Strong organic growth and solid results

Transcription

1 FEBRUARY 8, 2019 Strong organic growth and solid results INVESTOR PRESENTATION

2 Kemira in brief FY2018: REVENUE EUR 2,593 MILLION, OPERATIVE EBITDA EUR 323 MILLION, OPERATIVE EBITDA MARGIN 12.5%, OPERATIVE ROCE 9.8% 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 #2 globally 39% AMERICAS 1.USA 2.Canada 3.Brazil 9% APAC 1.China 2.South Korea 3.Thailand 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 Several thousand customers TOP 10 customers are ~25% of revenue TOP 50 customers are ~50% of revenue EXAMPLES OF LARGEST CUSTOMERS Municipalities, e.g. Frankfurt, London, New York, Paris, Shanghai, Singapore FEBRUARY 2019 INVEST OR PRESENT AT ION 2

3 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 FEBRUARY 2019 INVEST OR PRESENT AT ION 3

4 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 Q announced decision to direct bleaching chemical capacity to pulp customers resulting in closure of sodium percarbonate production line in Sweden by the year end FEBRUARY 2019 INVEST OR PRESENT AT ION 4

5 Regulation trends favorable to demand of water treatment chemicals More efficient implementation More stringent discharge limits Emerging contaminants (pharma, microplastics) Better dewatering of sludge and phosphorus recovery Increased demand for water treatment chemicals Water reuse Stormwater Overflows FEBRUARY 2019 INVEST OR PRESENT AT ION 5

6 Delivering profitable growth REVENUE EUR million OPERATIVE EBITDA OPERATIVE EBITDA MARGIN EUR million 2,373 2,363 2,486 2, ,229 2, % 11.8% 12.1% 12.8% 12.5% 12.5% F E B R U A R Y INVEST OR PRESENT AT ION 6

7 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 1,520 1, % Pulp Market growth 1-2% 40% Board & tissue 2-3% 20% Printing & writing papers -1-2% 5% Other 10% Polymers 20% Defoamers, dispersants, biocides and other process chemicals 40% Bleaching & pulping 25% Sizing & strength MARKET ENVIRONMENT Solenis (paper)* #1 Kemira (pulp and paper) m.s. ~16% #2 Nouryon (pulp) #3 Ecolab (paper) #4 Kurita (paper) #5 * Solenis-BASF combined entity REVENUE BY GEOGRAPHIES AND MARKET GROWTH BY REGION 55% EMEA Market growth 1% 30% Americas 0-1% 15% APAC 2-3% CUSTOMER EXAMPLES Note: Revenue by industry, product and geography rounded to the nearest 5% F E B R U A R Y INVEST OR PRESENT AT ION 7

8 Industry & Water strong positions in chosen categories REVENUE AND OPERATIVE EBITDA ROLLING 12 MONTHS REVENUE BY APPLICATION TYPE AND MARKET GROWTH REVENUE BY PRODUCT CATEGORY ,009 1,016 1,040 1,065 1, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q % Water treatment Municipal Market growth 2-3% Industrial 25% Oil & Gas 5-6% 10% Other 2-3% 20% Other products such as defoamers and biocides 40% Polymers 40% Coagulants MARKET ENVIRONMENT WATER TREATMENT Market share ~30% in coagulants and ~20% in polymers Main competitors in coagulants: Feralco (Europe) Kronos (Europe) Chemtrade (NA) USAlco (NA) OIL & GAS Market share ~25% in polymers used in shale oil & gas Main peers in polymers (also in water treatment): SNF Solenis Solvay (only O&G) REVENUE BY GEOGRAPHIES AND MARKET GROWTH BY REGION 50% EMEA Market growth 3-4% 45% Americas 3-4% 5% APAC 5-6% CUSTOMER EXAMPLES MUNICIPAL (40%), customer examples Amsterdam Barcelona Frankfurt London Oslo Paris Stockholm Los Angeles Montreal New York City Toronto Melbourne Shanghai Singapore INDUSTRIAL (60%), customer examples Note: Revenue by industry, product and geography rounded to the nearest 5% F E B R U A R Y INVEST OR PRESENT AT ION 8

9 Kemira s mid- to long-term financial targets FINANCIAL TARGETS AND HISTORICAL FIGURES Targets IFRS 16 impact Mid- to long-term target Revenue EUR 2,486 million Change +5% EUR 2,593 million Change +4% - Above-the-market growth Operative EBITDA* 12.5% 12.5% Around +1 %-point 15-17% Gearing* 59% 62% Around +10 %-points Below 75% * Targets updated in February 2019 due to IFRS 16 accounting change figures are PRE IFRS 16. KEY FACTORS TO WATCH FOR PROFITABILITY IMPROVEMENT Factors FY 2018 comments Organic growth through volume and sales price increases Group s organic growth +7% Oil & Gas becoming larger share of Group (incl. shale, CEOR and oil sands) Revenue from EUR 126m in 2016 to EUR 242m in 2018 Sales price vs raw material price development Capex projects Polymer capacity expansion in Netherlands, AKD Joint Venture in China, Polymer capacity expansion in the US Raw material inflation in 2017 and 2018, sales prices starting to offset raw material cost pressure in 2018 Backward integration and growth benefits F E B R U A R Y INVEST OR PRESENT AT ION 9

10 Healthy market growth for Kemira s relevant markets KEMIRA RELEVANT MARKET EUR billion PULP & PAPER RELEVANT MARKET EUR billion 27 9 CAGR: 1-2% CAGR: 2-3% Pulp Printing & writing Board & tissue INDUSTRY & WATER RELEVANT MARKET EUR billion 13 CAGR: 3-4% Americas EMEA APAC Water treatment Oil & Gas Other Source: Management estimation based on various sources FEBRUARY 2019 INVEST OR PRESENT AT ION 10

11 Dividend proposal EUR 0.53 per share Kemira s dividend policy is to pay a stable and competitive dividend Board of Directors proposal to the AGM a dividend of EUR 0.53 per share, totaling EUR 81 million Kemira has paid dividend every year since listing of shares in 1994 Kemira offers attractive dividend yield Dividend per share Dividend yield % 4.5% 4.4% 5.4% 4.9% 4.4% 4.6% 5.4% * Kemira s dividend yield calculated using the share price at year-end *BoD proposal to the AGM 2019 F E B R U A R Y INVEST OR PRESENT AT ION 11

12 Our three sustainability priorities Incorporating sustainability into our products and solutions Proactive product stewardship throughout the products lifecycle KPI S AND TARGETS At least 50% of our revenue is generated through products improving customers resource efficiency Sustainable products and solutions Responsible operations & supply chain Ensuring responsible operations to protect our assets, our environment, employees, contractors, customers and communities Ensuring compliance with responsible business practices in our supply chain KPI S AND TARGETS Culture and commitment to people Ensuring compliance with Kemira Code of Conduct KPI S AND TARGETS Employee engagement index above industry benchmark Leadership development activities 2 per people manager position, cumulative target 1500 by 2020 (2015=0) Integrity index continuously increasing People and integrity Carbon Index 80 by 2020 (Baseline 100 in 2012) People safety TRIF 2.0 by 2020 Supplier Sustainability Evaluation 90% of direct key suppliers screened through sustainability evaluation through assessments and audits (Baseline 60% in 2017) FEBRUARY 2019 INVEST OR PRESENT AT ION 12

13 INVESTOR PRESENTATION Latest news and financials FEBRUARY 2019 INVEST OR PRESENT AT ION 13

14 Selected highlights in 2018 Favorable market trends good global demand in all our business areas organic growth +7% Customer satisfaction and employee engagement improved Systematic improvements in operational excellence to meet changing market dynamics Second half of the year was better than the first Investments acquisition/jv in China and CEOR polymer capacity ramp-up proceeding, decision made to increase emulsion polymer capacity in the US FEBRUARY 2019 INVEST OR PRESENT AT ION 14

15 Strong organic growth and solid results in 2018 Organic growth +7% All businesses grew, growth driven mainly by higher sales prices Especially Oil & Gas chemicals was strong, growth over 40% Operative EBITDA +4% Profitability impacted by currencies in H1 and higher raw material prices passing on variable cost increases continues Earnings per share +13% Increase driven by higher operative EBITDA and lower items affecting comparability Dividend Board of Directors proposes a dividend of EUR 0.53 per share EUR million (except ratios) FY 2018 FY 2017 Δ% Revenue 2, , Operative EBITDA of which margin 12.5% 12.5% - Operative EBIT of which margin 6.7% 6.9% - Net profit EPS, EUR Dividend per share, proposal by the BoD, EUR FEBRUARY 2019 INVEST OR PRESENT AT ION 15

16 Pulp & Paper good organic growth, profitability unsatisfactory in paper chemicals Organic growth +6% in 2018 Good volume growth in bleaching and sizing Growth driven also by higher sales prices, especially in caustic soda Operative EBITDA Sales price increases started to compensate higher raw material prices Currency impact EUR -8 million vs prior year Capacity additions to fuel volume growth Deal to acquire 80% of Chinese AKD manufacturing plant completed, final construction proceeding, production ramp-up expected in H2 Multimillion JV in South Korea announced in January 2019 for additional dry polymer capacity investment supports also growth in Industry & Water REVENUE EUR million 1,477 1, OPERATIVE EBITDA AND EBITDA-% EUR million % 12.6% FEBRUARY 2019 INVEST OR PRESENT AT ION 16

17 Industry & Water profitable growth in water treatment and oil & gas Organic growth +9% in 2018 Growth driven mainly by Oil & Gas Water treatment also grew driven by pricing as we continue to pass on inflationary pressure Operative EBITDA increased by 15% EBITDA improvement driven mainly by higher sales prices Currency impact EUR -6 million vs 2017 Growth investments CEOR polymer capacity expansion in Netherlands under construction, ramp-up in H New EUR 60 million investment into expansion of emulsion polymers capacity in the US, in commercial operation beginning of 2021 REVENUE EUR million OPERATIVE EBITDA AND EBITDA-% EUR million FEBRUARY 2019 INVEST OR PRESENT AT ION 17 1,009 1, % %

18 Organic growth continued driven by pricing Q Group s organic growth +3% Pulp & Paper +4%, Industry & Water +2% Sales volumes grew in Pulp & Paper and Oil & Gas chemicals Volume growth negative due to equipment delivery in Oil & Gas in 2017 and weak water treatment volumes as focus has been on profitable contracts REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million 637-3% +6% +1% Operative EBITDA +5%, margin 12.8% Good growth in absolute EBITDA, margin improved slightly as sales prices more than compensated higher raw material prices Earnings per share +5% Reported tax rate for the year was 23% OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million % 13.4% 13.6%11.7%11.3% 12.5%13.6% 13.3% 12.8% 12.7% 11.3% 12.4% Q Sales volumes Sales prices Currency impact Acquisitions Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q FEBRUARY 2019 INVEST OR PRESENT AT ION 18

19 Pulp & Paper good growth driven by pricing and volume Organic growth +4% driven by high demand for caustic soda and bleaching chemicals Operative EBITDA 13.1% higher sales prices were not enough to compensate increasing raw material prices REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million 13.2% 13.7% 14.2% 12.6%12.4% 13.0% 13.4% 14.9% 11.6% 12.1%13.6% 13.1% % +1% -4% -2% 0% +1% +2% +5% +5% +6% +7% +4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q FEBRUARY 2019 INVEST OR PRESENT AT ION 19

20 Industry & Water record-high Q4 EBITDA Growth was muted due to equipment deal in comparison period as well as change in customer mix and related timing of deliveries Oil & Gas has grown +92% from EUR 126 million in 2016 to EUR 242 million in 2018 Organic growth over 30% in Q4 driven by pricing excl. the equipment deal made in 2017 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% 12.3% 10.4% 9.6% 9.6% 10.9% % -5% -5% 0% +6% +9% +15% +20% +11% +14% +11% +2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q FEBRUARY 2019 INVEST OR PRESENT AT ION 20

21 Net impact of sales price & variable costs positive SALES PRICE VS VARIABLE COST TREND EUR million Brent oil, USD Sales prices* Variable costs* SALES PRICES AND VARIABLE COSTS (CHANGE Y-O-Y) EUR million Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Net impact on EBITDA (sales prices-variable costs) Sales prices Variable costs * 12-month rolling change vs previous year in EUR million FEBRUARY 2019 INVEST OR PRESENT AT ION 21

22 Kemira s variable cost split and top raw materials VARIABLE COST SPLIT 2018 EUR 1.6 billion 15% Logistics 15% Electricity & energy 70% Raw materials EXPOSURE TO OIL RELATED RAW MATERIALS 70% Not oil related 30% Oil & gas related TOP 10 RAW MATERIALS BY SPEND 1. Sodium hydroxide (caustic soda)* 2. Acrylonitrile (OD) 3. Aluminium hydrate 4. Colloidal silica dispersion* 5. Amines (OD) 6. Petroleum solvents (OD) 7. Acrylic acid (OD) 8. Alpha olefin (OD) 9. Acrylic ester (OD) 10. Fatty acid Top 10 account for 50% of Kemira s raw material spend OD = Oil & gas derivative * Mainly trading materials F E B R U A R Y INVEST OR PRESENT AT ION 22

23 Outlook for 2019 Kemira expects its operative EBITDA (2018: EUR million) to increase from the prior year on a comparable basis, excluding the impact of IFRS 16 accounting change. EUR million Operative EBITDA outlook Increase Operative EBITDA figures for are pre IFRS-16. FEBRUARY 2019 INVEST OR PRESENT AT ION 23

24 2019 IFRS 16 impacting financials EBITDA margin lifted by around 1 %-point IFRS 16 will affect primarily the accounting for Kemira Group s operating leases On December 31, 2018, Group s operating lease commitments were EUR 205 million Operating lease expenses are replaced by the depreciation of the right-of-use assets and interest cost associated with lease liability. As a result, the impact on net profit is immaterial The adaptation of IFRS 16 will increase total amount of balance sheet by approximately EUR 120 million, and EBITDA will increase by around EUR 30 million leading to EBITDA margin increase of approximately 1 percentage point IFRS 16 will also have an impact on key figures such as net debt and gearing No restatement of prior years instead we will provide enough detail during the year for analysis EUR million (except ratios) FY 2018 Estimated impact in 2019, around Operative EBITDA of which margin 12.5% +1 %-point Operative EBIT Small positive Impact on opening balance sheet EUR million (except ratios) Dec 31, 2018 PRE-IFRS 16 Impact on opening balance sheet, around Balance sheet 2, Gearing 62% +10%-points FEBRUARY 2019 INVEST OR PRESENT AT ION 24

25 Majority of contracts with fixed annual pricing Pulp & Paper Contract types and pricing terms on high level Length Around 95% of contracts are 1-year or longer / only 5% are spot deals Pricing Around 70% fixed / 30% formula or spot pricing Industry & Water Contract types and pricing terms Length Around 60% of contracts are 1-yr or longer / 40% spot deals Pricing Around 60% fixed / 40% formula or spot pricing, incl. Oil & Gas where contracts are either formula or spot based FEBRUARY 2019 INVEST OR PRESENT AT ION 25

26 Currencies Currency exchange rates had around EUR -70 million impact on revenue and EUR -14 million impact on the operative EBITDA in 2018 compared to 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 2018 KEMIRA COST DISTRIBUTION % Others 2% BRL 44% EUR 9 % Others 44 % EUR 2% SEK 5 % CNY 3% CNY 5 % CAD 4% CAD 7 % SEK 35% USD 30 % USD FEBRUARY 2019 INVEST OR PRESENT AT ION 26

27 Development of selected key figures ALL KEY FIGURES IN EUR MILLION EXCEPT RATIOS CASH FLOW FROM OPERATIONS CAPITAL EXPENDITURE EXCL. ACQUISITIONS Growth capex OPERATIVE RETURN ON CAPITAL EMPLOYED 9.8% 9.9% 9.7% 9.8% NET DEBT AND LEVERAGE RATIO FEBRUARY 2019 INVEST OR PRESENT AT ION 27

28 CAPEX guidance MEUR in CAPEX WAS LOWER DUE TO TIMING OF INVESTMENT PROJECTS CAPEX FOCUS IN CORE PRODUCT GROUPS SINCE 2016 Bleaching chemicals new chlorate plant in Brazil and new chlorate line in Finland Polymers capacity additions in Italy, UK and Netherlands Sizing chemicals capacity additions due to integration of acquisitions CAPEX GUIDANCE In 2019, capital expenditure estimated to increase from 2018 and be approximately EUR million, including Expansion of Oil & Gas CEOR polymers in Netherlands New capacity expansion in Oil & Gas polymers in the US Completion for the new Pulp & Paper AKD JV site in China CAPITAL EXPENDITURE EXCLUDING ACQUISITIONS EUR million and share of revenue 9.0% % % Expansion Improvement Maintenance FEBRUARY 2019 INVEST OR PRESENT AT ION 28

29 Debt portfolio is well diversified NET DEBT / OPERATIVE EBITDA AND GEARING NET DEBT 532m 456m 486m 642m 634m OPERATIVE EBITDA 249m 252m 253m 287m 303m 694m 311m 741m 323m GROSS DEBT MATURITY PROFILE, END OF DECEMBER 2018 EUR 886 MILLION (Cost of debt 1.9%) % 41% 42% 54% 54% 2.2x 2.1x 2.1x 1.8x 1.9x 59% 2.2x 62% 2.3x Bilaterals Bonds Undrawn RCF Undrawn Bilaterals Others F E B R U A R Y INVEST OR PRESENT AT ION 29

30 Key figures and ratios 5-year summary EUR million (except ratios) Revenue 2, , , , ,592.8 Operative EBITDA of which margin 11.8% 12.1% 12.8% 12.5% 12.5% Operative EBIT of which margin 7.4% 6.9% 7.2% 6.9% 6.7% Cash flow from operations Capital expenditure, excluding acq Gearing at period-end Inventories Personnel at period-end 4,248 4,685 4,818 4,732 4,915 FEBRUARY 2019 INVEST OR PRESENT AT ION 30

31 Per share figures 5-year summary Earnings per share, EUR Cash flow from operating activities per share, EUR Equity per share, EUR Dividend per share, EUR Share price, EUR, end of period Market capitalization, EUR million (excl. treasury shares) Number of shares, million (excl. treasury shares) 1,504 1,654 1,848 1,752 1, P/E ratio P/CF ratio P/B ratio Dividend yield, % F E B R U A R Y INVEST OR PRESENT AT ION 31

32 Key figures EUR million Q Q Δ% Δ% Revenue , , Operative EBITDA margin 12.8% 12.7% % 12.5% - Operative EBIT margin 6.8% 6.9% - 6.7% 6.9% - Net profit Earnings per share, EUR Cash flow from operations Capex excl. acquisitions Net debt NWC ratio 10.2% 9.4% % 9.4% - Operative ROCE % (rolling 12 months) 9.8% 9.7% - 9.8% 9.7% - Personnel at period-end 4,915 4, ,915 4, FEBRUARY 2019 INVEST OR PRESENT AT ION 32

33 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 FEBRUARY 2019 INVEST OR PRESENT AT ION 33

34 Pulp & Paper KEY FINANCIALS EUR million Q Q Δ% Δ% Revenue , , Operative EBITDA margin 13.1% 14.9% % 13.4% - Operative EBIT margin 6.2% 8.3% - 6.0% 7.1% - Operative ROCE*, % 7.8% 9.0% - 7.8% 9.0% - Capital expenditure (excl. M&A) Cash flow after investing activities *12-month rolling average FEBRUARY 2019 INVEST OR PRESENT AT ION 34

35 Industry & Water KEY FINANCIALS EUR million Q Q Δ% Δ% Revenue , , Operative EBITDA margin 12.3% 9.6% % 11.3% - Operative EBIT margin 7.7% 5.0% - 7.7% 6.5% - Operative ROCE*, % 13.6% 11.0% % 11.0% - Capital expenditure Cash flow after investing activities *12-month rolling average FEBRUARY 2019 INVEST OR PRESENT AT ION 35

36 Revenue split by country FY 2018 Other APAC 4% South Korea 1% China 4% Other EMEA 9% Norway 1% Netherlands 2% France 2% Italy 2% Russia 2% Spain 2% UK 3% Poland 3% Germany 5% Sweden 5% USA 27% Canada 6% Brazil 3% Uruguay 2% Other Americas 1% Finland 16% FEBRUARY 2019 INVEST OR PRESENT AT ION 36

37 INVESTOR PRESENTATION Pulp & Paper driving growth as market leader FEBRUARY 2019 INVEST OR PRESENT AT ION 37

38 Pulp & Paper chemicals market estimated to grow 1-2% REVENUE AND OPERATIVE EBITDA EUR million 1, ,417 1,457 1,477 1, REVENUE BY CUSTOMER TYPE 40% Pulp Market growth 1-2% 40% Board & tissue 2-3% 20% Printing & writing papers -1-2% Pulp & Paper chemicals market drivers Hardwood and softwood pulp demand increasing driven by growth of packaging needs (ecommerce, non-plastic solutions), growing tissue demand and lack of recycled fiber Demand increase continues for packaging, driven by online shopping, last-mile delivery, product safety and non-plastic solutions Growth in tissue demand driven by increasing wealth in emerging countries Ongoing digitalization of media drives decline of graphic paper demand Growth areas, pulp and board & tissue, represent over 80% of our Pulp & Paper revenue Ongoing capacity additions suit well for the need of growing demand FEBRUARY 2019 INVEST OR PRESENT AT ION 38

39 Strong demand in pulp market creating growth opportunities New pulp mill projects are driven by increasing demand for board and tissue Confirmed new capacity / debottlenecking Food and liquid packaging board is growing particularly fast in Asia Pulp is produced close to fiber sources and then shipped to board, paper, and tissue mills or used captively in an integrated mill Growth in board = 1 new pulp mill per year Multiple pulp mill projects realised and expected in Northern Europe creating opportunities for Kemira to grow with the market In addition, a few large scale pulp mill projects expected in South America Possible new mills Östrand Värobacka Steti Kemi Paltamo Kuopio Äänekoski Kuusankoski Viljandi/Tartto Svetlogorsk Vologda Sveza Bratsk -> Uts-Ilimsk -> FEBRUARY 2019 INVEST OR PRESENT AT ION 39

40 Bleaching investment case Joutseno EUR 50 MILLION INVESTMENT IN 2017 In Joutseno we doubled our chlorate capacity in Q Excellent timing, pulp production grew simultaneously in Finland Multiple pulp mills are located nearby with annual production of over 2Mt Part of chlorate production can be also exported in dry format to APAC FEBRUARY 2019 INVEST OR PRESENT AT ION 40

41 Acquisition via JV in China Agreed to form joint venture with Tiancheng NewCo will produce mainly AKD wax and its key raw material fatty acid chloride (FACL) AKD is sizing chemical used in board and paper to createresistance against liquid absorption NewCo also plans to produce coagulants for water treatment Kemira strengthens its position and secures supply of key raw material for AKD wax Kemira will have 80% of NewCo Investment for 80% around EUR 55 million Ramp-up after completion investments Good contribution to P&L after ramp-up FEBRUARY 2019 INVEST OR PRESENT AT ION 41

42 We leverage acquisition synergies with our global production AKD WAX SUPPLIED FROM YANZHOU, CHINA TO KEMIRA SITES GLOBALLY Joutseno St. Catharines Helsingborg Washougal Krems Tarragona Yanzhou NewCo Nanjing Gunsan Wellgrow Telêmaco Borba Pasuruan Hallam FEBRUARY 2019 INVEST OR PRESENT AT ION 42

43 Acquisition in China is excellent strategic fit Acquired asset fulfills our key criteria for acquisitions GROWTH End-products in growing markets APAC Enables profitable growth in APAC SUPPLY Backward integr. & self-sufficiency (FACL) SUSTAINABILITY FACL from renewable raw material LOCATION Close to our existing production PROFITABILITY Accretive after ramp-up END-PRODUCTS WHERE AKD WAX IS USED FEBRUARY 2019 INVEST OR PRESENT AT ION 43

44 Pulp & Paper TECHNOLOGY AND MARKET LEADER RAW MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS CUSTOMER INDUSTRIES CUSTOMERS Electricity Sodium chloride (salt) Crude tall oil Cationic monomer Acrylonitrile Acrylic acid Olefins Fatty acids Maleic anhydride Sulfur Tall oil rosin AKD Wax Isomerized olefins Acrylamide Sodium chlorate Hydrogen peroxide Polymers Defoamers Coagulants Biocides Sizing Strength Additives Surface additives Colorants Sulfuric acid Pulping Bleaching Retention Wet-end process control WQQM Sizing Strength Surface treatment Coloring Pulp Packaging and board Printing and writing Tissue All the major global paper and pulp producers Value chain part covered by Kemira MAIN COMPETITORS: Solenis, Nouryon, Ecolab, Kurita, SNF FEBRUARY 2019 INVEST OR PRESENT AT ION 44

45 INVESTOR PRESENTATION Industry & Water - stronger platform for profitable growth FEBRUARY 2019 INVEST OR PRESENT AT ION 45

46 Industry & Water relevant chemicals market estimated to grow 3-4% REVENUE AND OPERATIVE EBITDA EUR million , , Demand for water treatment chemicals expected to increase due to Higher demand for water driven by industrial growth and population growth More stringent discharge limits for waste water figures are pro forma; combination of Municipal & Industrial and Oil & Mining segments Better dewatering of sludge Phosphorus recovery REVENUE BY APPLICATION 65% Water treatment 25% Oil & Gas 10% Other Water reuse Higher demand for Oil & Gas solutions expected Shale friction reducer market expected to grow due to higher energy demand and increasing number of wells fracked Market growth 2-3% 5-6% 2-3% Oil sands operators face regulatory requirements for their tailings treatment Chemical Enhanced Oil Recovery lucrative in certain fields due to better yield from existing reservoirs FEBRUARY 2019 INVEST OR PRESENT AT ION 46

47 Kemira is a market leader in water treatment chemistry Serving most European cities Drinking water plants and Wastewater plants No of ship-to countries ~ 80 No of ship-to points ~ No of ship-from points ~ I&W EMEA customer locations. Dot size correlates with ship-to volumes. Not representative for East Europe due to rollout of Kemira ERP system in H2/2018. FEBRUARY 2019 INVEST OR PRESENT AT ION 47

48 Major re-fit of the European water laws C I R C U L A R E C O N O M Y P A C K A G E Sewage Sludge Directive Fertilizer Directive Critical Raw Materials Water Re-use Plastics Strategy (microplastics) New regulation Proposal Proposal Environmental Impact Assessment Directive Industrial Emissions Directive Urban Waste Water Treatment Directive Evaluation Drinking Water Directive Proposal W A T E R F R A M E W O R K D I R E C T I V E Environmental Quality Standards Directive Ground-water Directive Floods Directive Marine Strategy Framework Directive Nitrates Directive Bathing Water Directive Fitness check FEBRUARY 2019 INVEST OR PRESENT AT ION 48

49 Oil & Gas growing fast REVENUE IN OIL & GAS EUR million REVENUE SPLIT 15% Other LTM = Last Twelwe Months ending June 2018 Organic growth >30% Oil price 65% Shale fracking 20% Oil sands and Chemical Enhanced Oil Recovery Figures rounded to closest 5% Growing market demand with our selective market diversification assuring growth Kemira s offering Process efficiencies: polymers that reduce energy consumption by 60% in shale oil fields Cost reduction: higher concentrated liquids that make offshore oil recovery more cost effective (CEOR) Addressing environmental regulations: tailing treatment in oil sands New innovative technologies driving expansion FEBRUARY 2019 INVEST OR PRESENT AT ION 49

50 CEOR-polymer deal with Chevron Strategically important multi-year Chemical Enhanced Oil Recovery deal with Chevron EUR 30 million polymer capacity addition, announced in October 2017, progressing well CEOR market size approximately EUR 1 billion of which EUR 500 million accessible to Kemira Market growth estimated to be 5% driven by enhanced production from existing fields Kemira is committed to provide enhanced solutions for challenging water intensive environments and technologies that can enable CEOR FEBRUARY 2019 INVEST OR PRESENT AT ION 50

51 Industry & Water TECHNOLOGY AND MARKET LEADER IN WATER TREATMENT AS WELL AS IN NICHE APPLICATIONS IN OIL & GAS RAW MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS SALES CHANNELS CUSTOMERS Acrylonitrile Acrylic acid Sulfuric acid Hydrochloric acid Aluminium hydrate Iron ore Pickling liquor Copperas Various monomers Acrylamide Cationic monomer Polymers (EPAM, DPAM) Al Coagulants Fe Coagulants Dispersants & antiscalants Biocides Emulsifiers Defoamers Formulations Raw water & waste water treatment Sludge treatment Friction reduction Enhanced oil recovery Tailings treatment Mining processes Direct sales Distributor/reseller Service companies Municipalities Private operators Industrial customers Pumpers Oil & Gas operators Service companies Mine operators Value chain part covered by Kemira MAIN COMPETITORS Coagulants: mainly local small companies, Feralco, USALCO, Kronos, PVS, Polymers: SNF, Solvay, Ecolab, Solenis FEBRUARY 2019 INVEST OR PRESENT AT ION 51

52 INVESTOR PRESENTATION Appendix FEBRUARY 2019 INVEST OR PRESENT AT ION 52

53 Kemira largest shareholders and Board of Directors SHAREHOLDERS ON JANUARY 31, 2019 KEMIRA BOARD OF DIRECTORS % OF SHARES 1. Oras Invest 18.2% 2. Solidium (owned by State of Finland) 15.8% 3. Varma Mutual Pension Insurance Company 3.4% 4. Ilmarinen Mutual Pension Insurance Comp. 2.1% 5. Kemira Oyj 1.8% Total number of shares 155,342,557 Foreign ownership of shares 27.5% Total number of shareholders 34,357 JARI PAASIKIVI Chairman Member since 2012 Oras Invest Oy, CEO KERTTU TUOMAS Vice Chairman Member since 2010 SHIRLEY CUNNINGHAM Member since 2017 TIMO LAPPALAINEN Member since 2014 WOLFGANG BÜCHELE Member in and since 2014 KAISA HIETALA Member since 2016 FEBRUARY 2019 INVEST OR PRESENT AT ION 53

54 Kemira s Management Board PRESIDENT AND CEO Jari Rosendal PULP & PAPER Kim Poulsen INDUSTRY & WATER Antti Salminen CFO Petri Castrén OPER. EXCELLENCE Esa-Matti Puputti HUMAN RESOURCES Eeva Salonen CTO Matthew R. Pixton Jukka Hakkila, Chief Legal Officer, acts as secretary of Management Board and Board of Directors. FEBRUARY 2019 INVEST OR PRESENT AT ION 54

55 Corporate responsibility performance Q Priority KPI+Target Performance Comments Progress Sustainable products and solutions Product sustainability Share of revenue from products used for use-phase resource efficiency. At least 50% of Kemira s revenue generated through products improving customers resource efficiency. 49% Baseline average % new R&D projects were started and 9 projects were commercialized in 2018 to improve customer s resource efficiency. Workplace safety Achieve zero injuries on long term; TRIF* 2.0 by end of Our health and safety performance improved in 2018 compared to 2017 and is consistent with 2016 performance. There was a decline in severity and permanent injuries which is responding to ongoing management commitment, progressive safety messaging and an overall improvement in safety culture Target 2020 Responsible operations and supply chain Climate change Kemira Carbon Index 80 by end of 2020 (2012 = 100). This KPI is reported once a year Carbon Index decreased mainly due to higher share of purchased electricity from renewable and low carbon sources and in some extent through energy efficienc improvements Target 20 Supplier Management % of direct key suppliers screened through sustainability assessments and audits (cumulative %). The target includes 5 sustainability audits for highest risk** suppliers every year, and cumulatively 25 by % 80% 60% 40% 20% 0% 90% 50 55% 69% Baseline Target 2020 % of key suppliers # of audits (cumul.) Sustainability screening of key suppliers progressed well as planned for In total 32 sustainability assessments and 3 Ethical on-site audits were conducted during the year. Overall target of 25 Ethical audits is behind the target but is compensated by active screening via assessments of key suppliers with good performance.. FEBRUARY 2019 INVEST OR PRESENT AT ION * TRIF = Number of Total Recordable Injury Frequency per million hours, Kemira + contractor, year-to-date 55 ** Suppliers with lowest sustainability assessment score

56 Corporate responsibility performance Q Priority KPI+target Performance Comments Progress Employee engagement index based on biennial survey The index at or above the external industry norm. The participation rate target in is 75% or above. 85% 84% 75% 67% 71% 58% Action planning is ongoing at manager level. Intensive company wide strategy communication and engagement is ongoing. Engagement Participation People and integrity Leadership development activities provided, average Two leadership development activities per people manager position during , the cumulative target is 1,500 by ,533 1,500 1, Target 2020 Above target level for activities consisting of the best practice model for Learning and Development (on-the-job learning 70%, coaching and mentoring 20%, and development programs 10%). Total by the end of 2018 is already 1,533; the target for 2020 is 1,500. Integrity index KPI to measure compliance with the Kemira Code of Conduct. The target is to maintain the Integrity Index level above the external industry norm. 87% 84% 2018 Integrity Index Participation To comply with EU's General Data Protection Regulation (GDPR), data processing activities were extensively reviewed and documented, and a privacy impact assessment process was implemented. Privacy notices, data processing agreements and global privacy policy were created. A mandatory online training course on GDPR was assigned to over 300 Kemira employees who work in roles that involve the processing of personal data while general awareness-building was continued to all Kemira employees. FEBRUARY 2019 INVEST OR PRESENT AT ION 56

57 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 FEBRUARY 2019 INVEST OR PRESENT AT ION 57

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