Revenue and earnings growth continued

Transcription

1 OCTOBER 24, 2018 Revenue and earnings growth continued 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 Several thousand 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 * Solenis-BASF combined entity expected to be #1 after the closing of the announced merger OCT OBER 2018 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 OCT OBER 2018 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 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 2018 INVEST OR PRESENT AT ION 4

5 Global regulation trends favorable to demand of water treatment chemicals Water reuse More stringent discharge limits Increased demand for water treatment chemicals Better dewatering of sludge and phosphorus recovery Emerging contaminants (pharma, microplastics) OCT OBER 2018 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, ,229 2, % 11.3% 11.8% 12.1% 12.5% OCT OBER 2018 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 1,068 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 * Solenis-BASF combined entity expected to be #1 after the closing of the announced merger Note: Revenue by industry, product and geography rounded to the nearest 5% OCT OBER 2018 INVEST OR PRESENT AT ION 7

8 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 2018 INVEST OR PRESENT AT ION 8

9 Kemira s mid- to long-term financial targets FINANCIAL TARGETS AND HISTORICAL FIGURES Targets Above-the-market growth EUR 2,373 million Change +11% EUR 2,363 million Change 0% Operative EBITDA 14-16% 12.1% 12.8% 12.5% Gearing below 60% 54% 54% 59% EUR 2,486 million Change +5% FACTORS TO WATCH FOR PROFITABILITY IMPROVEMENT Factors 9M 2018 comments Volume growth and sales price increases Group s volume growth +2% and sales prices +6% Oil & Gas becoming larger share of Group (incl. shale, CEOR and oil sands) Revenue from EUR 126m in 2016 to EUR 233m (LTM) Raw material price development Significant inflation in 2017 and YTD 2018 Currency exchange rate development, especially EUR/USD Prudent fixed cost management AKD acquisition / joint venture in China FX delta EUR -17 million on EBITDA Fixed costs almost flat despite strong organic growth Significant backward integration and growth benefits OCT OBER 2018 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: 3-4% Pulp Board, tissue, printing & writing INDUSTRY & WATER RELEVANT MARKET EUR billion 13 CAGR: 4-5% Americas EMEA APAC Water treatment Oil & Gas Other Source: Management estimation based on various sources OCT OBER 2018 INVEST OR PRESENT AT ION 10

11 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 2018 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) OCT OBER 2018 INVEST OR PRESENT AT ION 12

13 INVESTOR PRESENTATION Latest news and financials OCT OBER 2018 INVEST OR PRESENT AT ION 13

14 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 2018 INVEST OR PRESENT AT ION 14

15 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 2018 INVEST OR PRESENT AT ION 15

16 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 2018 INVEST OR PRESENT AT ION 16

17 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 2018 INVEST OR PRESENT AT ION 17

18 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 2018 INVEST OR PRESENT AT ION 18

19 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 2018 INVEST OR PRESENT AT ION 19

20 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 2018 INVEST OR PRESENT AT ION 20

21 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 2018 INVEST OR PRESENT AT ION 21

22 Kemira s variable cost split and top raw materials VARIABLE COST SPLIT Last 12 months EUR 1.5 billion 20% Logistics 15% Electricity & energy 65% Raw materials EXPOSURE TO OIL RELATED RAW MATERIALS 70% Not oil related 30% Oil & gas derivative TOP 10 RAW MATERIALS BY SPEND 1. Sodium hydroxide (caustic soda)* 2. Acrylonitrile (OD) 3. Colloidal silica dispersion* 4. Amines (OD) 5. Aluminum hydrate 6. Petroleum solvents (OD) 7. Acrylic acid (OD) 8. Acrylic ester (OD) 9. Alpha olefin (OD) 10. Sodium chloride (salt) Top 10 account for 45% of Kemira s raw material spend OD = Oil & gas derivative * Mainly trading materials OCT OBER 2018 INVEST OR PRESENT AT ION 22

23 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 OCT OBER 2018 INVEST OR PRESENT AT ION 23

24 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 2018 INVEST OR PRESENT AT ION 24

25 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 2018 INVEST OR PRESENT AT ION 25

26 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 OCT OBER 2018 INVEST OR PRESENT AT ION 26

27 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 SEPTEMBER 2018 EUR 889 MILLION (Cost of debt 2.0%) % 54% 59% % 41% 42% x 2.1x 2.1x 1.8x 1.9x 2.2x Bilaterals Bonds Undrawn RCF Undrawn Bilaterals Others OCT OBER 2018 INVEST OR PRESENT AT ION 27

28 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) 1,849 1,504 1,654 1,848 1, P/E ratio P/CF ratio P/B ratio Dividend yield, % OCT OBER 2018 INVEST OR PRESENT AT ION 28

29 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 2018 INVEST OR PRESENT AT ION 29

30 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 2018 INVEST OR PRESENT AT ION 30

31 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 2018 INVEST OR PRESENT AT ION 31

32 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 2018 INVEST OR PRESENT AT ION 32

33 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 2018 INVEST OR PRESENT AT ION 33

34 INVESTOR PRESENTATION Pulp & Paper driving growth as market leader OCT OBER 2018 INVEST OR PRESENT AT ION 34

35 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 OCT OBER 2018 INVEST OR PRESENT AT ION 35

36 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 OCT OBER 2018 INVEST OR PRESENT AT ION 36

37 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 OCT OBER 2018 INVEST OR PRESENT AT ION 37

38 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 -> OCT OBER 2018 INVEST OR PRESENT AT ION 38

39 Recent 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 OCT OBER 2018 INVEST OR PRESENT AT ION 39

40 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 OCT OBER 2018 INVEST OR PRESENT AT ION 40

41 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 OCT OBER 2018 INVEST OR PRESENT AT ION 41

42 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 OCT OBER 2018 INVEST OR PRESENT AT ION 42

43 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 OCT OBER 2018 INVEST OR PRESENT AT ION 43

44 INVESTOR PRESENTATION Industry & Water - stronger platform for profitable growth OCT OBER 2018 INVEST OR PRESENT AT ION 44

45 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 OCT OBER 2018 INVEST OR PRESENT AT ION 45

46 Oil & Gas growing fast REVENUE IN OIL & GAS EUR million LTM REVENUE SPLIT 15% Other LTM = Last Twelwe Months ending June 2018 YTD 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 OCT OBER 2018 INVEST OR PRESENT AT ION 46

47 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 OCT OBER 2018 INVEST OR PRESENT AT ION 47

48 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) OCT OBER 2018 INVEST OR PRESENT AT ION 48

49 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 OCT OBER 2018 INVEST OR PRESENT AT ION 49

50 INVESTOR PRESENTATION Appendix OCT OBER 2018 INVEST OR PRESENT AT ION 50

51 Kemira largest shareholders and Board of Directors SHAREHOLDERS ON SEPTEMBER 30, 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 27.2% Total number of shareholders 34,259 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 OCT OBER 2018 INVEST OR PRESENT AT ION 51

52 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. OCT OBER 2018 INVEST OR PRESENT AT ION 52

53 Corporate responsibility performance Q Priority Target Performance 2017 Comments Progress Sustainable products Sustainable products Share of revenue from products used for use-phase resource efficiency. At least 50% of our revenue is generated through products that improve customers resource efficiency. 60% 40% 20% 0% 49% 49% During January-September 2018, ten new products and concepts that aim to improve customer material efficiency were commercialized, and ten new projects started with the same target. Climate change Kemira Carbon Index 80 by end of 2020 (2012 = 100). This KPI is reported once a year Target 2020 Sourcing of low carbon energy continued as planned. At two manufacturing sites, E3 Energy Reviews were performed, as part of the Energy Efficiency Enhancement (E3plus) program. The work to upgrade the Energy Management System at sodium chlorate sites in the US was accelerated. The performed E3 energy reviews now cover more than 90% of Kemira s total energy consumption. At the Äetsä sodium chlorate site, projects to save steam continued, aiming at carbon free steam production. Responsible operations and supply chain People Safety Achieve zero injuries on long term; TRIF* 2.0 by end of YTD Target 2020 We have been able to reduce the number of employee incidents but unfortunately we have not been able to improve our performance in contractor safety. The behavior-based safety program has been implemented at all our sites in EMEA, APAC and South America. 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% 62% Baseline Q2 Target 2022 % of Key suppliers # Audits Sustainability screening of key suppliers continues as planned. In total 16 new assessments and one on-site follow-up audit have been conducted so far this year. For the last quarter of 2018 there are around 12 assessments in progress and one to three audits in the pipeline. OCT OBER 2018 INVEST OR PRESENT AT ION 53

54 Corporate responsibility performance Q Priority Target Performance Comments Progress Employee engagement index based on biennial survey The index at or above the external industry norm. Participation rate in 75 % or above. 100% 50% 0% 85% 75% 84% 58% 67% 71% Employee engagement index was 2 ppts and the participation rate 9 ppts above the external norm. Action planning is ongoing at manager level. Company wide communication on refreshed strategy has been completed and this will be the Kemira focus area based on the survey. Engagement Participation People and integrity Leadership development activities provided, average Two (2) leadership development activities per people manager position during , cumulative target 1500 by ,357 1,500 1, Q3 Target 2020 Continued good level of leadership development activities during the third quarter. In cumulative terms, we are at 1,357 (69 activities during the third quarter). Integrity index New KPI to measure compliance with Kemira Code of Conduct. The target is to maintain the Integrity Index level above the industry benchmark. 88% 86% 84% 82% 87% 84 % 2018 Integrity Index Participation Updated Code of Conduct E-learning training was launched and the target is to have all employees trained by the end of fourth quarter. All sales directors were trained on the new third party Due Diligence process to be conducted with all new agents and distributors to assure that third parties are organized in accordance with local laws, have the correct approach to public entities and are not involved in corruption. * TRIF = Number of Total Recordable Injury Frequency per million hours, Kemira + contractor, year-to-date ** suppliers with lowest sustainability assessment score OCT OBER 2018 INVEST OR PRESENT AT ION 54

55 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 2018 INVEST OR PRESENT AT ION 55

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