Revenue and earnings growth continued JANUARY-SEPTEMBER 2018

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1 JARI ROSENDAL, PRESIDENT AND CEO PETRI CASTRÉN, CFO OCTOBER 24, 2018 Revenue and earnings growth continued JANUARY-SEPTEMBER 2018

2 Key financial highlights Q Organic growth +9% Growth continued driven by higher sales prices Especially Oil & Gas was robust in seasonally strong Q3 Global megatrends favor Kemira Operative EBITDA +5% Passing on variable cost increases continues Profitability diluted by higher raw material prices and the start-up phase of oil sands and Chemical Enhanced Oil Recovery (CEOR) businesses Earnings per share +12% EUR million (except ratios) Q Q Δ% FY 2017 Revenue ,486.0 Operative EBITDA of which margin 13.3% 13.6% % Operative EBIT of which margin 7.5% 7.7% - 6.9% Net profit EPS, EUR OCT OBER 24, 2018 Q RESULT S 2

3 Pulp & Paper good organic growth, profitability impacted by currencies Organic growth +6% in the first nine months Higher sales prices main contributor to organic growth Good volume growth in bleaching and sizing Operative EBITDA Sales price increases have started to compensate higher raw material prices Currencies were main headwind, impacted EBITDA by EUR -10 million YTD vs prior year China AKD JV/acquisition Kemira agreed in Q to form joint venture with Tiancheng Closing expected by the year end REVENUE EUR million 1,104 1,130 9M M 2018 OPERATIVE EBITDA AND EBITDA-% EUR million % 12.4% 9M M 2018 OCT OBER 24, 2018 Q RESULT S 3

4 Industry & Water profitable growth in water treatment and oil & gas Organic growth +12% YTD Performance driven mainly by Oil & Gas Also water treatment demonstrated sales price and volume growth Operative EBITDA increased EBITDA improvement driven mainly by higher sales prices Currency impact EUR -7 million vs 9M 2017 Update on Venator in Pori, Finland During Q3 Venator announced they will close their Pori TiO2 facility by 2021 Venator is Kemira s supplier and customer Insurance coverage has been consumed REVENUE EUR million M M 2018 OPERATIVE EBITDA AND EBITDA-% EUR million % % 9M M 2018 OCT OBER 24, 2018 Q RESULT S 4

5 Global megatrends favor Kemira GROWING MIDDLE CLASS & URBANIZATION SCARCITY OF RESOURCES REGULATION Higher use of water, energy, tissue and board E-commerce / online shopping Alternative materials for single-use plastic products Material and resource efficiency More stringent discharge limits Safe drinking water OCT OBER 24, 2018 Q RESULT S 5

6 Global trends favor Pulp & Paper capacity additions in bleaching chemicals Pulp, board and tissue markets Growth driven by e-commerce and growing middle class in APAC Above mentioned trends have fueled growth in pulp bleaching, Kemira s CAGR +6% since 2014 Bleaching chemical capacity additions During 2018, we have done debottlenecking in Finland In Q3 announced decision to direct bleaching chemical capacity to pulp customers resulting in closure of sodium percarbonate production line in Sweden by the year end OCT OBER 24, 2018 Q RESULT S 6

7 Global regulation trends favorable to demand of water treatment chemicals Water reuse More stringent discharge limits Increasing demand for water treatment chemicals Better dewatering of sludge and phosphorus recovery Emerging contaminants (pharma, microplastics) OCT OBER 24, 2018 Q RESULT S 7

8 Outlook for 2018 Kemira expects its operative EBITDA to increase from the prior year (2017: EUR million). EUR million Operative EBITDA M M outlook Increase OCT OBER 24, 2018 Q RESULT S 8

9 PETRI CASTRÉN, CFO OCTOBER 24, 2018 Financials Q OCT OBER 24, 2018 Q RESULT S 9

10 Organic growth continued Q Group s organic growth +9% Pulp & Paper +7%, Industry & Water +11% Operative EBITDA +5%, margin 13.3% Good growth in absolute EBITDA, profitability diluted by new growth areas in Oil & Gas REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million % +7% -1% 0% 670 Earnings per share up by 12% Improvement driven by higher EBITDA Q included EUR -14 million items affecting comparability (prior year also EUR -14 million) Consists of write-downs and restructuring costs, mainly reallocation of hydrogen peroxide and related closure of sodium percarbonate production line OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million % 13.4% 13.6% 11.7% 11.3% 12.5% 13.6% 12.7% 13.3% 12.4% 11.3% Q Sales volumes Sales prices Currency impact Acquisitions Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q OCT OBER 24, 2018 Q RESULT S 10

11 Net impact of sales price & variable costs positive SALES PRICE VS VARIABLE COST TREND SALES PRICES AND VARIABLE COSTS (CHANGE Y-O-Y) Brent oil, USD Sales prices* Variable costs* Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Net impact on EBITDA (sales prices-variable costs) Sales prices Variable costs * 12-month rolling change vs previous year in EUR million OCT OBER 24, 2018 Q RESULT S 11

12 Pulp & Paper strong growth throughout the year Organic growth continued sales volumes grew 3% driven by bleaching and sizing chemicals Sales prices increasing and also slightly inflated by caustic soda market price We need to continue sales price increases to offset continuously increasing raw material prices APAC improved profitability mainly due to higher sales prices and better availability of key raw materials REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million % 13.7% 14.2% 12.6% 12.4% 13.0% 13.4% 14.9% 13.6% % 12.1% % +1% -4% -2% 0% +1% +2% +5% +5% +6% +7% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q OCT OBER 24, 2018 Q RESULT S 12

13 Industry & Water strong growth continued Growth driven by sales prices and seasonally high deliveries to Canadian oil sands Profitability diluted by higher raw material prices and the start-up phase of oil sands and Chemical Enhanced Oil Recovery (CEOR) businesses Oil & Gas +28% to EUR 73 million, volume growth decelerating REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million 13.1% 13.9% 12.5% 12.8% 12.9% 11.3% 11.8% 10.4% 9.6% 9.6% 10.9% % -5% -5% 0% +6% +9% +15% +20% +11% +14% +11% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q OCT OBER 24, 2018 Q RESULT S 13

14 Development of selected key figures ALL KEY FIGURES IN EUR MILLION EXCEPT RATIOS CASH FLOW FROM OPERATIONS M M 2018 OPERATIVE RETURN ON CAPITAL EMPLOYED 9.8% 9.9% 9.7% 9.8% 9.2% CAPITAL EXPENDITURE EXCL. ACQUISITIONS Growth capex M M 2018 NET DEBT AND LEVERAGE RATIO M M M M 2018 OCT OBER 24, 2018 Q RESULT S 14

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16 JANUARY-SEPTEMBER 2018 Appendix OCT OBER 24, 2018 Q RESULT S 16

17 Kemira in brief FY2017: REVENUE EUR 2,486 MILLION, OPERATIVE EBITDA EUR 311 MILLION, OPERATIVE EBITDA MARGIN 12.5%, OPERATIVE ROCE 9.7% SEGMENT SPLIT GEOGRAPHIES PRODUCTS 41% Industry & Water #1 in water treatment in NA and Europe #2 in friction reduction in North American shale oil & gas 59% Pulp & Paper #1 globally 39% AMERICAS 1.USA 2.Canada 3.Brazil 9% APAC 1.China 2.South Korea 3.Indonesia 52% EMEA 1.Finland 2.Sweden 3.Germany 20% Other: e.g. defoamers, dispersants, and biocides 15% Sizing and strength 20% Polymers Revenue by product category rounded to the nearest 5% 25% Bleaching and pulping 20% Coagulants CUSTOMERS 2,000 customers TOP 10 customers are ~25% of revenue TOP 50 customers are ~45% of revenue EXAMPLES OF LARGEST CUSTOMERS Municipalities, e.g. Frankfurt, London, New York, Paris, Shanghai, Singapore OCT OBER 24, 2018 Q RESULT S 17

18 Pulp & Paper market leader with solid track record REVENUE AND OPERATIVE EBITDA REVENUE BY CUSTOMER TYPE AND MARKET GROWTH REVENUE BY PRODUCT CATEGORY 1,417 1,457 1,477 1,068 1, % Pulp Market growth 1-2% 40% Board & tissue 2-3% 20% Printing & writing papers -1-2% 10% Other 10% Polymers 20% Defoamers, dispersants, biocides and other process chemicals 35% Bleaching & pulping 25% Sizing & strength MARKET ENVIRONMENT Kemira (pulp and paper) m.s. ~16% #1 BASF (paper) #2 Solenis (paper) #3 AkzoNobel (pulp) #4 Ecolab (paper) #5 REVENUE BY GEOGRAPHIES AND MARKET GROWTH BY REGION 50% EMEA Market growth 0-1% 35% 15% APAC Americas 0-1% 2-3% CUSTOMER EXAMPLES Note: Revenue by industry, product and geography rounded to the nearest 5% OCT OBER 24, 2018 Q RESULT S 18

19 Industry & Water strong positions in chosen categories REVENUE AND OPERATIVE EBITDA ROLLING 12 MONTHS ,009 1,016 1,040 1, Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 WATER TREATMENT Market share ~30% in coagulants and ~20% in polymers MARKET ENVIRONMENT Main competitors in coagulants: Feralco (Europe) Kronos (Europe) Chemtrade (US) USAlco (US) OIL & GAS Market share ~25% in polymers used in shale oil & gas Main peers in polymers (also in water treatment): SNF BASF Solenis Solvay (only O&G) REVENUE BY APPLICATION TYPE AND MARKET GROWTH 70% Water treatment Municipal Market growth 2-3% 5-6% REVENUE BY GEOGRAPHIES AND MARKET GROWTH BY REGION 50% EMEA Market growth 3-4% Industrial 45% Americas 20% Oil & Gas 3-4% 10% Other 2-3% 5% APAC 5-6% REVENUE BY PRODUCT CATEGORY 20% Other products such as defoamers and biocides 40% Polymers CUSTOMER EXAMPLES MUNICIPAL (40%), customer examples Amsterdam Barcelona Frankfurt London Oslo Paris Stockholm Los Angeles Montreal New York City Toronto Melbourne Shanghai Singapore 40% Coagulants INDUSTRIAL (60%), customer examples Note: Revenue by industry, product and geography rounded to the nearest 5% OCT OBER 24, 2018 Q RESULT S 19

20 Delivering profitable growth REVENUE EUR million OPERATIVE EBITDA OPERATIVE EBITDA MARGIN EUR million 2,373 2,363 2, ,229 2, % 11.3% 11.8% 12.1% 12.5% OCT OBER 24, 2018 Q RESULT S 20

21 Kemira offers stable and competitive dividend Cash flow from operations has been partly invested into future growth and partly distributed to shareholders as dividends Kemira has paid dividend every year since listing of shares in 1994 Kemira offers attractive dividend yield Dividend per share Growth investments per share Dividend yield % 4.5% 4.4% 5.4% 4.9% 4.4% 4.6% Kemira s dividend yield calculated using the share price at year-end OCT OBER 24, 2018 Q RESULT S 21

22 Key figures EUR million Q Q Δ% Δ% Δ% Revenue , , , , Operative EBITDA margin 13.3% 13.6% % 12.5% % 12.8% - Operative EBIT margin 7.5% 7.7% - 6.7% 6.8% - 6.9% 7.2% - Net profit Earnings per share, EUR Cash flow from operations Capex excl. acquisitions Net debt NWC ratio 9.8% 9.4% - 9.8% 9.4% - 9.4% 10.2% - Operative ROCE (rolling 12 months), % 9.8% 9.2% - 9.8% 9.2% - 9.7% 9.9% - Personnel at period-end 4,798 4, ,798 4, ,732 4,818-2 OCT OBER 24, 2018 Q RESULT S 22

23 Currencies Currency exchange rates had EUR -74 million impact on revenue and EUR -17 million impact on the operative EBITDA in Jan-Sep 2018 compared to Jan-Sep 2017 Guidance: 10% change in our main foreign currencies would approximately have EUR 15 million impact on operative EBITDA on an annualized basis KEMIRA REVENUE DISTRIBUTION YTD 2018 KEMIRA COST DISTRIBUTION YTD % Others 2 % BRL 44 % EUR 9 % Others 44 % EUR 2 % SEK 5 % CNY 3 % CNY 5 % CAD 4 % CAD 7 % SEK 36 % USD 30 % USD OCT OBER 24, 2018 Q RESULT S 23

24 Pulp & Paper KEY FINANCIALS EUR million Q Q Δ% Δ% Δ% Revenue , , , , Operative EBITDA margin 13.6% 13.4% % 12.9% % 13.4% - Operative EBIT margin 6.9% 6.7% - 6.0% 6.7% - 7.1% 7.7% - Operative ROCE*, % 8.5% 8.5% - 8.5% 8.5% - 9.0% 10.0% - Capital expenditure Cash flow after investing activities *12-month rolling average OCT OBER 24, 2018 Q RESULT S 24

25 Industry & Water KEY FINANCIALS EUR million Q Q Δ% Δ% Δ% Revenue , Operative EBITDA margin 12.9% 13.9% % 11.8% % 11.8% - Operative EBIT margin 8.2% 9.0% - 7.7% 7.0% - 6.5% 6.5% - Operative ROCE*, % 12.5% 10.6% % 10.6% % 9.7% - Capital expenditure Cash flow after investing activities *12-month rolling average OCT OBER 24, 2018 Q RESULT S 25

26 Cash flow EUR million Q Q Net profit for the period Total adjustments Change in net working capital Finance expenses Income taxes paid Net cash gen. from operating activities Purchases of subsidiaries and acquisit Capital expenditure Proceeds from sale of assets Change in long-term loan receivables Cash flow after investing activities OCT OBER 24, 2018 Q RESULT S 26

27 Revenue split by country FY 2017 Other APAC 4% South Korea 1% China 4% Other EMEA 9% Norway 2% Netherlands 2% France 2% Italy 2% Russia 2% Spain 2% UK 3% Poland 3% Germany 5% Sweden 6% USA 27% Canada 6% Brazil 3% Uruguay 2% Other Americas 1% Finland 14% OCT OBER 24, 2018 Q RESULT S 27

28 Important information about financial figures Kemira provides certain financial performance measures (alternative performance measures) on non-gaap basis. Kemira believes that alternative performance measures, such as organic growth*, EBITDA, operative EBITDA, cash flow after investing activities, and gearing followed by capital markets and Kemira management, provide useful information of its comparable business performance and financial position. Selected alternative performance measures are also used as performance criteria in remuneration. Kemira s alternative performance measures should not be viewed in isolation to the equivalent IFRS measures and alternative performance measures should be read in conjunction with the most directly comparable IFRS measures. Definitions of the alternative performance measures can be found in the Definitions of the key figures in this report, as well as at > Investors > Financial information. All the figures in this interim report have been individually rounded and consequently the sum of individual figures may deviate slightly from the sum figure presented. * Revenue growth in local currencies, excluding acquisitions and divestments OCT OBER 24, 2018 Q RESULT S 28

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