FEBRUARY 8, 2019 Strong organic growth and solid results INVESTOR PRESENTATION
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 9% ◼ 20% Other: ◼ 41% ◼ 59% APAC e.g. defoamers, ◼ 25% Bleaching Industry & Water Pulp & Paper 1.China dispersants, 39% and pulping 2.South and biocides AMERICAS #2 globally Korea 1.USA 3.Thailand 2.Canada ◼ 15% 3.Brazil Sizing #1 in and 52% water strength EMEA treatment 1.Finland in NA and 2.Sweden ◼ 20% ◼ 20% 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 Several thousand customers TOP 10 customers are ~ 25% of revenue Municipalities, e.g. TOP 50 customers are ~ 50% of revenue Frankfurt, London, New York, Paris, Shanghai, Singapore FEBRUARY 2019 INVESTOR PRESENTATION 2
Global megatrends favor Kemira GROWING MIDDLE SCARCITY CLASS & REGULATION OF RESOURCES URBANIZATION Higher use of E-commerce / Alternative Material and More stringent Safe drinking water, energy, online shopping materials for resource discharge limits water tissue and board single-use plastic efficiency products FEBRUARY 2019 INVESTOR PRESENTATION 3
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 2018 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 INVESTOR PRESENTATION 4
Regulation trends favorable to demand of water treatment chemicals More stringent Emerging More discharge contaminants efficient limits (pharma, implementation microplastics) Increased demand for water treatment chemicals Better Stormwater dewatering of Overflows sludge and Water phosphorus reuse recovery FEBRUARY 2019 INVESTOR PRESENTATION 5
Delivering profitable growth REVENUE OPERATIVE EBITDA OPERATIVE EBITDA MARGIN EUR million EUR million 2,593 323 311 2,486 303 287 2,373 2,363 253 2,229 252 2,137 12.8% 12.5% 12.5% 12.1% 11.8% 11.3% 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 FEBRUARY 2019 INVESTOR PRESENTATION 6
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% ◼ 5% Other ◼ 40% 1,520 1,457 1,477 1,417 Pulp Board & Printing & Bleaching 1,170 ◼ 10% tissue writing papers & pulping 192 195 198 Polymers 171 137 ◼ 20% Defoamers, dispersants, biocides and Market ◼ 25% 1-2% 2-3% -1-2% other process growth Sizing & chemicals 2014 2015 2016 2017 2018 strength MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND CUSTOMER EXAMPLES MARKET GROWTH BY REGION Solenis (paper)* #1 ◼ 15% ◼ 55% ◼ 30% Kemira (pulp and paper) m.s. ~16% #2 APAC EMEA Americas Nouryon (pulp) #3 Ecolab (paper) #4 Market 1% 0-1% 2-3% Kurita (paper) #5 growth * Solenis-BASF combined entity Note: Revenue by industry, product and geography rounded to the nearest 5% FEBRUARY 2019 INVESTOR PRESENTATION 7
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 945 973 1,009 1,016 1,040 1,065 1,073 924 ◼ 25% ◼ 10% ◼ 65% ◼ 20% ◼ 40% Oil & Gas Water treatment Other Other Coagulants 131 products 123 123 117 113 such as 112 105 105 defoamers Municipal Industrial and biocides Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Market ◼ 40% 2-3% 5-6% 2-3% 2017 2018 growth Polymers MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND CUSTOMER EXAMPLES MARKET GROWTH BY REGION WATER TREATMENT OIL & GAS ◼ 5% Market share Market share ~25% in ◼ 50% ◼ 45% MUNICIPAL (40%), INDUSTRIAL (60%), APAC ~30% in coagulants and polymers used in shale EMEA Americas customer examples customer examples ~20% in polymers oil & 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 Paris Shanghai • Kronos (Europe) • Solenis 3-4% 3-4% 5-6% growth Stockholm Singapore • Chemtrade (NA) • Solvay (only O&G) • USAlco (NA) Note: Revenue by industry, product and geography rounded to the nearest 5% FEBRUARY 2019 INVESTOR PRESENTATION 8
Kemira’s mid - to long-term financial targets FINANCIAL TARGETS AND HISTORICAL FIGURES Targets 2017 2018 IFRS 16 impact Mid- to long-term target Revenue EUR 2,486 million EUR 2,593 million - Above-the-market growth Change +5% Change +4% 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. 2017-2018 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 Raw material inflation in 2017 and 2018, sales prices starting to offset raw material cost pressure in 2018 Capex projects – Polymer capacity expansion in Netherlands, AKD Joint Backward integration and growth benefits 2020-21 Venture in China, Polymer capacity expansion in the US FEBRUARY 2019 INVESTOR PRESENTATION 9
Healthy market growth for Kemira’s relevant markets KEMIRA RELEVANT MARKET PULP & PAPER RELEVANT MARKET EUR billion EUR billion 10 CAGR: 9 27 1-2% CAGR: 2- 3% 22 2018 2023 Pulp Printing & writing Board & tissue INDUSTRY & WATER RELEVANT MARKET EUR billion 17 CAGR: 13 3-4% 2018 2023 2018 2023 Americas EMEA APAC Water treatment Oil & Gas Other Source: Management estimation based on various sources FEBRUARY 2019 INVESTOR PRESENTATION 10
Dividend proposal EUR 0.53 per share • Kemira’s dividend policy is to pay a stable ◼ Dividend per share Dividend yield and competitive dividend * 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53 • Board of Directors’ proposal to the AGM a dividend of EUR 0.53 per share, totaling EUR 81 million 5.8% 4.5% 4.4% 5.4% 4.9% 4.4% 4.6% 5.4% • Kemira has paid dividend every year since listing of shares in 1994 Kemira offers attractive dividend yield • 2011 2012 2013 2014 2015 2016 2017 2018 Kemira’s dividend yield calculated using the share price at year-end *BoD proposal to the AGM 2019 FEBRUARY 2019 INVESTOR PRESENTATION 11
Our three sustainability priorities Incorporating sustainability into Ensuring responsible operations our products and solutions to protect our assets, our environment, employees, Proactive product stewardship contractors, customers and Sustainable throughout the products’ lifecycle Responsible communities products operations & Ensuring compliance with KPI’S AND TARGETS and responsible business practices supply chain At least 50% of our revenue is generated solutions through products improving customers’ in our supply chain resource efficiency KPI’S AND TARGETS • Carbon Index 80 by 2020 (Baseline Culture and commitment to people 100 in 2012) • People safety TRIF 2.0 by 2020 Ensuring compliance with People and Supplier Sustainability Evaluation Kemira Code of Conduct • 90% of direct key suppliers screened integrity through sustainability evaluation KPI’S AND TARGETS through assessments and audits (Baseline 60% in 2017) • 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 FEBRUARY 2019 INVESTOR PRESENTATION 12
INVESTOR PRESENTATION Latest news and financials FEBRUARY 2019 INVESTOR PRESENTATION 13
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 INVESTOR PRESENTATION 14
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