APRIL 26, 2019 Strong earnings improvement in Q1 INVESTOR PRESENTATION
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 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 APRIL 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 • Debottlenecking done in Finland during 2018 In Q3 2018, decided to close non-core detergent • business to direct bleaching chemical capacity to pulp customers APRIL 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 APRIL 2019 INVESTOR PRESENTATION 5
Delivering profitable growth PRE IFRS 16 REVENUE OPERATIVE EBITDA OPERATIVE EBITDA MARGIN EUR million EUR million 2 593 323 311 2 486 303 287 2 373 2 363 253 2 137 12.8% 12,5% 12.5% 12.1% 11.8% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 APRIL 2019 INVESTOR PRESENTATION 6
Pulp & Paper – strong business with solid track record REVENUE AND OPERATIVE EBITDA REVENUE BY CUSTOMER REVENUE BY TYPE AND MARKET GROWTH PRODUCT CATEGORY EUR million ◼ 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 Polymers 198 195 192 171 ◼ 20% 137 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 #1 Solenis (paper)* ◼ 15% ◼ 55% ◼ 30% Kemira (pulp and paper) m.s. ~16% #2 APAC EMEA Americas #3 Nouryon (pulp) 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% APRIL 2019 INVESTOR PRESENTATION 7
Industry & Water – strong positions in chosen categories REVENUE AND OPERATIVE EBITDA REVENUE BY APPLICATION REVENUE BY TYPE AND MARKET GROWTH PRODUCT CATEGORY EUR million 1,073 1,009 956 947 ◼ 25% ◼ 10% 906 ◼ 65% ◼ 20% ◼ 40% Oil & Gas Water treatment Other Other Coagulants 131 products 116 116 114 107 such as defoamers Municipal Industrial and biocides Market 2014 2015 2016 2017 2018 ◼ 40% 2-3% 5-6% 2-3% growth Polymers 2014-2016 figures are pro forma; combination of Municipal & Industrial and Oil & Mining segments MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND CUSTOMER EXAMPLES MARKET GROWTH BY REGION WATER TREATMENT OIL & GAS ◼ 5% ◼ 50% ◼ 45% MUNICIPAL (40%), INDUSTRIAL (60%), Market share Market share ~25% in 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% APRIL 2019 INVESTOR PRESENTATION 8
Kemira’s mid - to long-term financial targets FINANCIAL TARGETS AND HISTORICAL FIGURES Targets 2017 2018 IFRS 16 impact Q1 2019 Mid- to long-term target Revenue EUR 2,486 million EUR 2,593 million - EUR 648 million Above-the-market Change +5% Change +4% Change +6% growth Operative 12.5% 12.5% Around +1 %-point 14.8% 15-17% EBITDA* Gearing* 59% 62% Around +10 %-points 74% 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 Q1 2019 comments Organic growth through volume and sales price increases Group’s organic growth +2% Oil & Gas becoming larger share of Group (incl. shale, CEOR and oil sands) Revenue from EUR 126m in 2016 to EUR 258m in Q1/19 Sales price vs raw material price development Raw material inflation in 2017 and 2018, sales prices started to offset raw material cost pressure during 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 APRIL 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 APRIL 2019 INVESTOR PRESENTATION 10
Kemira pays stable and competitive dividend • 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 • Kemira has paid dividend every year since listing of shares in 1994 • Attractive dividend yield 5.8% 4.5% 4.4% 5.4% 4.9% 4.4% 4.6% 5.4% 2011 2012 2013 2014 2015 2016 2017 2018 Kemira’s dividend yield calculated using the share price at year-end APRIL 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 APRIL 2019 INVESTOR PRESENTATION 12
INVESTOR PRESENTATION Latest news and financials APRIL 2019 INVESTOR PRESENTATION 13
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 2019 INVESTOR PRESENTATION 14
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