APRIL 27, 2018 Good organic growth INVESTOR PRESENTATION
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 9% 20% Other: 41% 59% 25% Bleaching APAC e.g. defoamers, Industry & Water Pulp & Paper and pulping 1.China 39% dispersants, AMERICAS 2.South and biocides #1 globally Korea 1.USA 3.Indonesia 2.Canada 15% 3.Brazil Sizing #1 in 52% and water EMEA strength treatment 1.Finland in NA and 20% 20% 2.Sweden Europe 3.Germany Polymers Coagulants #2 in friction reduction in North Revenue by product category rounded to the nearest 5% American shale oil & gas CUSTOMERS EXAMPLES OF LARGEST CUSTOMERS 2,000 customers TOP 10 customers are ~ 25% of revenue Municipalities, e.g. TOP 50 customers are ~45 of revenue Frankfurt, London, New York, Paris, Shanghai, Singapore APRIL 2018 INVESTOR PRESENTATION 2
Global trends favor Kemira Trends, among others Plastics to Regulation driving Finding oil Recycling E-commerce / Plastics to be replaced be replaced better water quality reservoirs online by biobased by biobased becoming harder shopping products products How Kemira benefits from the trend With chemistry With polymers More chemicals Increasing need Increased water can be increasing required for for packaging demand of purified better amount of oil stronger material biobased and can be paper/board more sustainable extracted from technologies current and new oil fields APRIL 2018 INVESTOR PRESENTATION 3
Delivering profitable growth REVENUE OPERATIVE EBITDA OPERATIVE EBITDA MARGIN EUR million EUR million 311 2,486 303 287 2,373 2,363 253 2,229 252 2,137 12.8% 12.5% 12.1% 11.8% 11.3% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 APRIL 2018 INVESTOR PRESENTATION 4
Pulp & Paper – market leader with solid track record REVENUE AND REVENUE BY CUSTOMER REVENUE BY OPERATIVE EBITDA TYPE AND MARKET GROWTH PRODUCT CATEGORY 40% 40% 20% 10% Other 35% 1,457 1,477 1,417 Pulp Board & Printing & Bleaching 10% 1,170 198 tissue writing papers & pulping 1,068 195 Polymers 171 137 20% 130 Defoamers, dispersants, biocides and 25% other process Sizing & Market chemicals 1-2% 2-3% -1-2% 2013 2014 2015 2016 2017 growth strength MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND CUSTOMER EXAMPLES MARKET GROWTH BY REGION Kemira (pulp and paper) m.s. ~16% #1 35% 50% 15% APAC # 2 BASF (paper) Americas EMEA # 3 Solenis (paper) # 4 AkzoNobel (pulp) Market 0-1% 0-1% 2-3% # 5 Ecolab (paper) growth Note: Revenue by industry, product and geography rounded to the nearest 5% APRIL 2018 INVESTOR PRESENTATION 5
Industry & Water – strong positions in chosen categories REVENUE AND OPERATIVE EBITDA REVENUE BY APPLICATION REVENUE BY ROLLING 12 MONTHS TYPE AND MARKET GROWTH PRODUCT CATEGORY 1,016 938 921 906 906 924 945 973 1,009 70% 20% 10% 20% 40% Water treatment Oil & Gas Other Coagulants Other 117 113 107 105 107 105 105 112 111 products such as Municipal Industrial defoamers and biocides Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Market 40% 2-3% 5-6% 2-3% growth Polymers 2016 2017 2018 MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND CUSTOMER EXAMPLES MARKET GROWTH BY REGION WATER TREATMENT OIL & GAS 50% 45% 5% MUNICIPAL (40%), INDUSTRIAL (60%), Market share Market share ~25% in ~30% in coagulants and polymers used in shale oil EMEA Americas APAC customer examples customer examples ~20% in polymers & gas Amsterdam Los Angeles Barcelona Montreal Main competitors in Main peers in polymers Frankfurt New York City coagulants: (also in water treatment): London Toronto • Feralco (Europe) • SNF Oslo Melbourne Market • Kronos (Europe) • BASF Paris Shanghai 3-4% 3-4% 5-6% growth Stockholm Singapore • Chemtrade (US) • Solenis • USAlco (US) • Solvay (only O&G) Note: Revenue by industry, product and geography rounded to the nearest 5% APRIL 2018 INVESTOR PRESENTATION 6
Our key actions to improve margins Operative EBITDA margin 14-16% Advanced Volatility and Chemical Water inflation Oil sands Enhanced Treatment Optimization Oil Recovery Acquisition of operations: 12.8% 12.5% New in China majority of New 12.1% bleaching savings in AkzoNobel’s two segment capacity in logistics paper structure Finland chemicals 2015 2016 2017 Pulp & Group Pulp & Pulp & Group Industry & Industry & Industry & Volatility & Mid- to long- Paper Paper Paper Water Water Water inflation term target Estimated end of 2017 run-rate 100% 100% 75% 0% Low 25% Low Low Full run-rate by EO 2017 EO 2017 2018 2019 1-2 yrs 2-3 yrs 2-5 yrs 3-5 yrs APRIL 2018 INVESTOR PRESENTATION 7
Kemira offers stable and competitive dividend • Cash flow from operations has been partly Dividend per share Growth investments per share invested into future growth and partly Dividend yield distributed to shareholders as dividends 0.61 • Kemira has paid dividend every year since 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.51 listing of shares in 1994 0.47 0.44 0.43 • Kemira offers attractive dividend yield 0.37 5.8% 4.5% 4.4% 5.4% 4.9% 4.4% 4.6% 0.13 2011 2012 2013 2014 2015 2016 2017 Kemira’s dividend yield calculated using the share price at year-end APRIL 2018 INVESTOR PRESENTATION 8
Progress in profitable growth Opening / expansion of site Acquisition Operational efficiencies Closure of site Start-up of Joutseno 11.3% 12.5% (FI) chlorate expansion 2013 operative 2017 operative Transportation Q4 EBITDA EBITDA agreement with 17 Q3 Start-up of Ortigueira Odyssey Q2 17 (BR) sodium chlorate site 17 Q1 and announcement of 17 Q4 Joutseno (FI) expansion Acquisition of Soto 16 Opening of Acquisition BASF Q3 Industries (US) 16 Nanjing (CN) AKD emulsion business Q2 Announcement AkzoNobel’s site Odyssey go-live 16 of acquisition Q1 paper chemicals in North America 16 via JV in China Q4 Opening of Tarragona acquisition Bradford (UK) 15 coagulant site (ES) Q3 expansion Two segment 15 Q2 structure 15 Q1 San Giorgio (IT) Acquisition operational 15 expansion Q4 of Polymer 14 Q3 Services (US) Expansion of Closures of Ottawa (CA) 14 Q2 Q1 pulp chemicals, and Zaramillo (ES) 14 Closure of 14 Oulu (FI) Expansion of dry Soave (IT) Botlek (NL) and emulsion modernization Closure of Opening of EMEA polyacrylamide Longview (US) service center BOOST operational (US) excellence program launch APRIL 2018 INVESTOR PRESENTATION 9
INVESTOR PRESENTATION Latest news and financials APRIL 2018 INVESTOR PRESENTATION 10
Key financial highlights Q1 2018 • Organic growth +7% EUR million Q1 Q1 Δ% FY – Demand is growing in every market we serve 2018 2017 2017 (except ratios) – Strong momentum continued especially in 613.7 Revenue 610.0 +1 2,486.0 Oil & Gas 69.4 Operative EBITDA flat at reported figures, • Operative EBITDA 69.0 +1 311.3 underlying development better 11.3% of which margin 11.3% - 12.5% – Positive impact of organic growth was offset by 33.9 Operative EBIT 34.9 -3 170.3 increased variable costs and currency headwind • Currencies EUR -7 million on EBITDA level 5.5% of which margin 5.7% - 6.9% – Q1 was below our expectations but we expect 23.0 better performance in the coming quarters Net profit 19.8 +16 85.2 Earnings per share +17% • 0.14 EPS, EUR 0.12 +17 0.52 – Finance costs were lower due to EUR 3.6 million gain from the sale of shares in power plant companies APRIL 2018 INVESTOR PRESENTATION 11
Positive long-term operative EBITDA trend ROLLING 12-MONTH OPERATIVE EBITDA AND OPERATIVE EBITDA-% In big picture, operative EBITDA on positive trend 320 16% 312 311 Profitability improvement 303 301 301 measures overshadowed by 299 298 297 300 15% 294 pressure from raw material 287 285 prices 276 280 14% During the last year market 262 260 13% has moved from deflatory to 12.5% 12.7% 12.8% inflatory environment 12.5% 12.3% 12.3% 12.5% 240 12.4% 12.3% 12.1% 12.2% 12.4% 12% 12.1% 220 11% 200 10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 APRIL 2018 INVESTOR PRESENTATION 12
Pulp & Paper – good underlying market with major regional differences Market environment and performance ROLLING 12-MONTH OPERATIVE EBITDA AND EBITDA-% EUR million • EMEA strong and South America solid • North America battles with shrinking market 198 196 195 in process and functional chemicals 194 193 192 191 • 189 In APAC growth continues but profitability a challenge 183 Q1 organic growth +5% • FX offsetting reported revenue growth 13.2% 13.4% 13.4% 13.4% 13.2% 13.0% 12.9% 12.8% Profitability drivers 12.5% • Profitability improvement to continue when price increases go through - current sales prices were not yet sufficient to cover Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 increase in raw material prices 2016 2017 2018 • In addition to sales prices, new capacity at Joutseno and Chinese acquisition are expected to improve profitability in mid-term APRIL 2018 INVESTOR PRESENTATION 13
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