Revenue growth continued operative EBITDA improved from the prior year

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1 Jari Rosendal, President and CEO Petri Castrén, CFO October 25, 2017 January-September 2017 Interim Report Revenue growth continued operative EBITDA improved from the prior year

2 Key financial and operational highlights Q Q Revenue and operative EBITDA improvement driven by Oil & Gas Good organic growth Group +7% Volume growth led to higher operative EBITDA Net profit impacted by EUR 13 million settlement for damage claim related to alleged infringement of competition law during First full quarter for new two segment structure with benefits becoming visible Hurricanes had only limited impact (except ratios) Q Q Δ% Revenue Operative EBITDA of which margin, % Operative EBIT of which margin, % Net profit to equity owners EPS, EUR Q Results October 25,

3 Pulp & Paper solid underlying revenue growth January-September Underlying organic growth +2% driven by bleaching and strength chemicals Operative EBITDA at 12.9% Impacted by higher variable costs Akzo synergies final step-up in Q4 New sodium chlorate production line successfully started up in Finland Capacity doubled in Joutseno with around EUR 50 million investment Partnership agreement signed with Valmet for development of digitalized data-based applications and services Revenue and revenue growth +1% 1,089 1,104 YTD 2016 YTD 2017 Operative EBITDA and operative EBITDA margin % -4% % YTD 2016 YTD 2017 Q Results October 25,

4 Industry & Water Oil & Gas driven growth continues January-September New organization now fully in place Strong growth in Oil & Gas continued 57% revenue growth YTD Sales prices started to improve in Q3 Volume growth in water treatment at healthy level YTD profitability adversely impacted by raw material prices, particularly in NA coagulants Revenue and revenue growth +10% YTD 2016 YTD 2017 Operative EBITDA and operative EBITDA margin % +6% % YTD 2016 YTD 2017 Q Results October 25,

5 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

6 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

7 Acquisition in China is excellent strategic fit Acquired asset fulfills our key criteria for acquisitions End-products where AKD wax is used 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 Q Results October 25,

8 Growth in CEOR supported by approximately EUR 30 million investment We will expand our polymer capacity for Chemical Enhanced Oil Recovery within Oil & Gas business After prudent development in R&D and successful field trials, the investment will be done on the basis of anticipated uptake in customer demand Additional capacity will be built to Kemira s existing manufacturing site at Botlek, Netherlands New capacity is expected to be in commercial operation by the beginning of 2019 Investment is part of earlier announced EUR million capital expenditure for 2018 Q Results October 25,

9 Progressing our strategy for profitable growth Balanced cash flow and capex Increase efficiency Grow by investing, innovating and capturing market opportunities GROUP S MID- TO LONG-TERM TARGETS Above-the-market growth Operative EBITDA 14-16% Gearing below 60% Dividend policy: stable and competitive dividend

10 Petri Castrén, CFO October 25, 2017 Financials Q3 2017

11 Group s organic revenue growth continued Q Group s organic growth 7% Sales volumes grew in both segments, +13% in Industry & Water Operative EBITDA margin 13.6% at prior year level Volume growth main driver, variable costs increased. Sales prices were above prior year Kemira Group revenue bridge Q % +1% -2% 0% 622 Q Sales volumes Sales prices Currency impact M&A Q Operative EBITDA and operative EBITDA margin trend % 12.6% 12.5% 11.3% 12.5% 13.4% 13.6% 12.5% 13.6% 11.7% 11.3% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Q Results October 25,

12 Pulp & Paper organic growth improved Volume growth at good level (+2%) Absolute revenue impacted by FX Sales prices were at prior year level Profitability improving sequentially, y-o-y below due to raw material prices Revenue and organic revenue growth (y-on-y) % +5% +3% +2% +3% +1% -4% -2% 0% +1% +2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Operative EBITDA and operative EBITDA margin trend % 13.7% 11.5% 11.8% 12.3% 12.6% % 12.6% 13.0% 13.4% 12.4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Q Results October 25,

13 Industry & Water Organic growth accelerated Growth driven by Oil & Gas partly due to equipment sales in oil sands Oil & Gas grew by 75% to EUR 57 million in Q3 In water treatment volume growth continued at 2% Profitability improved clearly Higher sales volumes and increased sales prices main reasons. Fixed costs below prior year Revenue and organic revenue growth (y-on-y) -7% -5% -5% 0% +6% +9% +15% Operative EBITDA and operative EBITDA margin trend % 13.1% 12.5% % 9.6% 11.8% % 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 0 Q1 Q2 Q3 Q4 Q1 Q2 Q Q Results October 25,

14 Sales prices starting to offset increase in raw material costs Sales price vs variable cost trend Sales prices and variable costs on EBITDA level (change y-o-y) Brent oil, USD Sales prices* Variable costs* * 12-month rolling change vs previous year in Q1 Q2 Q3 Q4 Q1 Q2 Q Net impact on EBITDA (sales prices-variable costs) Sales prices Variable costs Q Results October 25,

15 Kemira settled damage claim litigation in Dortmund, Germany Kemira settled damage claim with CDC Cartel Damage Claims Hydrogen Peroxide SA and CDC Holding SA (together "CDC") in Dortmund, Germany The settlement concerns claims assigned to CDC based on which CDC claimed compensation for alleged damages relating to the alleged old infringement of competition law in the hydrogen peroxide business during Kemira agreed to pay to CDC EUR 12.7 million Kemira will continue to defend in the pending legal action in Amsterdam related to the sodium chlorate business in against Kemira Chemicals Oy (former Finnish Chemicals Oy). Kemira acquired Finnish Chemicals in 2005 Q Results October 25,

16 Outlook for 2017 Kemira expects its operative EBITDA to increase from the prior year (2016: EUR million) Operative EBITDA 9M M outlook Increase

17 Q Appendix

18 Revenue and operative EBITDA split Revenue split Operative EBITDA EUR 622 million EUR 2,363 million EUR 84.5 million EUR 303 million 42% 38% 43% 35% Q Q % 62% 57% 65% Pulp & Paper Industry & Water Q Results October 25,

19 Pulp & Paper FY2016: Revenue EUR 1,457 billion, Operative EBITDA EUR 195 million, margin 13.4% Customers, examples 40% Pulp production Customer mills 40% Board & tissue production 20% Paper production Geographies 35% Americas 50% EMEA Note: Revenue by industry, product and geography rounded to the nearest 5% 15% APAC 10% Other 10% Polymers 20% Defoamers, dispersants, biocides and other process chemicals Products 35% Bleaching and pulping 25% Sizing & strength Q Results October 25,

20 Industry & Water FY2016: Revenue EUR 906 million, Operative EBITDA EUR 107 million, margin 11.8% 15% Other applications 15% Oil & Gas Application split 70% Water treatment Municipal (40%), customer examples London New York City Montreal Frankfurt Shanghai Stockholm Toronto Los Angeles Singapore Las Vegas Oslo Barcelona Miami Berlin Melbourne Amsterdam Paris Washington DC Industrial (60%), customer examples Geographies 40% Americas 55% EMEA 5% 20% Other products such as defoamers and biocides APAC Products 45% Coagulants 35% Polymers Note: Revenue by industry, product and geography rounded to the nearest 5% Q Results October 25,

21 Key figures Q Q Δ% Δ% Δ% Revenue , , , , Operative EBITDA margin 13.6% 13.6% % 13.2% % 12.1% - Operative EBIT margin 7.7% 7.8% - 6.8% 7.6% - 7.2% 6.9% - Finance costs, net Earnings per share, EUR Cash flow from operations Capex excl. acquisitions Net debt Gearing, % at period-end Inventories Personnel at period-end 4,749 4, ,749 4, ,818 4, Q Results October 25,

22 Cash flow 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 Q Results October 25,

23 Pulp & Paper Key financials Q Q Δ% Δ% Δ% Revenue , , , , Operative EBITDA margin 13.4% 14.2% % 13.7% % 12.1% - Operative EBIT margin 6.7% 8.2% - 6.7% 8.0% - 7.7% 6.8% - Capital expenditure Cash flow after investing activities Q Results October 25,

24 Industry & Water Key financials Q Q Δ% Δ% * Δ% Revenue Operative EBITDA margin 13.9% 12.5% % 12.3% % 12.2% - Operative EBIT margin 9.0% 7.1% - 7.0% 6.9% - 6.5% 6.9% - Capital expenditure Cash flow after investing activities * Sum of Oil & Mining and Municipal & Industrial segments. Q Results October 25,

25 Investments into growth In 2017 capital expenditure is expected to be approximately EUR 200 million Largest investments in New chlorate plant in Brazil New chlorate line in Joutseno, Finland Capacity additions due to acquisition of AkzoNobel paper chemicals business Polymer capacity additions in Italy and UK Capital expenditure excluding acquisitions % Maintenance 28% Improvement CAPEX split in % Expansion YTD 2016 YTD 2017 Q Results October 25,

26 Revenue and cost distribution per currency Currency exchange rates had around EUR 0 million impact on the operative EBITDA in Q and around +6 million in January-September Guidance: 10% change in our main foreign currencies would approximately have EUR 10 million impact on operative EBITDA on an annualized basis Kemira revenue distribution 2016 Kemira cost distribution 2016 USD 35% USD 31% EUR 44% CAD 4% BRL 3% CNY 3% Others 11% EUR 41% SEK 8% CAD 4% CNY 4% Others 12% Q Results October 25,

27 Financial summary Revenue Operative EBITDA 2,241 2,229 2,373 2, , % 11.3% 11.8% 12.1% 12.8% Q Results October 25,

28 Revenue split by country FY 2016 Other EMEA 8% Indonesia 1% China 3% Other APAC 6% USA 27% Norway 2% Netherlands 2% France 2% Italy 2% Russia 2% Spain 2% UK 3% Poland 3% Sweden 6% APAC EMEA AMERICAS Canada 5% Brazil 3% Uruguay 2% Other Americas 1% Germany 6% Finland 14% Q Results October 25,

29 Important information about financial figures Kemira provides certain financial performance measures (alternative performance measures) on non-gaap basis. Kemira Group believes that alternative performance measures, like operative EBITDA and operative EBIT, followed by Kemira management, provide useful and more comparable information of its operative business performance. 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 at > Investors > Financial information. Q Results October 25,

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