September 21, 2017 Capital Markets Day Kemira – progressing our strategy for profitable growth
Kemira Capital Markets Day 2017 Program (UK time): 11.00 Registration & breakfast 11.30 President & CEO: Jari Rosendal Pulp & Paper: Kim Poulsen Jari Rosendal Petri Castrén Industry & Water: Antti Salminen President and CEO CFO 12.45 Lunch 13.20 Oil & Gas: Pedro Materan Sourcing: Thierry Blomet CFO: Petri Castrén Kim Poulsen Antti Salminen President, Industry President, Pulp & Paper 14.35 Coffee break & Water 14.50 Breakout sessions with the management (three groups) 16.05 Cocktails 17.00 End Thierry Blomet Pedro Materan SVP, Sourcing SVP, Oil & Gas Capital Markets Day September 21, 2017 2
Today’s speakers Jari Rosendal Petri Castrén President and CEO CFO with Kemira since 2014 with Kemira since 2013 Key prior positions: Key prior positions: • • Outotec Nokia Siemens Networks – – Member of the Executive Board Head of Corporate Finance (Group Treasurer) – – Executive Vice President, President of Head of Corporate Development Americas Region • Nokia Corporation – President, Non ‐ ferrous Solutions Business Area – Head of Mergers & Acquisitions – President, Minerals Processing Division – Various finance and business development • Relevant positions of trust: management roles • Chemical Industry Federation of Finland – Member of the Board of Directors • European Chemical Industry Council (CEFIC) – Member of the Board of Directors Capital Markets Day September 21, 2017 3
Today’s speakers Kim Poulsen Antti Salminen President, Segment Pulp & Paper President, Segment Industry & Water with Kemira since 2015 with Kemira since 2011 Key prior positions: Key prior positions: • • UPM-Kymmene Kemira – – Paper Asia, EVP and Group Executive Team Member Executive Vice President, Supply Chain – Management Head of APAC, EVP and Group Executive Team Member • KONE – Senior Vice President, Plywood business – Director, New Equipment Business, Asia Pacific • Vitalis Gladius – Vice President, Delivery Process – Owner and Senior Partner • Capgemini Finland • – Paloheimo Group and Fenestra Managing Consultant – President and CEO • Finnforest – Several management roles Capital Markets Day September 21, 2017 4
Today’s speakers Pedro Materan Thierry Blomet SVP, Global Oil & Gas, SVP, Sourcing Industry & Water with Kemira since 2013 with Kemira since 2006 Key prior positions: Key prior positions: • • Kemira PPG – – SVP, RBU Oil & Mining, Americas Director, Raw Material Purchasing EMEA – – Global Business Development and Global Sales Director, Indirect Purchasing EMEA Manager, Oil and Gas – Business Director – Industrial Finishes Europe • Cytec Industries • Dupont – Global Marketing Manager for Oilfield – Business Director – Coatings for mass production – Sales Manager, Americas for Phosphine Chemicals industry (Oil, Mining and Textiles) – Regional Technical Sales Manager for Water Treatment – Sales Rep for Water Soluble Polymers Capital Markets Day September 21, 2017 5
Jari Rosendal , President and CEO September 21, 2017 Capital Markets Day Kemira – progressing our strategy for profitable growth
Kemira in brief FY2016: Revenue EUR 2,363 billion, Operative EBITDA EUR 302.5 million, margin 12.8% SEGMENT SPLIT GEOGRAPHIES PRODUCTS 25% Bleaching 10% and pulping 20% Other: APAC 38% 38% e.g. defoamers, 1.China AMERICAS Industry dispersants, 2.Indonesia & Water 1.USA and biocides 3.South 2.Canada #1 in water Korea 20% 3.Brazil treatment in 52% Coagulants NA and EUROPE Europe 62% 1.Finland 15% Sizing Pulp & #1 in shale 2.Sweden and strength 20% Paper in NA 3.Germany Polymers #1 globally Revenue by product category rounded to the nearest 5% CUSTOMERS Examples of largest customers Municipalities, e.g. Frankfurt 8,000 Sold-to customers London New York City 16,000 Ship-to customers Paris Shanghai Singapore Capital Markets Day September 21, 2017 7
Our targets and actions for profitable growth ACQUISITIONS ORGANIC GROWTH Very selective approach • • Strategic and synergistic fit Investments in capacity expansion • • Accretive to profitability Seize opportunities in growth pockets • • Reasonable valuation Shale oil & gas business • CEOR and oil sands • Digitalization • Above-the-market APAC • R&D, new products growth and operative EFFICIENCY EBITDA of 14-16% • Manufacturing footprint OPERATING COST and utilization optimization DISCIPLINE • BOOST – Operational excellence Prudent cost culture • Organizational efficiencies with new structure • Complexity reduction • Efficient processes Capital Markets Day September 21, 2017 8
Progress in profitable growth Opening / expansion of site Acquisition Operational efficiencies Closure of site Start-up of Joutseno (FI) chlorate 11.3% 12.8% expansion 2013 operative 2016 operative Transportation EBITDA EBITDA agreement with Q3 Start-up of Ortigueira Odyssey 17 (BR) sodium chlorate site Q2 and announcement of 17 Q1 Joutseno (FI) expansion 17 Acquisition of Soto Q4 Acquisition BASF Opening of 16 Industries (US) Q3 AKD emulsion business Nanjing (CN) 16 AkzoNobel’s Q2 Odyssey go-live site 16 Q1 paper chemicals in North America 16 Opening of Tarragona acquisition Q4 Bradford (UK) coagulant site (ES) 15 Q3 expansion Two segment 15 Q2 structure San Giorgio (IT) 15 Q1 Acquisition operational expansion 15 Q4 of Polymer Q3 14 Services (US) Expansion of Closures of Ottawa (CA) 14 Q2 pulp chemicals, and Zaramillo (ES) Q1 14 Closure of Oulu (FI) 14 Soave (IT) Botlek (NL) Expansion of dry and emulsion modernization Closure of Opening of EMEA polyacrylamide Longview (US) BOOST operational service center (US) excellence program launch Capital Markets Day September 21, 2017 9
Kemira has managed to improve EBITDA even with the downturn in the O&G market Revenue Operative EBITDA and operative EBITDA margin EUR million EUR million 2420 2373 2363 2229 2137 303 297 287 253 252 12.8% 12.3% 12.1% 11.8% 11.3% 2013 2014 2015 2016 LTM 2013 2014 2015 2016 LTM Between 2014-2016, Oil & Mining revenue and operative EBITDA dropped EUR 70 million and EUR 30 million respectively LTM = Last Twelve Months ending June 2017 Capital Markets Day September 21, 2017 10
Kemira’s relevant market expected to show healthy growth Market growth by business areas: Pulp & Paper 1%, Water treatment 2-3%, Oil & Gas 5-6% p.a. Long-term drivers for growth, including: Relevant target market (EUR billion) • E-commerce drives the need for packaging material ~23 +3% • Growing middle class, increased standards of living ~20 and urbanization leads to higher usage of water, 2-3% energy, tissue, and board • Recycling and use of renewables leads to e.g. higher Americas usage of strength chemicals • Regulation increases water treatment 2-3% • Scarcity of resources accelerates need to produce more with less EMEA Challenges 3-4% • Risks to global GDP growth APAC • Decline in demand for printing and writing paper demand 2017 2022 CAGR 2017-2022 Management estimation based on various sources Capital Markets Day September 21, 2017 11
APAC is driving future market growth • APAC market is the largest and fastest Revenue growing market • Our business in APAC has been growing and EBITDA turned to positive after 2014 2011 2013 2015 H1 – New greenfield manufacturing site in Nanjing, 2017* China in 2014 and acquisition of AkzoNobel’s paper chemicals in 2015 have helped to improve Operative profitability EBITDA – We are market leader in Pulp & Paper with ~10% market share – Industry & Water continue to grow, albeit from 2011 2013 2015 H1 small base 2017* * H1 2017 annualized Capital Markets Day September 21, 2017 12
Innovation drives growth – EUR 220 million revenue from recent innovations We innovate for the future through customer collaboration, partnerships and open innovation. We use digitalization to improve our own performance as well as the services offered to 20% Other: 25% Bleaching customers. e.g. defoamers, and pulping dispersants, and biocides 250 R&D experts create new innovations in R&D centers in Finland, China and US. Products 20% EUR 2.4bn 348 patent families Coagulants Over 1,200 patents 15% Sizing and strength 20% Polymers
Innovation sales on track – pipeline strong Sales from new products (launched within the last 5 years) 300 9% 8% 8% 250 7% 200 5% 150 Best selling new products in 2016 100 1. Oil & Gas – Freeze tolerant friction reducer 50 2. Oil & Gas – Stabilizing additives for 0 CEOR polymers 2012 2013 2014 2015 2016 3. Pulp & Paper – of Group’s revenue from new products Strength for tissue Capital Markets Day September 21, 2017 14
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