UPM-Kymmene Business Model Canvas

UPM-Kymmene, deeply invested in energy-intensive manufacturing, cultivates key partnerships with energy and utility providers. These alliances are crucial for ensuring a stable and economically viable power supply, especially as the company navigates the transition to more sustainable energy sources. For instance, UPM has been actively exploring collaborations with renewable energy providers to diversify its energy portfolio.

A significant aspect of these partnerships involves securing access to both traditional and green energy. UPM's commitment to sustainability is evident in its own initiatives, such as UPM Energy's exploration of wind and solar power projects on company-owned land. This strategic move not only aims to enhance self-sufficiency but also to forge deeper partnerships within the green energy sector, aligning with global decarbonization trends.

• Renewable Energy Sourcing: Partnerships with providers of wind, solar, and other renewable energy sources to reduce carbon footprint and secure long-term energy supply.
• Energy Infrastructure Development: Collaborations on developing and upgrading energy infrastructure to support UPM's large-scale industrial operations.
• Cost Optimization: Joint efforts to negotiate favorable energy pricing and explore innovative energy management solutions to control operational costs.
• Energy Security: Establishing reliable energy supply agreements with major utility companies to mitigate risks associated with power outages and price volatility.

UPM actively collaborates with key industry associations and sustainability organizations. These partnerships are vital for maintaining UPM's strong commitment to responsible and sustainable forestry and business operations.

Collaborations with bodies like the Confederation of Finnish Industries and various European forest industry associations help shape industry standards and advocate for sustainable policies. For instance, UPM is a member of the World Business Council for Sustainable Development (WBCSD), engaging in dialogues on global sustainability challenges.

Working with non-governmental organizations (NGOs) and adhering to certification schemes such as the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC) is crucial. In 2023, UPM reported that approximately 90% of its wood raw material was sourced from certified forests, underscoring the importance of these partnerships in validating its environmental credentials.

• Industry Association Engagement: UPM participates in numerous national and international industry groups to influence best practices and policy.
• NGO Collaboration: Partnerships with environmental NGOs help UPM address concerns and improve its sustainability performance.
• Certification Schemes: Adherence to FSC and PEFC standards, with over 90% of wood certified in 2023, reinforces UPM's commitment to responsible sourcing.
• ESG Reputation: These collaborations significantly bolster UPM's reputation as a leader in environmental, social, and governance (ESG) performance within the forest industry.

UPM's skilled human capital is the bedrock of its success, encompassing a diverse range of expertise from forest management to advanced material science. This talent pool is crucial for navigating the complexities of the bioindustry, from sustainable forestry practices to the development of innovative biobased products.

The company's workforce includes specialized roles such as foresters who manage vast forest resources, engineers who design and optimize production processes, scientists driving research and development, and sales professionals building strong customer ties. Their collective knowledge ensures operational excellence and fuels UPM's strategic growth.

• Skilled Workforce: UPM employs approximately 17,600 people globally as of its 2023 annual report, a testament to its significant human capital investment.
• Expertise Areas: The workforce possesses deep knowledge in forestry, bioenergy, pulp and paper manufacturing, biochemicals, and advanced materials.
• Innovation Drivers: Scientists and R&D professionals are key to developing new biobased solutions, contributing to UPM's commitment to sustainability and circular economy principles.
• Customer Relations: Experienced sales and marketing teams are vital for understanding market needs and fostering long-term relationships with a diverse customer base across various industries.

UPM-Kymmene's access to substantial financial resources, including robust cash reserves and established credit lines, is fundamental for maintaining its extensive operations and pursuing strategic growth initiatives. This financial strength is crucial for funding capital expenditures, research and development, and potential mergers or acquisitions that align with its long-term vision.

A strong balance sheet underpins UPM's ability to navigate economic fluctuations and market volatility, ensuring operational continuity and the capacity to seize investment opportunities. For instance, UPM reported a strong financial performance in 2023, with an operating profit of €1,212 million, demonstrating its financial resilience.

• Financial Strength: UPM's solid financial standing provides the necessary capital for daily operations and strategic investments.
• Growth and Resilience: A healthy balance sheet supports long-term growth ambitions and enhances the company's ability to withstand market downturns.
• Investment Capacity: Significant financial resources enable UPM to invest in new technologies, sustainable solutions, and potential acquisitions.
• Operational Funding: Access to cash and credit facilities ensures the smooth running of its global operations and supply chains.

UPM-Kymmene leverages digital platforms and e-commerce to enhance customer relationships by offering streamlined order placement and tracking through online portals. This digital approach, while reducing direct personal interaction, significantly boosts accessibility for a wider customer base, simplifying routine transactions and providing efficient information access.

These digital channels are crucial for managing a large volume of interactions, allowing UPM-Kymmene to serve diverse customer needs efficiently. For instance, in 2024, the company continued to invest in its e-commerce capabilities, aiming to capture a larger share of the online B2B transactions within the forest industry.

• Online Portal Functionality: Customers can place orders, track shipments, and access product information 24/7, improving convenience.
• Efficiency Gains: Digital platforms automate many processes, reducing administrative overhead and speeding up transaction times.
• Broader Reach: E-commerce enables UPM-Kymmene to connect with customers who prefer or require digital engagement, expanding market penetration.
• Data-Driven Insights: Online interactions provide valuable data for understanding customer behavior and preferences, informing service improvements.

UPM actively engages in industry events like trade shows and conferences to foster direct connections with its customer base. These platforms are crucial for showcasing new product developments and understanding evolving market needs. For instance, in 2023, UPM highlighted its sustainable packaging solutions at major European paper and packaging exhibitions, leading to increased inquiries and partnership discussions.

These engagements are vital for building brand visibility and establishing UPM as a thought leader in its specialized sectors. The company leverages these opportunities to network effectively, not just with clients but also with potential collaborators and industry influencers. Such strategic participation reinforces UPM's commitment to innovation and customer-centricity.

• Industry Event Presence: UPM participates in key global trade shows and conferences to connect with customers and showcase innovations.
• Market Insight Gathering: Events provide valuable opportunities to collect direct feedback and understand market trends.
• Brand Awareness & Networking: Participation enhances brand recognition and facilitates crucial industry relationships.
• Customer Engagement: UPM uses these platforms to directly interact with existing and potential clients, driving business development.

Energy and fuel distributors represent a crucial emerging customer segment for UPM-Kymmene, particularly those focused on renewable fuels. This includes companies distributing biofuels like UPM's advanced diesel and, significantly, Sustainable Aviation Fuel (SAF).

The demand for SAF is a major growth driver, with the aviation industry actively seeking sustainable alternatives to reduce its carbon footprint. UPM's biorefining capabilities position it to supply this critical market. For instance, in 2024, the global SAF market was projected to reach over $10 billion, with significant growth expected in the coming years as airlines commit to decarbonization targets.

• Key Focus: Sustainable Aviation Fuel (SAF) - This segment is increasingly prioritizing the adoption of SAF to meet environmental regulations and corporate sustainability goals.
• Market Growth: The SAF market is experiencing rapid expansion, driven by airline commitments and government mandates aimed at reducing aviation emissions.
• UPM's Role: UPM's biorefining expertise allows it to produce advanced biofuels, including SAF, which are essential for this customer segment.

Chemical and bio-based material manufacturers represent a crucial new customer segment for UPM as it ventures into biochemicals. These companies are actively seeking sustainable, bio-based alternatives to traditional fossil fuel-derived materials for a wide array of applications.

This demand spans industries such as textiles, where bio-based fibers are gaining traction, and pharmaceuticals, which are exploring greener chemical building blocks. UPM's Leuna biorefinery is specifically designed to cater to this growing market, offering innovative solutions that align with the industry's push towards a circular economy.

For instance, in 2024, the global market for bio-based chemicals is projected to reach significant growth, driven by increasing environmental regulations and consumer preference for sustainable products. UPM's strategy directly addresses this by providing materials that reduce carbon footprints and support the transition away from petrochemicals.

• Target Market: Chemical and bio-based material manufacturers seeking sustainable alternatives.
• Application Areas: Textiles, pharmaceuticals, and other industries requiring bio-based inputs.
• UPM's Role: Supplying innovative biochemicals from its Leuna biorefinery.
• Market Trend: Growing demand for bio-based chemicals driven by sustainability initiatives and regulations.

Sales of advanced renewable fuels, such as UPM BioVerno diesel and sustainable aviation fuel, represent a growing and significant revenue stream for UPM-Kymmene. These bio-based products are derived from wood biomass, offering a sustainable alternative to fossil fuels.

The upcoming commercial production at the Leuna biorefinery is poised to substantially boost this revenue segment. This expansion underscores the company's commitment to scaling up its biofuel and biochemical offerings.

• UPM BioVerno diesel: A renewable diesel produced from tall oil, a residue from the pulp production process.
• Sustainable Aviation Fuel (SAF): UPM is developing SAF from its biorefining technologies, targeting the aviation industry's decarbonization efforts.
• Bio-based chemicals: The company also produces various bio-based chemicals, diversifying its product portfolio and revenue sources.
• Leuna Biorefinery: This facility is a key element in UPM's strategy to increase its output of renewable fuels and chemicals, contributing significantly to future revenue growth.

UPM generates revenue from selling advanced materials, notably self-adhesive label materials through its UPM Adhesive Materials division, formerly known as UPM Raflatac. This segment is a key growth driver for the company, focusing on high-value-added products.

In 2023, UPM's Adhesive Materials segment reported net sales of €1,388 million, showcasing the significant contribution of these specialized products to the company's overall revenue. This highlights the strategic importance of engineered materials within UPM's business model.

• Revenue Source: Sales of self-adhesive label materials and other engineered products.
• Segment Focus: UPM Adhesive Materials (formerly UPM Raflatac) is a dedicated business area for these advanced materials.
• Growth Area: Identified by UPM as a strategic segment for future expansion and revenue generation.
• 2023 Performance: The Adhesive Materials segment achieved net sales of €1,388 million in 2023.