JARI ROSENDAL, PRESIDENT AND CEO PETRI CASTRÉN, CFO JULY 20, 2018 Strong organic growth continued JANUARY-JUNE 2018
Key financial highlights Q2 2018 • Organic growth +9% EUR million Q2 Q2 Δ% FY – Healthy organic growth in all businesses (except ratios) 2018 2017 2017 – Strong growth continued in Oil & Gas Revenue 647.6 617.2 +5 2,486.0 • Operative EBITDA increased 4% Operative EBITDA 80.2 77.1 +4 311.3 – Sales prices started to offset increasing raw of which margin 12.4% 12.5% - 12.5% material costs Operative EBIT 45.1 43.6 +3 170.3 – Currencies were still significant headwind • Currencies EUR -9 million on EBITDA level vs of which margin 7.0% 7.1% - 6.9% Q2 2017 Net profit 23.5 19.6 +20 85.2 EPS, EUR 0.14 0.12 +17 0.52 JULY 20, 2018 Q2 2018 RESULTS 2
Kemira’s variable cost split and top raw materials VARIABLE COST SPLIT EXPOSURE TO OIL RELATED TOP 10 RAW MATERIALS Last 12 months EUR 1.5 billion RAW MATERIALS BY SPEND 1. Sodium hydroxide (caustic soda) 70% 30% 2. Acrylonitrile (OD) 20% Not oil Oil & gas related derivative 3. Colloidal silica dispersion Logistics 4. Amines (OD) 15% Electricity & energy 5. Aluminum hydrate 6. Petroleum solvents 7. Acrylic acid (OD) 8. Acrylic ester (OD) 9. Alpha olefin (OD) 10. Sodium chloride (salt) Top 10 account for 45% 65% of Kemira’s raw material spend Raw materials OD = Oil & gas derivative JULY 20, 2018 Q2 2018 RESULTS 3
Raw material prices on inflationary path CERTAIN FEEDSTOCK AND RAW MATERIAL PRICES IN THE US • Especially oil-based raw Change y-o-y material prices have WTI +41% 90% been very volatile Change Propylene +28% in Q2/18: Acrylonitrile +19% 70% Price changes in the • Acrylic Acid +6% value chain from WTI 50% Crude Oil to acrylonitrile 30% and acrylic acid 10% illustrated on the right -10% • Inflationary pressure so far only partially passed -30% on to customers -50% Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 WTI Crude Oil US Propylene Key feedstock Acrylonitrile Acrylic Acid Key oil related raw materials JULY 20, 2018 Q2 2018 RESULTS 4
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 JULY 20, 2018 Q2 2018 RESULTS 5
Pulp & Paper – good organic growth, profitability hampered by FX H1 organic growth +5% REVENUE EUR million Higher sales prices contributing to organic • 745 741 growth Good volume growth in chlorate • • FX offsetting reported revenue growth Operative EBITDA below prior year H1 2017 H1 2018 Currencies main headwind, impacted • EBITDA by EUR -9 million in H1 OPERATIVE EBITDA AND EBITDA-% EUR million Sales price increases have started to • compensate higher raw material prices 94 88 Update on China AKD JV/acquisition 11.8% 12.7% • Kemira agreed in Q3 2017 to form joint venture with Tiancheng H1 2017 H1 2018 • Closing still pending certain authority approvals JULY 20, 2018 Q2 2018 RESULTS 6
Industry & Water – profitable growth continued in water treatment and oil & gas Strong revenue growth REVENUE EUR million In H1, organic growth +12% • 517 486 • Oil & Gas continued its strong momentum Volume growth in water treatment continued • driven by positive underlying market trends H1 2017 H1 2018 Operative EBITDA increased • EBITDA improvement driven mainly by higher OPERATIVE EBITDA AND EBITDA-% EUR million gross margin Currency impact EUR -7 million vs H1 2017 • 61 52 Polymer production optimization 11.9% 10.8% Intermediary-product manufacturing unit closed • as a part of long-term polymer manufacturing optimization H1 2017 H1 2018 JULY 20, 2018 Q2 2018 RESULTS 7
Outlook for 2018 Kemira expects its operative EBITDA to increase from the prior year (2017: EUR 311.3 million). EUR 2015 2016 2017 H1 H1 2018 million 2017 2018 outlook Operative 287 303 311 146 150 Increase EBITDA JULY 20, 2018 Q2 2018 RESULTS 8
PETRI CASTRÉN, CFO JULY 20, 2018 Financials Q2 2018 JULY 20, 2018 Q2 2018 RESULTS 9
Organic growth continued Q2 2018 Group’s organic growth +9% Earnings per share up by 17% • EPS increased mostly due to higher operative EBITDA • Pulp & Paper +6%, Industry & Water +14% and gain on sale Operative EBITDA +4%, margin 12.4% Q2 2018 includes also EUR 9 million write-down of – manufacturing unit and Q2 2017 includes restructuring Profitability negatively impacted by FX and lag in • costs of EUR 10 million implementing sales price increases REVENUE AND ORGANIC REVENUE GROWTH OPERATIVE EBITDA AND OPERATIVE EBITDA (Y-ON-Y) EUR million MARGIN EUR million 84.5 80.8 80.7 80.2 78.9 77.1 72.8 69.4 70.0 +8% -4% 69.0 648 0% +2% 12.4% 617 12.5% 13.4% 13.6% 11.7% 11.3% 12.5% 13.6% 12.7% 11.3% Q2 2017 Sales Sales Currency Acquisitions Q2 2018 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 volumes prices impact 2016 2017 2018 JULY 20, 2018 Q2 2018 RESULTS 10
Adverse FX movements impacted EBITDA CURRENCIES HAD EUR -16 MILLION IMPACT ON H1 2018 VS H1 2017 OF WHICH -10 FROM EUR/USD EUR/USD SINCE JANUARY 2017 CURRENCY IMPACT ON EBITDA EUR million Q2 Q2 Delta H1 H1 Delta 1.30 Negative FX effect on (Rounded figures) 2018 2017 2018 2017 hedges and balance sheet (Mar 31 vs Jun 30) 1.25 Translation / -4 -1 -3 -10 -1 -9 transaction 1.20 1.15 Hedges and balance -4 +1 -5 -5 +2 -7 sheet revaluation Negative FX effect on 1.10 revenue and EBITDA (Q2/17 vs Q2/18) 1.05 Currencies in total -8 0 -9 -15 0 -16 1.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2017 2018 JULY 20, 2018 Q2 2018 RESULTS 11
Net impact of sales price & variable cost delta positive for the 1 st time since Q2 2016 SALES PRICE VS VARIABLE COST TREND SALES PRICES AND VARIABLE COSTS (CHANGE Y-O-Y) 60 200 47 50 150 36 40 26 100 30 13 20 50 11 9 23 5 10 16 13 0 11 0 -9 3 0 -2 -2 -10 -10 -3 -50 -18 -4 -10 -23 -13 -20 -100 -16 -20 -18 -30 -23 -23 -26 -16 -150 -40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 -200 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net impact on EBITDA (sales prices-variable costs) Brent oil, USD Sales prices* Variable costs* Sales prices Variable costs * 12-month rolling change vs previous year in EUR million JULY 20, 2018 Q2 2018 RESULTS 12
Pulp & Paper – good growth but profitability impacted by raw material prices and FX • Organic growth continued driven by pricing but drastic FX headwind impacted operative EBITDA Raw material prices increasing – mitigating sales price increases announced • • Maintenance breaks had additional negative impact on EBITDA vs. Q2 2017 REVENUE AND ORGANIC REVENUE GROWTH OPERATIVE EBITDA AND OPERATIVE EBITDA (Y-ON-Y) EUR million MARGIN EUR million 14.9% 13.2% 13.7% 14.2% 12.6% 12.4% 13.0% 13.4% 376 372 373 369 369 369 362 365 363 361 11.6% 12.1% 55.4 51.8 49.3 48.5 47.9 47.8 46.3 46.0 45.4 42.7 +2% +5% +5% +6% +3% +1% -4% -2% 0% +1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 2016 2017 2018 JULY 20, 2018 Q2 2018 RESULTS 13
Industry & Water – strong growth continued and margin improved • Strong organic growth, USD was still headwind for reported figures Oil & Gas +26% to EUR 56 million in Q2 2018, organic growth again over 30% • – Vast majority of growth in Oil & Gas came from higher sales prices Growth also continued in water treatment with positive pricing and volume development • REVENUE AND ORGANIC REVENUE GROWTH OPERATIVE EBITDA AND OPERATIVE EBITDA (Y-ON-Y) EUR million MARGIN EUR million 272 13.9% 264 259 13.1% 12.5% 248 245 12.8% 238 231 227 228 11.8% 220 11.3% 9.6% 10.9% 10.4% 9.6% 36.0 34.8 29.6 29.0 29.3 26.6 24.9 25.3 23.7 22.9 +20% -7% -5% -5% 0% +6% +9% +15% +14% +11% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 2016 2017 2018 JULY 20, 2018 Q2 2018 RESULTS 14
Development of selected key figures ALL KEY FIGURES IN EUR MILLION EXCEPT RATIOS CASH FLOW FROM OPERATIONS CAPITAL EXPENDITURE EXCL. ACQUISITIONS 271 Growth capex 248 205 95 66 78 38 22 58 41 124 118 104 44 41 2015 2016 2017 H1 2017 H1 2018 2015 2016 2017 H1 2017 H1 2018 OPERATIVE RETURN ON CAPITAL EMPLOYED NET DEBT AND LEVERAGE RATIO 773 758 694 9.9% 9.8% 642 9.7% 9.7% 634 9.2% 2.2 2.1 2.2 2.6 2.5 2015 2016 2017 H1 2017 H1 2018 2015 2016 2017 H1 2017 H1 2018 JULY 20, 2018 Q2 2018 RESULTS 15
JANUARY-JUNE 2018 Appendix JULY 20, 2018 Q2 2018 RESULTS 17
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