,736

Speciality volumes (Kt) 1,398 1,464 1,480 1,520

Communication papers volumes (kt) 2,894 2,736 2,543 2,443

Northern Bleached Softwood Kraft

1,524 1,615 1,643 1,669

price ($/t)

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

Pulp prices RISKS TO UPSIDE FY Dec 2026e

Graphic paper demand A faster- or stronger-than-expected rebound in 1.35 Graphic paper prices pulp prices. EPS

EUR:USD exchange rates Deeper declines in Nordic wood prices or (€) 1.29 1.84

1.55 greater efficiency gains at Paso de los Toros.

GLOBAL REVENUE EXPOSURE Earlier-than-expected EBIT breakeven at Leuna.

Mean Morgan Stanley Estimates

0-10% Latin America RISKS TO DOWNSIDE Source: Refinitiv, Morgan Stanley Research

0-10% North America Sustained soft pulp prices would erode Fibres

0-10% UK profitability and delay cash flow recovery.

10-20% Mainland China An accelerated decline in graphic paper

60-70% Europe ex UK demand would weigh on margins.

Further delays or cost overruns at Leuna.

Source: Morgan Stanley Research Estimate

View explanation of regional hierarchies here

OWNERSHIP POSITIONING

MS ALPHA MODELS Inst. Owners, % Active 60.6%

HF Sector Long/Short Ratio 1.4x

3/5 3 Month

MOST Horizon HF Sector Net Exposure 2.1%

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is Refinitiv; MSPB Content. Includes certain hedge fund

the highest favored Quintile and 5 is the least favored exposures held with MSPB. Information may be

Quintile inconsistent with or may not reflect broader market

trends. Long/Short Ratio = Long Exposure / Short

exposure. Sector % of Total Net Exposure = (For a