APRIL 27, Good organic growth INVESTOR PRESENTATION

Transcription

1 APRIL 27, 2018 Good organic growth INVESTOR PRESENTATION

2 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 APRIL 2018 INVEST OR PRESENT AT ION 2

3 Global trends favor Kemira Trends, among others Recycling E-commerce / online shopping Plastics to be replaced by biobased products Regulation driving better water quality Finding Plastics oil to be replaced reservoirs by biobased becoming harder products How Kemira benefits from the trend More chemicals required for stronger paper/board Increasing need for packaging material Increased demand of biobased and more sustainable technologies With chemistry water can be purified better With polymers increasing amount of oil can be extracted from current and new oil fields APRIL 2018 INVEST OR PRESENT AT ION 3

4 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% A P R IL INVEST OR PRESENT AT ION 4

5 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% A P R IL INVEST OR PRESENT AT ION 5

6 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, % Water treatment Municipal Industrial 20% Oil & Gas 10% Other 20% Other products such as defoamers and biocides 40% Coagulants Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Market growth 2-3% 5-6% 2-3% 40% Polymers MARKET ENVIRONMENT WATER TREATMENT Market share ~30% in coagulants and ~20% in polymers 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 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% A P R IL INVEST OR PRESENT AT ION 6

7 Our key actions to improve margins Operative EBITDA margin 14-16% 12.8% 12.5% 12.1% New AkzoNobel s paper chemicals two segment structure New bleaching capacity in Finland Acquisition in China Oil sands Optimization of operations: majority of savings in logistics Advanced Chemical Water Enhanced Treatment Oil Recovery Volatility and inflation Pulp & Paper Group Pulp & Paper Pulp & Paper Group Industry & Water Industry & Water Industry & Water Volatility & inflation Mid- to longterm target Estimated end of 2017 run-rate 100% 100% 75% 0% Low 25% Low Low Full run-rate by EO 2017 EO yrs 2-3 yrs 2-5 yrs 3-5 yrs A P R IL INVEST OR PRESENT AT ION 7

8 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 A P R IL INVEST OR PRESENT AT ION 8

9 Progress in profitable growth Opening / expansion of site Acquisition Operational efficiencies Closure of site 11.3% 2013 operative EBITDA Opening of Nanjing (CN) site Q1 14 Q2 14 Acquisition BASF AKD emulsion business Opening of Tarragona coagulant site (ES) Q3 14 Opening of EMEA service center 12.5% 2017 operative EBITDA Q4 14 AkzoNobel s paper chemicals acquisition Q1 15 Expansion of dry and emulsion polyacrylamide (US) Acquisition of Soto Industries (US) Q2 15 Q3 15 Expansion of pulp chemicals, Oulu (FI) Closure of Longview (US) Start-up of Ortigueira (BR) sodium chlorate site and announcement of Joutseno (FI) expansion Q4 15 Q1 16 Acquisition of Polymer Services (US) Closure of Soave (IT) Q2 16 Q3 16 Bradford (UK) expansion San Giorgio (IT) expansion Closures of Ottawa (CA) and Zaramillo (ES) Botlek (NL) modernization Transportation agreement with Odyssey BOOST operational excellence program launch Q4 16 Start-up of Joutseno (FI) chlorate expansion Q1 17 Odyssey go-live in North America Two segment structure operational Q2 17 Q3 17 Q4 17 Announcement of acquisition via JV in China A P R IL INVEST OR PRESENT AT ION 9

10 INVESTOR PRESENTATION Latest news and financials APRIL 2018 INVEST OR PRESENT AT ION 10

11 Key financial highlights Q Organic growth +7% Demand is growing in every market we serve Strong momentum continued especially in Oil & Gas Operative EBITDA flat at reported figures, underlying development better Positive impact of organic growth was offset by increased variable costs and currency headwind Currencies EUR -7 million on EBITDA level Q1 was below our expectations but we expect better performance in the coming quarters Earnings per share +17% Finance costs were lower due to EUR 3.6 million gain from the sale of shares in power plant companies EUR million (except ratios) Q Q Δ% FY 2017 Revenue ,486.0 Operative EBITDA of which margin 11.3% 11.3% % Operative EBIT of which margin 5.5% 5.7% - 6.9% Net profit EPS, EUR APRIL 2018 INVEST OR PRESENT AT ION 11

12 Positive long-term operative EBITDA trend In big picture, operative EBITDA on positive trend Profitability improvement measures overshadowed by pressure from raw material prices During the last year market has moved from deflatory to inflatory environment ROLLING 12-MONTH OPERATIVE EBITDA AND OPERATIVE EBITDA-% % % % % % 12.8% 12.5% 12.4% 12.3% 12.1% 12.1% 12.2% 12.4% 12.5% 12.5% 12.3% 12.3% 12% % 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q % APRIL 2018 INVEST OR PRESENT AT ION 12

13 Pulp & Paper good underlying market with major regional differences Market environment and performance EMEA strong and South America solid North America battles with shrinking market in process and functional chemicals In APAC growth continues but profitability a challenge Q1 organic growth +5% FX offsetting reported revenue growth Profitability drivers Profitability improvement to continue when price increases go through - current sales prices were not yet sufficient to cover increase in raw material prices In addition to sales prices, new capacity at Joutseno and Chinese acquisition are expected to improve profitability in mid-term ROLLING 12-MONTH OPERATIVE EBITDA AND EBITDA-% EUR million % % % 13.4% 13.2% 13.0% 12.8% 13.4% 194 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 2018 INVEST OR PRESENT AT ION %

14 Megatrend e-commerce drives need for packaging material Megatrend Retail e-commerce grew +25% globally in 2017 led by Amazon, ebay, Alibaba, etc. Growth in e-commerce drives packaging material production volumes Impact on pulp and paper producers New board capacity regularly announced, especially in APAC and EMEA, e.g. Chinese Nine Dragon to add 3 million tons of packaging paper capacity by June 2019 APP to expand Guangxi (CN) mill by 2 new board machines with production of 1.8 Mton/a Hamburger Rieger (DE) to invest in new 500 kt/a containerboard machine Impact on Kemira Kemira serves board producers with process and functional chemicals Kemira has strong references in conversions and new start-ups Also beneficial for Kemira s pulp bleaching business as pulp is the intermediate product for board APRIL 2018 INVEST OR PRESENT AT ION 14

15 Industry & Water growth driven by Oil & Gas Market demand drivers Fracking activity continued to grow in shale oil & gas industry ROLLING 12-MONTH REVENUE EUR million 1,009 1, Underlying economic growth increasing demand in industrial water treatment Municipal water treatment growing with the help of tighter regulation Revenue and operative EBITDA trend improving In Q1, strong +11% organic growth Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q ROLLING 12-MONTH OPERATIVE EBITDA AND EBITDA-% EUR million % 11.6% 11.5% 11.8% 11.4% 11.1% 11.5% 11.2% 11.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 2018 INVEST OR PRESENT AT ION 15

16 CEOR deal signed with Chevron Strategically important multi-year Chemical Enhanced Oil Recovery deal signed with Chevron EUR 30 million 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 Our offering provides enhanced and improved oil recovery with focus around polymer injectivity, chemical stability, shear tolerance, thermal stability and efficacy APRIL 2018 INVEST OR PRESENT AT ION 16

17 Group s organic revenue growth continued Q Group s organic growth +7% Pulp & Paper +5% Industry & Water +11% REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million Operative EBITDA margin 11.3% Flat compared to prior year Good revenue growth was offset by raw material prices and FX Fixed costs slightly below prior-year level OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million % +4% -7% 0% % 13.4% 13.6% 11.7% 11.3% 12.5% 13.6% 12.7% 11.3% Q Sales volumes Sales prices Currency impact Acquisitions Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 2018 INVEST OR PRESENT AT ION 17

18 Currencies are currently headwind due to translation, transactional risk limited Currency exchange rates had EUR -41 million impact on revenue and EUR -7 million impact on the operative EBITDA in Q 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 Q KEMIRA COST DISTRIBUTION Q % Others 2% BRL 46% EUR 10% Others 45% EUR 3% SEK 4% CNY 3% CNY 5% CAD 4% CAD 8% SEK 33% USD 28% USD APRIL 2018 INVEST OR PRESENT AT ION 18

19 Variable costs spiked in Q1, sales prices following SALES PRICE VS VARIABLE COST TREND 200 SALES PRICES AND VARIABLE COSTS (CHANGE Y-O-Y) Brent oil, USD Sales prices* Variable costs* Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Net impact on EBITDA (sales prices-variable costs) Sales prices Variable costs * 12-month rolling change vs previous year in EUR million APRIL 2018 INVEST OR PRESENT AT ION 19

20 Pulp & Paper good organic growth but profitability disappointed Organic growth continued with volume growth at +3%, driven by chlorate capacity addition in Finland and good underlying demand, especially in Europe FX headwind had -6% impact on revenue Profitability hampered by FX and sharp variable cost increases EMEA performing well but North America and China were behind 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% % +1% -4% -2% 0% +1% +2% +5% +5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 2018 INVEST OR PRESENT AT ION 20

21 Industry & Water strong growth continued Strong organic growth, heavy FX headwind from USD Oil & Gas +21% to EUR 46 million in Q1 2018, organic growth in O&G over 30% Profitability improving in Oil & Gas driven by sales price increases and volume growth Newer growth areas, such as water treatment for oil sands and CEOR, continue to be margin-dilutive until fully scaled up and optimized REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million % -5% -5% 0% +6% +9% +15% +20% +11% OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million 11.3% % 12.5% 10.4% % % % % 10.9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 2018 INVEST OR PRESENT AT ION 21

22 Development of selected key figures ALL KEY FIGURES IN EUR MILLION EXCEPT RATIOS CASH FLOW FROM OPERATIONS Q Q CAPITAL EXPENDITURE EXCL. ACQUISITIONS Growth capex Q Q RETURN ON CAPITAL EMPLOYED 9.9% 9.8% 9.7% 9.7% NET DEBT AND LEVERAGE RATIO % Q Q Q Q APRIL 27, 2018 Q RESULT S 22

23 CAPEX guidance MEUR in 2018 IN , ON AVERAGE AROUND EUR 80 MILLION INVESTED INTO GROWTH RECENT LARGEST VALUE CREATING INVESTMENTS New chlorate plant in Brazil and new chlorate line in Finland Capacity additions due to integration of acq. Polymer capacity in Italy and UK CAPEX GUIDANCE In 2018, capital expenditure estimated to be EUR million Includes capacity expansion in Oil & Gas CAPITAL EXPENDITURE EXCLUDING ACQUISITIONS EUR million and share of revenue 7.7% % % Expansion Improvement Maintenance APRIL 2018 INVEST OR PRESENT AT ION 23

24 Kemira s variable cost split and top raw materials VARIABLE COST SPLIT 2017 EUR 1.5 billion 20% Logistics 10% 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 2. Acrylonitrile 3. Colloidal silica dispersion 4. Amines 5. Aluminium hydrate 6. Petroleum solvents 7. Sodium chloride (salt) 8. Acrylic ester 9. Acrylic acid 10. Fatty acid Top 10 account for 43% of Kemira s raw material spend A P R IL INVEST OR PRESENT AT ION 24

25 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 GROSS DEBT MATURITY PROFILE, END OF MARCH 2018 EUR 908 MILLION (Cost of debt 2.0%) % 41% 42% 54% 54% 59% x 2.1x 2.1x 2.2x x 1.9x Bilaterals Bonds Undrawn RCF Undrawn Bilaterals Others A P R IL INVEST OR PRESENT AT ION 25

26 Per share figures 5-year summary Earnings per share, EUR Cash flow from operating activities per share, EUR Equity per share, EUR ,61 Dividend per share, EUR (*2017 proposal to the AGM) * Share price, EUR, end of period Market capitalization, EUR million (excl. treasury shares) Number of shares, million (excl. treasury shares) 1,849 1,504 1,654 1,848 1, P/E ratio P/CF ratio P/B ratio Dividend yield, % A P R IL INVEST OR PRESENT AT ION 26

27 Key figures and ratios EUR million (except ratios) Q Q Revenue 2, , , , , Operative EBITDA of which margin 11.3% 11.8% 12.1% 12.8% 12.5% 11.3% 11.3% Operative EBIT of which margin 7.4% 7.4% 6.9% 7.2% 6.9% 5.5% 5.7% Net profit Cash flow from operations Capital expenditure, excluding acq Gearing at period-end Inventories Personnel at period-end 4,453 4,248 4,685 4,818 4,732 4,740 4,771 * Restated figures reflect the change of IAS 19, Employee Benefits APRIL 2018 INVEST OR PRESENT AT ION 27

28 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 APRIL 2018 INVEST OR PRESENT AT ION 28

29 Pulp & Paper KEY FINANCIALS EUR million Q Q Δ% Δ% Revenue , , Operative EBITDA margin 11.6% 12.4% % 13.4% - Operative EBIT margin 5.1% 6.4% - 7.1% 7.7% - Operative ROCE*, % 8.6% 9.5% - 9.0% 10.0% - Capital expenditure Cash flow after investing activities *12-month rolling average APRIL 2018 INVEST OR PRESENT AT ION 29

30 Industry & Water KEY FINANCIALS EUR million Q Q Δ% Δ% Revenue , Operative EBITDA margin 10.9% 9.6% % 11.8% - Operative EBIT margin 6.1% 4.7% - 6.5% 6.5% - Operative ROCE*, % 11.8% 9.4% % 9.7% - Capital expenditure Cash flow after investing activities *12-month rolling average APRIL 2018 INVEST OR PRESENT AT ION 30

31 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% APRIL 2018 INVEST OR PRESENT AT ION 31

32 INVESTOR PRESENTATION Pulp & Paper driving growth as market leader APRIL 2018 INVEST OR PRESENT AT ION 32

33 Our winning formula to continue growth INVEST IN GROWTH AND R&D Capacity additions More than 10 new products in 2016 and 2017 ENHANCE PERFORMANCE CULTURE New mgmt. structure Employee engagement 15/16 survey items improved since 2015 Above-the-market growth and operative EBITDA of 14-16% IMPROVE CUSTOMER EXPERIENCE TOP 50 customers are EUR 1bn Customer satisfaction to 98% MAXIMIZE CAPACITY UTILIZATION Bleaching ran flat out 9 years Paper chemicals varying REDUCE COMPLEXITY Group: 240 products out in 2016 Around 250 products out in 2017 MANAGE FIXED COSTS 2017 business overheads below 2016 level APRIL 2018 INVEST OR PRESENT AT ION 33

34 Board and paper production shifting to emerging markets North America 2015: 82 mt 2030: 75 mt TOTAL BOARD & PAPER PRODUCTION: 2015: 402 million tons 2030: 461 million tons CAGR%: around 1 % / annum Latin America 2015: 21 mt 2030: 31 mt E. Europe 2015: 18 mt 2030: 26 mt. Europe 2015: 85 mt 2030: 78 mt Africa 2015: 4 mt 2030: 6 mt China 2015: 106 mt 2030: 139 mt Japan 2015:26 mt 2030:21 mt Rest of Asia 2015: 55 mt 2030: 82 mt Oceania 2015: 4 mt 2030: 4 mt GROWTH OF BOARD AND PAPER PRODUCTION BY REGION mt growth in APAC by 2030 BIGGEST PRODUCERS ARE: China, USA, Japan, Germany, India, Sweden, Korea, Canada, Finland, Brazil BIGGEST GROWTH AREAS ARE: China, India, Indonesia, Brazil, Russia, Vietnam Source: Pöyry APRIL 2018 INVEST OR PRESENT AT ION 34

35 Strong market positions and strategic investments REGION MARKET POSITION GROWTH TREND GROWTH STRATEGY EMEA #1 Exceptional customer experience North America #2/3 Transformation from paper to board APAC South America #1 #3 Continue to grow with major players (TCM) and assess future investments Assess future bleaching investments TCM = Total Chemistry Management APRIL 2018 INVEST OR PRESENT AT ION 35

36 We have become market leader in APAC Board and paper production in APAC will be bigger than Europe and North America combined by 2020 >90% of global board and paper production growth in APAC Kemira now #1 with close to 10% share in APAC Revenue doubled to around EUR 200 million in 3 years Fragmented market provides good potential for profitable growth Continue to grow revenue and market share PULP & PAPER RELEVANT CHEMICALS MARKET 2017 South America 2-3% APAC North America EMEA CAGR % -1-0% 0-1% APRIL 2018 INVEST OR PRESENT AT ION 36

37 Strong demand in pulp market creating growth opportunities New pulp mill projects are driven by increasing demand for board and tissue Food and liquid packaging board is growing particularly fast in Asia Pulp is produced close to wood sources and then shipped to board, paper, and tissue mills 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 Confirmed new capacity / debottlenecking Possible new mills APRIL 2018 INVEST OR PRESENT AT ION 37

38 Successful value creating investments case Joutseno Kemira s capacity in sodium chlorate was fully utilized, hence the need for additional capacity Capacity doubled in Joutseno with around EUR 50 million investment Investment realized according to budget and start-up was ahead of schedule in early September 2017 Part of the production will be shipped to APAC to support the growth in the region KEMIRA BLEACHING CHEMICALS REVENUE GROWTH +7% +10% +6% +5% CAGR + 7% APRIL 2018 INVEST OR PRESENT AT ION 38

39 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 Closing expected in H Ramp-up in H2/18 after completion investments Good contribution to P&L in 2019 after ramp-up APRIL 2018 INVEST OR PRESENT AT ION 39

40 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 APRIL 2018 INVEST OR PRESENT AT ION 40

41 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 in 2019 after ramp-up END-PRODUCTS WHERE AKD WAX IS USED APRIL 2018 INVEST OR PRESENT AT ION 41

42 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: BASF, Akzo Nobel, Solenis, Ecolab, SNF APRIL 2018 INVEST OR PRESENT AT ION 42

43 INVESTOR PRESENTATION Industry & Water - stronger platform for profitable growth APRIL 2018 INVEST OR PRESENT AT ION 43

44 New structure creates growth and efficiency opportunities Leveraging the full potential of new combined segment Full geographical reach in all regions Global polymer expert network Water treatment expertise for O&G and Mining Municipal & Industrial Oil & Mining Structural change means faster decision making More efficient development and roll-out of new innovations Important part of segment s profitability improvement On Group-level cost savings EUR million 10% Other applications 20% Oil & Gas Industry & Water 70% Water treatment APRIL 2018 INVEST OR PRESENT AT ION 44

45 Innovation case KemConnect Smart Dewatering ADVANCED WATER TREATMENT CASE EXAMPLE The next generation of sludge treatment will focus on customer performance and value created KemConnect Smart Dewatering combines a complete chemicals portfolio, continuous chemistry optimization and real-time monitoring to a new business model Chemical Cost Disposal Cost Customer Net Savings KemConnect Service Fee Disposal Cost Dewatering Today Smart Dewatering Tomorrow APRIL 2018 INVEST OR PRESENT AT ION 45

46 Resilient business set for growth REVENUE IN GROWTH INITIATIVES EUR million REVENUE IN GROWTH INITIATIVES EUR million 25% Other Oil Price + 56% in % Shale fracking 25% 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 APRIL 2018 INVEST OR PRESENT AT ION 46

47 Our innovations make shale industry more efficient SHALE MARKET Polymer market size +200M EUR and growing at double digit today Polymer more favorable product based on cost/performance KEMIRA Provides unique chemistries, friction reducers, that reduce energy needed during hydraulic fracturing Volume growth over 100% in 1-9/2017 Differentiating from competitors with innovative products #1 market position with over 30% market share Competitor C Competitor B Others Market shares in polymers used for fracking KEMIRA Competitor A APRIL 2018 INVEST OR PRESENT AT ION 47

48 Long-term growth potential in CEOR CHEMICAL ENHANCED OIL RECOVERY MARKET CEOR market size EUR 1bn of which EUR 500 million accessible to Kemira Market growth estimated to be 5% driven by decline of production from existing fields KEMIRA Kemira s MaxXtract solution tailored specifically to customer needs, incorporating chemistry, equipment and services Kemira s knowhow in polymers helps oil producers Potential for > EUR 100 million revenue in 5 years Substantial long-term growth potential within existing CEOR projects and through new projects APRIL 2018 INVEST OR PRESENT AT ION 48

49 Oil sands has grown from 0 to above EUR 30m in 3 years OIL SANDS MARKET Market size is around EUR 400 million Projects are capex-heavy but developed projects are considered as sunken costs KEMIRA Offers total solutions to reduce environmental concerns Customer base expanding Revenue has grown to above EUR 30 million in 3 years Target to more than double current revenues in 2-3 years Companies operating in oil sands market (examples) APRIL 2018 INVEST OR PRESENT AT ION 49

50 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, BASF APRIL 2018 INVEST OR PRESENT AT ION 50

51 INVESTOR PRESENTATION Appendix APRIL 2018 INVEST OR PRESENT AT ION 51

52 Kemira largest shareholders and Board of Directors SHAREHOLDERS ON MARCH 31, 2018 KEMIRA BOARD OF DIRECTORS % OF SHARES 1. Oras Invest 18.2% 2. Solidium (owned by State of Finland) 16.7% 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 26.4% Total number of shareholders 35,815 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 APRIL 2018 INVEST OR PRESENT AT ION 52

53 Kemira s Management Board PRESIDENT AND CEO Jari Rosendal PULP & PAPER Kim Poulsen INDUSTRY & WATER Antti Salminen CFO Petri Castrén OPERATIONAL 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. APRIL 2018 INVEST OR PRESENT AT ION 53

54 Corporate responsibility performance Q Priority Target Performance 2017 Comments Progress Climate change Kemira Carbon Index 80 by end of 2020 (2012 = 100) Target 2020 Sourcing of low carbon energy, especially carbonfree electricity, continued according to plan. As part of the E3 Plus program, four Energy Review site visits were performed during Q Until now, the performed energy reviews cover more than 90% of Kemira s total energy consumption. Additionally, internal Energy Management Audits were carried out in Joutseno and Helsinki. Responsible operations and supply chain People Safety Achieve zero injuries on long term; TRIF* 2.0 by end of Q1 18 Target 2020 Slight increase in the number of TRIs compared to last year. Safety campaign and critical safety standard implementation initiated this quarter should help to reduce TRIs going forward. No single reason for increase of incidents identified. 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% 55% 60% Baseline Q1 Target 2022 % of Key suppliers # Audits Target scope expanded to cover both supplier sustainability assessments and audits. APRIL 2018 INVEST OR PRESENT AT ION 54

55 Corporate responsibility performance Q Priority Target Performance Comments Employee engagement index based on biennial survey The index at or above the external industry norm. Participation rate in 75 % or above. 100% 80% 60% 40% 20% 0% 75% 58% 85% 67% Engagement Participation Global people employee engagement survey Voices@Kemira was postponed from autumn 2017 until Q2 2018, and will be conducted by IBM April 9-20th Progress People and integrity Leadership development activities provided, average Two (2) leadership development activities per people manager position during , cumulative target 1500 by ,500 1,036 1, Q1 Target 2020 Overall we are tracking well to achieve target. Cumulative figure by the end of Q is 1,147. * TRIF = Number of Total Recordable Injury Frequency per million hours, Kemira + contractor, year-to-date ** suppliers with lowest sustainability assessment score APRIL 2018 INVEST OR PRESENT AT ION 55

56 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 APRIL 2018 INVEST OR PRESENT AT ION 56

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