JARI ROSENDAL, PRESIDENT AND CEO PETRI CASTRÉN, CFO APRIL 26, 2019 Strong earnings improvement in Q1 JANUARY-MARCH 2019
Selected operational highlights in Q1 2019 • Organic growth continued – market environment fairly good • Profitability improved clearly – capacity utilization rates remained good • Investment projects proceeding well APRIL 26, 2019 Q1 2019 RESULTS 2
Key financial highlights Organic growth +2% EUR million Q1 Q1 Δ% FY Sales prices increased in all areas of our • (except ratios) 2019 2018 2018 businesses Revenue 613.7 +6 2,592.8 647.8 Operative EBITDA +38% to margin of 14.8% Operative EBITDA 95.6 69.4 +38 323.1 • Favorable combination of increasing sales prices and moderate raw material cost impact of which margin 14.8% 11.3% - 12.5% • Supply disruptions emerged during the quarter Operative EBIT 50.1 33.9 +48 173.8 but mitigating actions were done quickly – some financial impact expected in Q2 due to of which margin 7.7% 5.5% - 6.7% higher raw material and logistic costs Net profit 29.3 23.0 +27 95.2 Operative EBIT +48% to margin of 7.7% EPS, EUR 0.18 0.14 +31 0.58 APRIL 26, 2019 Q1 2019 RESULTS 3
Pulp & Paper – continued sales price growth Market environment REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million Long-term market outlook positive with multiple • 390 investments announced recently by major pulp & 385 381 376 373 372 369 369 363 paper companies like APP, Hamburger Containerboard, Mondi and Nine Dragons 0% +1% +2% +5% +5% +6% +7% +4% 0% Organic growth flat with positive pricing • Exit of ECOX business impacted sales volumes Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Operative EBITDA margin 13.3% 2017 2018 2019 Underlying profitability in focus • OPERATIVE EBITDA AND OPERATIVE EBITDA-% EUR million • *Due to IFRS 16, leasing costs are mostly in 14.9% depreciations and partly in interest expenses in 13.6% 13.4% 13.3% 13.1% 13.0% 12.4% 12.1% 2019, positive EBITDA impact EUR +3.3 million 11.6% 55.4 52.3 51.2 50.7 47.8 48.5 46.0 45.4 42.7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* 2017 2018 2019 APRIL 26, 2019 Q1 2019 RESULTS 4
Industry & Water – record-high margin Market environment REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million Water treatment market solid – expecting tighter • 284 272 271 267 264 259 regulation in Europe 248 245 238 • Oil & gas shale market growth rate moderating in the short-term +6% +9% +15% +20% +11% +14% +11% +2% +5% Organic growth +5% • Our Oil & Gas business had strong organic Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 growth, +26% to EUR 62 million 2017 2018 2019 In water treatment, we are well positioned to • OPERATIVE EBITDA AND OPERATIVE EBITDA-% meet continued inflationary pressures EUR million 16.8% Operative EBITDA margin 16.8% 13.9% 12.9% 12.8% 12.3% 11.8% 10.9% 45.0 Sales prices increased while propylene-based • 9.6% 9.6% 36.7 36.0 34.8 33.3 raw material prices decreased 29.3 26.6 25.3 22.9 • Favorable product mix *Due to IFRS 16, positive EBITDA impact EUR • +4.4 million in Q1 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* 2017 2018 2019 APRIL 26, 2019 Q1 2019 RESULTS 5
Investing in core product categories with higher return PRODUCTS • Top 4 product categories represent 80% of Group’s revenue, above EUR 2 billion ◼ 20% Other: ◼ 25% Bleaching • Our investments have focused on: e.g. defoamers, and pulping dispersants, Bleaching chemicals – and biocides – Polymers Revenue Sizing* chemicals – EUR 2,627 ◼ 15% Current investments projects • million Sizing* (LTM) and – Netherlands – Expansion of Oil & Gas polymers strength US – Expansion of Oil & Gas polymers – China – Completion of new Pulp & Paper AKD site – ◼ 20% ◼ 20% Coagulants Polymers *Sizing = Resistance against water absorption APRIL 26, 2019 Q1 2019 RESULTS 6
Key operative focus areas in 2019 1. Continue to pass on higher raw material costs to sales prices 2. Optimize capacity allocation 3. Modify product & service offering to cater better profitable growth 4. Improve operational excellence 5. Ramp-up CEOR* polymer capacity addition in Netherlands in H2 6. Start-up new sizing manufacturing site in China in H2 7. Construction of emulsion polymer capacity in the US on time and in budget, start-up expected beginning of 2021 8. Prudent cost-control in all areas *CEOR, chemical enhanced oil recovery APRIL 26, 2019 Q1 2019 RESULTS 7
PETRI CASTRÉN, CFO APRIL 26, 2019 Financials Q1 2019 APRIL 26, 2019 Q1 2019 RESULTS 8
Successful pricing drives improvement REVENUE AND ORGANIC GROWTH (Y-ON-Y) Group’s organic growth +2% EUR million Operative EBITDA margin 14.8% 0 648 +3% +6% -4% 614 Strong operational improvement mainly driven by • pricing Due to the adoption of IFRS 16 -standard, fixed costs • do not include operating lease expenses in 2019, Q1 2018 Sales Sales Currency Acquisitions Q1 2019 corresponding to a positive EBITDA impact of EUR 7.7 volumes prices impact million OPERATIVE EBITDA BRIDGE EUR million +5.4 +6.4 -2.4 -7.7 95.6 +34.4 -10.5 87.9 -7.0 69.4 Q1 Sales volumes Sales prices Variable costs Fixed costs Currency Other Q1 Adoption of "Pre IFRS 16 2018 impact 2019 IFRS 16 comparison" standard APRIL 26, 2019 Q1 2019 RESULTS 9
Net impact of sales price & variable costs positive SALES PRICE VS VARIABLE COST TREND SALES PRICES AND VARIABLE COSTS (ROLLING 12-MONTH CHANGE Y-O-Y) (CHANGE Y-O-Y) EUR million EUR million 180 47 42 37 120 34 26 38 36 13 60 16 24 29 13 11 9 23 8 5 4 11 0 11 -9 3 0 -2 -2 -10 -3 -18 -4 -60 -10 -23 -13 -16 -20 -18 -23 -23 -26 -16 -120 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -180 2016 2017 2018 2019 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 APRIL 26, 2019 Q1 2019 RESULTS 10
Cash flow improved in Q1 ALL KEY FIGURES IN EUR MILLION CASH FLOW FROM OPERATIONS • Q1 cash flow supported by improved profitability 271 Seasonality led to negative change in NWC as in • 210 205 previous years • Kemira’s Pension Fund Neliapila returned excess capital of EUR 15 million to Group in Q1 65 34 IFRS 16 impact EUR +7 million on cash flow from • operations 2016 2017 2018 Q1 2018 Q1 2019 CAPITAL EXPENDITURE EXCL. ACQUISITIONS 213 190 ◼ Growth capex In Q1 the largest growth capex projects were on- • 150 going completion of Pulp & Paper AKD plant in China 95 66 and expansion of CEOR polymers for Oil & Gas in 44 Netherlands 124 118 28 • CAPEX excl. acquisitions estimated to be around 106 23 14 7 EUR 180-220 million in 2019 16 14 2016 2017 2018 Q1 2018 Q1 2019 APRIL 26, 2019 Q1 2019 RESULTS 11
ROCE improving, adoption of IFRS 16 increased reported net debt OPERATIVE RETURN ON CAPITAL EMPLOYED ROCE improvement driven by Industry & Water • 10.3% 9.9% 9.8% 9.7% 9.7% Ongoing investment projects are expected to improve • Group’s ROCE once up and running 2016 2017 2018 Q1 2018 Q1 2019 LTM LTM NET DEBT (EUR million) AND LEVERAGE RATIO 842 • Increase in net debt resulted from the adoption of 741 694 IFRS 16 as operating leases (EUR 129 million) are 634 part of debt – Excluding IFRS 16 impact, net debt would have been 2.2 2.4 2.1 2.3 EUR 713 million and leverage ratio 2.1 – Improved cash flow reduced underlying debt level Dec 31 Dec 31 Dec 31 Mar 31 2016 2017 2018 2019 Average cost of net debt excluding leases is 2.0% • and duration is 28 months APRIL 26, 2019 Q1 2019 RESULTS 12
Outlook for 2019 “Kemira expects its operative EBITDA (2018: EUR 323.1 million) to increase from the prior year on a comparable basis, excluding the impact of IFRS 16 accounting change.” EUR 2014 2015 2016 2017 2018 2019 million outlook Operative 253 287 303 311 323 Increase EBITDA Operative EBITDA figures for 2014- 2018 are ”pre IFRS - 16”. APRIL 26, 2019 Q1 2019 RESULTS 13
Appendix APRIL 26, 2019 Q1 2019 RESULTS 15
Kemira in brief LAST 12 MONTHS: REVENUE EUR 2,627 MILLION, OPERATIVE EBITDA EUR 349 MILLION, OPERATIVE EBITDA MARGIN 13.3%, OPERATIVE ROCE 10.3% SEGMENT SPLIT GEOGRAPHIES PRODUCTS 9% ◼ 20% Other: ◼ 42% ◼ 58% 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 APRIL 26, 2019 Q1 2019 RESULTS 16
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