october 24, 2019 excellent profitability in seasonally ......kemira’s mid- to long-term financial...

INVESTOR PRESENTATION

Excellent profitability in seasonally strong third quarter

OCTOBER 24, 2019

SEGMENT SPLIT PRODUCTS

OCT OB E R 2019 INV E S T OR P RE S E NT A T ION 2

GEOGRAPHIES

Kemira in briefLAST 12 MONTHS: REVENUE EUR 2,663 MILLION, OPERATIVE EBITDA EUR 404 MILLION, OPERATIVE EBITDA MARGIN 15.2%, OPERATIVE ROCE 11.5%

◼ 25% Bleaching

and pulping

◼ 20%

Polymers

◼ 20% Other:

e.g. defoamers,

dispersants,

and biocides

◼ 20%

Coagulants

◼ 15%

Sizing

and

strength

Revenue by geographies and product category represent FY 2018.

39%

AMERICAS

1.USA

2.Canada

3.Brazil

52%

EMEA

1.Finland

2.Sweden

3.Germany

9%

APAC

1.China

2.South

Korea

3.Thailand

◼ 57%Pulp & Paper

◼ 43%Industry & Water

CUSTOMERS

Several thousand customers

TOP 10 customers are ~25% of revenue

TOP 50 customers are ~50% of revenue

EXAMPLES OF

LARGEST CUSTOMERS

Municipalities, e.g.

Frankfurt, London, New York,

Paris, Shanghai, Singapore

#1 in

water

treatment

in NA and

Europe

#2 in friction reduction in North

American shale oil & gas

#2 globally

Why invest in Kemira


Profitable growthOperative EBITDA improved by +34% and

Operative EBIT +41% in January-September 2019

1

2

3

Attractive dividendStable dividend and competitive yield

Sustainable investmentExcellent sustainability performance

(EcoVadis rating: Gold)

HOW KEMIRA CREATES VALUE

Strategy and Equity Story in summary


FINANCIAL TARGETS (mid- to long-term)

Above the market revenue growth • Operative EBITDA 15-17% • Gearing below 75%

OUR MARKET

FOCUS

Chemicals for Pulp & Paper,

Oil & Gas and Water Treatment

#1 or #2 in our core markets

Market growth estimated to be 2-3% p.a.

supported by higher use of fiber-based

products, resource efficiency and regulation

BUILDING A GREAT

CHEMICALS COMPANY

Great products:

4 core areas are polymers, coagulants,

sizing and bleaching chemicals which meet

our customers’ needs incl. resource efficiency

Great operations:

Deliver reliably with consistent quality

Great people:

Deep application expertise

and innovation capability

EXECUTION – VALUE

OVER VOLUME

Improving product and market mix

Focusing on capital efficiency

Investing selectively in core

product areas with higher return

on capital employed

Global megatrends favor Kemira


REGULATION

Safe drinking

water

More stringent

discharge limits

GROWING MIDDLE

CLASS &

URBANIZATION

E-commerce /

online shopping

Higher use of

water, energy,

tissue and board

SCARCITY

OF RESOURCES

Material and

resource

efficiency

Alternative

materials for

single-use plastic

products

REVENUE EUR million

2 137

2 373 2 363

2 486

2 593

2014 2015 2016 2017 2018

OPERATIVE EBITDAOPERATIVE EBITDA MARGINEUR million

253

287

303311

323

11.8%12.1%

12.8%12.5% 12,5%

2014 2015 2016 2017 2018

INV E S T OR P RE S E NT A T ION 6

Delivering profitable growth

OCT OB E R 2019

PRE IFRS 16

1,170

1,417 1,457 1,477 1,520

137

171195 198 192

2014 2015 2016 2017 2018

REVENUE BYPRODUCT CATEGORY


REVENUE BY CUSTOMERTYPE AND MARKET GROWTH

Pulp & Paper – strong business with solid track record

MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND

MARKET GROWTH BY REGION

CUSTOMER EXAMPLES

◼ 55%

EMEA

◼ 30%

Americas

◼ 15%

APAC

◼ 40%

Bleaching

& pulping

◼ 25%

Sizing &

strength

◼ 20%Defoamers,

dispersants,

biocides and

other process

chemicals

◼ 10%

Polymers

◼ 5% Other◼ 40%

Pulp

◼ 20%

Printing &

writing papers

◼ 40%

Board &

tissue

-1-2%2-3%1-2%Market

growth

2-3%0-1%1%Market

growth

Nouryon (pulp) #3

Solenis (paper)* #1

Kemira (pulp and paper) m.s. ~16% #2

Ecolab (paper) #4

Note: Revenue by industry, product and geography rounded to the nearest 5%

OCT OB E R 2019

* Solenis-BASF combined entity

Kurita (paper) #5

REVENUE AND OPERATIVE EBITDAEUR million

REVENUE BYPRODUCT CATEGORY


REVENUE BY APPLICATIONTYPE AND MARKET GROWTH

Industry & Water – strong positions in chosen categories

REVENUE BY GEOGRAPHIES AND

MARKET GROWTH BY REGION

◼ 40%

Coagulants

◼ 40%

Polymers

◼ 20%

Other

products

such as

defoamers

and biocides

2-3%5-6%2-3%

◼ 50%

EMEA

◼ 45%

Americas

◼ 5%

APAC

◼ 65%

Water treatment

◼ 10%

Other

◼ 25%

Oil & Gas

5-6%3-4%3-4%

WATER TREATMENT

Amsterdam

Barcelona

Frankfurt

London

Oslo

Paris

Stockholm

Los Angeles

Montreal

New York City

Toronto

Melbourne

Shanghai

Singapore

OIL & GAS

Note: Revenue by industry, product and geography rounded to the nearest 5%

Market

growth

Market

growth

CUSTOMER EXAMPLES

OCT OB E R 2019


MARKET ENVIRONMENT

Market share

~30% in coagulants and

~20% in polymers

Main competitors in

coagulants:

• Feralco (Europe)

• Kronos (Europe)

• Chemtrade (NA)

• USAlco (NA)

Market share ~25% in

polymers used in shale

oil & gas

Main peers in polymers

(also in water treatment):

• SNF

• Solenis

• Solvay (only O&G)

MUNICIPAL (40%),

customer examples

INDUSTRIAL (60%),

customer examples

Municipal Industrial

947 956906

1,0091,073

116 116107

114

131

2014 2015 2016 2017 2018

2014-2016 figures are pro forma; combination of Municipal & Industrial

and Oil & Mining segments

Kemira’s mid- to long-term financial targets

OCT OB E R 2019 9

Targets 2017 2018 IFRS 16 impact 1-9 2019 Mid- to long-term

target

Revenue MEUR 2,486

Change +5%

MEUR 2,593

Change +4%

- MEUR 2,001

Change +4%

Above-the-market

growth

Operative

EBITDA*

12.5% 12.5% Around +1 %-point 16.0% 15-17%

Gearing* 59% 62% Around +11 %-points 71% Below 75%

Factors 1-9 2019 comments

Organic growth through volume and sales price increases Group’s organic growth +1%

Oil & Gas becoming larger share of Group (incl. shale, CEOR and oil sands) Revenue from EUR 126m in 2016 to around 300m run-rate

Sales price vs raw material price development Focus on value over volume visible in profitability; higher

sales prices and better product mix

Growth investments – Polymer capacity expansion in Netherlands, AKD

sizing Joint Venture in China, Polymer capacity expansion in the US

Backward integration and growth benefits 2020-21

FINANCIAL TARGETS AND HISTORICAL FIGURES

KEY FACTORS TO WATCH FOR PROFITABILITY IMPROVEMENT

* Targets updated in February 2019 due to IFRS 16 accounting change. 2017-2018 figures are PRE IFRS 16.

INV E S T OR P RE S E NT A T ION

Healthy market growth for Kemira’s relevant markets

2018 2023

Americas EMEA APAC


Source: Management estimation based on various sources

KEMIRA RELEVANT MARKETEUR billion

PULP & PAPER RELEVANT MARKET EUR billion

INDUSTRY & WATER RELEVANT MARKETEUR billion

2018 2023

Pulp Printing & writing Board & tissue

2018 2023

Water treatment Oil & Gas Other

CAGR:2-3%

CAGR:1-2%

CAGR:3-4%

22

27

109

1713

Kemira pays stable and competitive dividend• Kemira’s dividend policy is to pay a stable

and competitive dividend

• Kemira has paid dividend every year since listing of shares in 1994

• Attractive dividend yield

0,53 0,53 0,53 0,53 0,53 0,53 0,53 0.53

5.8% 4.5% 4.4% 5.4% 4.9% 4.4% 4.6% 5.4%

2011 2012 2013 2014 2015 2016 2017 2018


◼ Dividend per share Dividend yield

OCT OB E R 2019

Kemira’s dividend yield calculated using the share price at year-end

Our three sustainability priorities


Sustainable products

and solutions

People and integrity

Responsible operations & supply chain

Ensuring responsible operations

to protect our assets, our

environment, employees,

contractors, customers and

communities

Ensuring compliance with

responsible business practices

in our supply chain

Incorporating sustainability into

our products and solutions

Proactive product stewardship

throughout the products’ lifecycle

Culture and commitment to people

Ensuring compliance with

Kemira Code of Conduct

KPI’S AND TARGETS

• 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

KPI’S AND TARGETS

• Carbon Index 80 by 2020 (Baseline 100 in 2012)

• People safety TRIF 2.0 by 2020

Supplier Sustainability Evaluation

• 90% of direct key suppliers screened through sustainability evaluation through assessments and audits (Baseline 60% in 2017)

KPI’S AND TARGETS

At least 50% of our revenue is generated through products improving customers’ resource efficiency

Capacity additions and cost savings via investmentsOngoing investments with positive EBITDA contribution in 2020

• China – New AKD sizing* manufacturing plant is in the ramp-up phase

• Netherlands – Expansion of Oil & Gas polymers close to start-up

Capacity additions under construction

• US – Expansion of Oil & Gas polymers in commercial operation in 2021

• South Korea – New dry polymer capacity for Asian market in 2021

Recently decided

• UK – Multi-million investment to double coagulant capacity in Goole to anticipate expected local market growth


PRODUCTS

◼ 25% Bleaching

and pulping

◼ 20%

Polymers

◼ 20% Other:

e.g. defoamers,

dispersants,

and biocides

◼ 20%

Coagulants

◼ 15%

Sizing*

and

strength

Revenue

EUR 2,663

million

(LTM)

*Sizing = Resistance against water absorption



Latest news andfinancials

Key points in Q3 2019

• Focus on value over volume visible in financials

• Efficiency actions continued

• Strong profitability improvement again – operative EBITDA margin 17.1%

• Slowdown in oil & gas shale market accelerated during the quarter

• Some softness in the near-term market demand in Pulp & Paper


Financial highlights

Focus on value over volume

• Our actions for higher profitability resulted in some expected lost volumes

• Organic growth +6% in Industry & Water driven by North American water treatment and Oil & Gas despite slowdown in shale market in Q3

Operative EBITDA +33% to margin of 17.1%

• Effective price and cost management

• Favorable currency development

• IFRS 16 impact EUR +9.1 million in Q3

Operative EBIT +42% to over 10% margin for the first time since 2010


EUR million

(except ratios)

Q3

2019

Q3

2018

Δ% FY

2018

Revenue 689.8 669.6 +3 2,592.8

Operative EBITDA 118.1 89.0 +33 323.1

of which margin 17.1% 13.3% 12.5%

Operative EBIT 71.1 50.0 +42 173.8

of which margin 10.3% 7.5% 6.7%

Net profit 43.3 22.1 +96 95.2

EPS diluted, EUR 0.27 0.14 +94 0.58

Pulp & Paper – profitability improved clearly

Market environment

• Some softness and increasing amount of uncertainty about the near-term market demand

Organic growth -3%

• Intentional focus on improving product mix

• Exit of ECOX business and lower caustic soda prices (mainly trading product) impacted organic growth – underlying growth flat

Operative EBITDA margin 16.0%

• Value over volume visible also in EBITDA and EBIT leading to improved profitability

• Cost savings supporting the margin improvement

• *IFRS 16 impact EUR +3.7 million in Q3 and EUR +10.3 million in 1-9/2019


OPERATIVE EBITDA AND OPERATIVE EBITDA-%

EUR million

REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y)

EUR million

372 369 363373 369 376 385 390 381 373

383

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019

0% +1% +2% +5% +5% +6% +7% +4% -3%

46.0 47.8 48.555.4

42.7 45.452.3 51.2 50.7 53.7

61.312.4% 13.0% 13.4%

14.9%

11.6% 12.1%13.6% 13.1% 13.3%

14.4%16.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2* Q3*

2017 2018 2019

+0% -3%

Industry & Water – profitability continued at exceptionally high levelMarket environment

• Water treatment market solid

• Shale market slowdown accelerated during Q3

• Uncertainty regarding key polymer raw material in Europe due to supply disruptions

Organic growth +6%

• Improved pricing in water treatment

• Strong growth in CEOR polymers and seasonal oil sands water treatment business

Operative EBITDA margin 18.5% in Q3

• Water treatment main driver for the improvement

• Coagulant asset in Italy and water treatment facility operations business in Finland (Operon) divested

• *IFRS 16 impact EUR +5.4 million in Q3 and EUR +14.9 million in 1-9/2019


22.929.3

36.0

25.3 26.634.8 36.7 33.3

45.052.4

56.8

9.6%11.8%

13.9%

9.6%10.9%

12.8% 12.9% 12.3%

16.8%18.1% 18.5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2* Q3*

2017 2018 2019

OPERATIVE EBITDA AND OPERATIVE EBITDA-%

EUR million

238 248 259 264245

272 284 271 267290 307

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019

+9% +15% +20% +14%

REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y)

EUR million

+11% +11% +2% +6%+6% +5% +4%

Key profitability improvement actions in 2016-2019


Operative

EBITDA

1-9/2019:

16.0%

(IFRS 16

included)

Operative

EBITDA 2015:

12.1% 2017

2018

2019

2016

Start-up of Ortigueira sodium

chlorate site (BR)

Botlek modernization (NL)

BOOST operational

excellence program launch

Bradford polymer expansion

(UK)

San Giorgio polymer

expansion (IT)

Closures of Ottawa (CA) and

Zaramillo (ES), coagulants

Transportation agreement

with Odyssey Odyssey go-live

in North America

Two segment

structure operational

Start-up of Joutseno chlorate

expansion (FI)

Chevron CEOR deal &

Botlek expansion

AKD wax manufacturing JV

deal closed (CN)

Closing of ECOX detergent

production (SWE)

Polymer investment decision (US)

Major oil sands tailings water

treatment deal (CA)

JV deal – Dry polymers (SK)

Divestment of

coagulant asset (IT)

Divestment of

Kemira Operon

(water treatment facility

operations, FI)

Odyssey go-live in Europe

‘Value over volume’ initiated

Start-up of new AKD wax site (CN)

Cost savings in

Pulp & Paper

Move from ‘Value

over volume’ to ‘Active

price management’

AcquisitionOrganic growth / expansion of site Operational efficiencies Closure of site / divestment

Key operative focus areas

1. Active price management

2. Continue to improve customer satisfaction scores (NPS)

3. Modify product & service offering to cater better profitable growth

4. Improve operational excellence

5. Ramp-up new AKD sizing manufacturing site in China

6. Finalize CEOR* polymer capacity addition in the Netherlands

7. Construction of emulsion polymer capacity in the US

8. Prudent cost-control in all areas


*CEOR, chemical enhanced oil recovery

Successful pricing drives improvement


89.0

Q32018

Sales volumes Sales prices Variable costs Fixed costs Currencyimpact

Other Q32019

Adoption ofIFRS 16standard

"Pre IFRS 16comparison"

-6.1+18.8

+13.0 -3.7 +6.3 +0.8

OPERATIVE EBITDA BRIDGE

EUR million

670 -2% +2% 0%690

Q3 2018 Salesvolumes

Salesprices

Currencyimpact

Acquisitions&

Divestments

Q3 2019

+3%

REVENUE AND ORGANIC GROWTH (Y-ON-Y)

EUR millionOperative EBITDA margin 17.1%

• Focus on value over volume is bearing fruit

• Due to the adoption of IFRS 16 -standard, fixed costs do not include operating lease expenses in 2019, corresponding to a positive EBITDA impact of EUR +9.1 million in Q3 and EUR +25.1 million in 1-9/2019

109.0-9.1118.1

SALES PRICE VS VARIABLE COST TREND(ROLLING 12-MONTH CHANGE Y-O-Y)

SALES PRICES AND VARIABLE COSTS(CHANGE Y-O-Y)

95

-3 -10

-16-20

-10

-2 -2

114

8

24

2832

-9

-18

-26-23

-16

-4

3

11

23

4742

3734

2319

-18-23

-23 -13

0

1613

13

2636

38

29

11

-5

-13

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018 2019

Net impact on EBITDA (sales prices-variable costs)

Sales prices

Variable costs


Net impact of sales price & variable costs exceptionally positive

* 12-month rolling change vs previous year in EUR million

EUR millionEUR million

-180

-120

-60

0

60

120

180

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Brent oil, USD Sales prices* Variable costs*

Strong cash flow


ALL KEY FIGURES IN EUR MILLION

271

205 210

122

244

2016 2017 2018 1-9 2018 1-9 2019

118 124 106

64 58

95 66

44

3362

2016 2017 2018 1-9 2018 1-9 2019

213

CASH FLOW FROM OPERATIONS

CAPITAL EXPENDITURE EXCL. ACQUISITIONS

◼ Growth capex190

150

• Cash flow improvement driven by strong results

• IFRS 16 impact EUR +21 million on cash flow from operations in 1-9/2019

• Kemira’s Pension Fund Neliapila returned excess capital of EUR 15 million to Group in Q1

• Typically cash flow is H2-weighted, especially due to changes in net working capital

• In the first nine months, the largest capital expenditures were related to polymer expansion in the Netherlands and new AKD manufacturing site in China

• CAPEX excl. acquisitions estimated to be around EUR 180-220 million in 2019

97120

ROCE improving clearly, adoption of IFRS 16 increased reported net debt

9.9% 9.7% 9.8% 9.8%

11.5%

2016 2017 2018 Q3 2018LTM

Q3 2019LTM

634694 741 744

866

Dec 31 2016

Dec 312017

Dec 312018

Sep 302018

Sep 302019


NET DEBT (EUR million) AND LEVERAGE RATIO*

OPERATIVE RETURN ON CAPITAL EMPLOYED

2.32.22.1

• ROCE improvement driven by Industry & Water

• Ongoing investment projects are expected to improve Group’s ROCE once up and running

• Increase in net debt resulted mainly from the adoption of IFRS 16 as operating leases (EUR 136 million) are part of debt

– Excluding IFRS 16 impact, net debt would have been EUR 730 million and leverage ratio 1.9

• Average cost of net debt excluding leases is 1.9% and duration is 27 months

2.12.3

* Leverage ratio = Net debt / last 12 months operative EBITDA

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

million

2014 2015 2016 2017 2018 2019

outlook

Operative

EBITDA

253 287 303 311 323 Increase

Operative EBITDA figures for 2014-2018 are ”pre IFRS-16”.

Majority of contracts with fixed annual pricingPulp & 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


VARIABLE COST SPLIT 2018EUR 1.6 billion

TOP 10 RAW MATERIALSBY SPEND

1. Sodium hydroxide (caustic soda)*

2. Acrylonitrile (OD)

3. Aluminium hydrate

4. Colloidal silica dispersion*

5. Amines (OD)

6. Petroleum solvents (OD)

7. Acrylic acid (OD)

8. Alpha olefin (OD)

9. Acrylic ester (OD)

10. Fatty acid

Top 10 account for 50%of Kemira’s raw material spend

OD = Oil & gas derivative

* Mainly trading materials


EXPOSURE TO OIL RELATEDRAW MATERIALS

Kemira’s variable cost split and top raw materials

◼ 30%Oil & gas

related

◼ 70%Not oil

related

◼ 70%Raw materials

◼ 15%Electricity & energy

◼ 15%Logistics

OCT OB E R 2019


Mid- to long-term financial targets were updated due to IFRS 16 in February 2019

Targets until

end of 2018

Revenue

Operative EBITDA-% 14-16%

IFRS 16

impact

-

Gearing

Around +1%-point

Approx. +10%-pointsBelow 60%

2017

EUR 2.5 billion

2018

EUR 2.6 billion

12.5% 12.5%

59% 62%

Above-the-market

growth

Financial

targets (mid- to long-term)

Above-the-market

growth

15-17%

Below 75%

• IFRS 16 will affect primarily the accounting for Kemira Group’s operating leases

• Operating lease expenses are replaced by the depreciation of the right-of-use assets and interest cost associated with lease liability

• The impact on EBIT is slightly positive and on net profit immaterial

• No restatement of previous year figures, instead we will provide enough data for analysis


IFRS 16 impact on financials

EUR million

(except ratio)

FY

2018

Impact on

1-9/2019

Estimated impact

on FY 2019

Operative EBITDA 323.1 +25.1 Around +30

of which margin 12.5% +1.3 %-point Around +1 %-point

Impact on balance sheet

EUR million

(except ratio) Dec 31, 2018

Impact on

Sept 30, 2019

Net debt 741 +136

Gearing 62% +11%-points

PLEASE NOTE FINANCIAL IMPACT OF IFRS 16 ADOPTION FROM THE PREVIOUS SLIDE

Key figures


EUR million Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 2018 2017

Revenue 689.8 663.6 647.8 661.8 669.6 2,592.8 2,486.0

Operative EBITDA 118.1 106.1 95.6 84.5 89.0 323.1 311.3

margin 17.1% 16.0% 14.8% 12.8% 13.3% 12.5% 12.5%

Operative EBIT 71.1 60.3 50.1 44.8 50.0 173.8 170.3

margin 10.3% 9.1% 7.7% 6.8% 7.5% 6.7% 6.9%

Net profit 43.3 35.2 29.3 26.5 22.1 95.2 85.2

Earnings per share, diluted, EUR 0.27 0.22 0.18 0.17 0.14 0.58 0.52

Cash flow from operations 121.3 57.2 65.2 88.2 64.2 210.2 205.1

Capex excl. acquisitions 51.5 39.9 28.3 53.2 34.3 150.4 190.1

Net debt 866 921 842 741 744 741 694

NWC ratio (rolling 12 m) 11.1% 10.9% 10.6% 10.2% 9.8% 10.2% 9.4%

Operative ROCE (rolling 12 m) 11.5% 10.8% 10.3% 9.8% 9.8% 9.8% 9.7%

Personnel at period-end 5,036 5,067 4,973 4,915 4,798 4,915 4,732

Cash flow


EUR million Q3 2019 Q3 2018 2018 2017

Net profit for the period 43 22 95 85

Total adjustments 73 66 220 204

Change in net working capital 15 -5 -51 -34

Finance expenses -6 -11 -30 -25

Income taxes paid -3 -7 -24 -25

Net cash generated from operating activities 121 64 210 205

Purchases of subsidiaries and business acquisitions, net of cash acquired

0 -2 -43 0

Capital expenditure -52 -34 -150 -190

Proceeds from sale of assets 4 1 7 3

Change in long-term loan receivables 0 0 5 -5

Cash flow after investing activities 73 29 29 13

Currencies

Currency exchange rates had around EUR +46 million impact on revenue andEUR +18 million impact on the operative EBITDA in 1-9/2019 compared to 1-9/2018.

Guidance: 10% change in our main foreign currencies would approximately haveEUR 15 million impact on operative EBITDA on an annualized basis.


◼ 41% EUR

◼ 7% Others

KEMIRA REVENUE DISTRIBUTION 1-9 2019 KEMIRA COST DISTRIBUTION 1-9 2019

◼ 2% SEK

◼ 4% CNY

◼ 4% CAD

◼ 38% USD

◼ 6% Others

◼ 5% CNY

◼ 5% CAD

◼ 6% SEK

◼ 31% USD

◼ 42% EUR◼ 2% BRL

◼ 2% GBP

◼ 3% GBP

◼ 2% PLN

KEY FINANCIALS

Pulp & Paper


*12-month rolling average


Revenue 382.9 373.4 380.8 390.4 385.2 1,520.2 1,476.9


margin 16.0% 14.4% 13.3% 13.1% 13.6% 12.6% 13.4%

Operative EBIT 32.1 24.0 20.6 24.1 26.6 91.6 104.8

margin 8.4% 6.4% 5.4% 6.2% 6.9% 6.0% 7.1%

Operative ROCE*, % 7.9% 7.6% 7.7% 7.8% 8.5% 7.8% 9.0%

Capital expenditure (excl. M&A) 25.4 23.3 17.3 28.8 20.7 85.1 138.3

Cash flow after investing activities

44.6 36.2 25.1 -13.5 20.6 29.9 15.7

KEY FINANCIALS

Industry & Water


*12-month rolling average


Revenue 306.9 290.2 267.0 271.5 284.4 1,072.6 1,009.1


margin 18.5% 18.1% 16.8% 12.3% 12.9% 12.3% 11.3%

Operative EBIT 39.0 36.3 29.5 20.8 23.4 82.2 65.5

margin 12.7% 12.5% 11.0% 7.7% 8.2% 7.7% 6.5%

Operative ROCE*, % 18.4% 16.9% 15.4% 13.6% 12.5% 13.6% 11.0%

Capital expenditure (excl. M&A) 26.0 16.5 11.0 24.4 13.6 65.3 51.7

Cash flow after investing activities

37.9 5.7 27.8 23.8 26.8 52.5 46.9

FY 2018

Revenue split by country


USA 27%

Canada 6%

Brazil 3%

Uruguay 2%

Other Americas 1%

Finland 16%Sweden 5%

Germany 5%

Poland 3%

UK 3%

Spain 2%

Other APAC 4%

South Korea 1%

China 4%

Russia 2%

Netherlands 2%

France 2%

Italy 2%

Other EMEA 9%

Norway 1%

Key figures and ratios – 5-year summary

EUR million (except ratios) 2014 2015 2016 2017 2018

Revenue 2,136.7 2,373.1 2,363.3 2,486.0 2,592.8

Operative EBITDA 252.9 287.3 302.5 311.3 323.1

of which margin 11.8% 12.1% 12.8% 12.5% 12.5%

Operative EBIT 158.3 163.1 170.1 170.3 173.8

of which margin 7.4% 6.9% 7.2% 6.9% 6.7%

Cash flow from operations 74.2 247.6 270.6 205.1 210.2

Capital expenditure, excluding acq. 140.6 181.7 212.6 190.1 150.4

Gearing at period-end 42 54 54 59 62

Inventories 197 207 217 224 284

Personnel at period-end 4,248 4,685 4,818 4,732 4,915


Per share figures – 5-year summary2014 2015 2016 2017 2018

Earnings per share, EUR 0.59 0.47 0.60 0.52 0.58

Cash flow from operating activities per

share, EUR

0.49 1.63 1.78 1.35 1.38

Equity per share, EUR 7.57 7.76 7.68 7.61 7.80

Dividend per share, EUR 0.53 0.53 0.53 0.53 0.53

Share price, EUR, end of period 9.89 10.88 12.13 11.50 9.85

Market capitalization, EUR million

(excl. treasury shares)

1,504 1,654 1,848 1,752 1,502

Number of shares, million

(excl. treasury shares)

152.1 152.1 152.4 152.4 152.4

P/E ratio 16.7 23.3 20.1 22.3 17.0

P/CF ratio 20.2 6.7 6.8 8.5 7.1

P/B ratio 1.3 1.4 1.6 1.5 1.3

Dividend yield, % 5.4 4.9 4.4 4.6 5.4

INV E S T OR P RE S E NT A T ION 37OCT OB E R 2019


Pulp & Paper –driving growth as market leader


Pulp & Paper chemicals market estimated to grow 1-2%

• Pulp & Paper chemicals market drivers

– Hardwood and softwood pulp demand increasing driven by growth of packaging needs (e-commerce, non-plastic solutions), growing tissue demand and lack of recycled fiber

– Demand increase continues for packaging, driven by online shopping, last-mile delivery, product safety and non-plastic solutions

– Growth in tissue demand driven by increasing wealth in emerging countries

– Ongoing digitalization of media drives decline of graphic paper demand

• Growth areas, pulp and board & tissue, represent over 80% of our Pulp & Paper revenue

– Ongoing capacity additions suit well for the need of growing demand



1,170

1,417 1,457 1,477 1 520

137

171195 198 192

2014 2015 2016 2017 2018

◼ 40%

Pulp

◼ 20%

Printing &

writing papers◼ 40%

Board & tissue

-1-2%2-3%1-2%Market

growth

REVENUE BY CUSTOMER TYPE

Strong demand in pulp market creating growth opportunitiesNew pulp mill projects are driven byincreasing demand for board and tissue

• Food and liquid packaging board isgrowing particularly fast in Asia

• Pulp is produced close to fiber sources andthen shipped to board, paper, and tissue mills or used captively in an integrated mill

• Growth in board = 1 new pulp mill per year

Multiple pulp mill projects realised and expected in Northern Europe creating opportunities for Kemira to grow withthe market

In addition, a few large scale pulp millprojects expected in South America


Confirmed new capacity /

debottlenecking 2016-2020

Possible new mills 2020-2022

Äänekoski

Kuusankoski

Kuopio

Paltamo

Kemi

Östrand

Värobacka

Svetlogorsk

Steti

Viljandi/Tartto

Vologda

Bratsk ->

Uts-Ilimsk ->

Sveza

Bleaching investment – case Joutseno


• In Joutseno we doubled our chlorate capacity in Q4 2017

– Excellent timing, pulp production grew simultaneously in Finland

• Multiple pulp mills are located nearby with annual production of over 2Mt

• Part of chlorate production can be also exported in dry format to APAC

EUR 50 MILLION INVESTMENT IN 2017

Acquisition via JV in China

• Agreed to form joint venture with Tiancheng

• NewCo will produce mainly AKD wax and its key raw material fatty acid chloride (FACL)

– AKD is sizing chemical used in board and paper to createresistance against liquid absorption

– NewCo also plans to produce coagulants for water treatment

• Kemira strengthens its position and secures supply of key raw material for AKD wax

• Kemira has 80% of NewCo

– Investment for 80% around EUR 55 million

• Ramp-up after completion investments

– Good contribution to P&L after ramp-up


AKD WAX SUPPLIED FROM YANZHOU, CHINA TO KEMIRA SITES GLOBALLY

We leverage acquisition synergieswith our global production


Telêmaco

Borba

Washougal

St. CatharinesHelsingborg

Joutseno

Nanjing

Hallam

Gunsan

Pasuruan

Wellgrow

Krems

TarragonaYanzhou

NewCo

Acquisition in China is excellentstrategic fitAcquired asset fulfills our key criteria for acquisitions

GROWTH – End-products in growing markets

APAC – Enables profitable growth in APAC

SUPPLY – Backward integr. & self-sufficiency (FACL)

SUSTAINABILITY – FACL from renewable raw material

LOCATION – Close to our existing production

PROFITABILITY – Accretive after ramp-up


END-PRODUCTSWHERE AKD WAXIS USED

Pulp & Paper


TECHNOLOGY AND MARKET LEADER

Value chain part covered by Kemira

RAW

MATERIALSINTERMEDIATES PRODUCTS APPLICATIONS

CUSTOMER

INDUSTRIESCUSTOMERS

Electricity

Sodium chloride(salt)

Crude tall oil

Cationic monomer

Acrylonitrile

Acrylic acid

Olefins

Fatty acids

Maleic anhydride

Sulfur

Tall oil rosin

AKD Wax

Isomerized olefinsAcrylamide

Sodium chlorate

Hydrogen peroxide

Polymers

Defoamers

Coagulants

Biocides

Sizing

Strength Additives

Surface additives

Colorants

Sulfuric acid

Pulping

Bleaching

Retention

Wet-end processcontrol

WQQM

Sizing

Strength

Surface treatment

Coloring

Pulp

Packagingand board

Printingand writing

Tissue

All the major global paper and pulp producers

MAIN COMPETITORS: Solenis, Nouryon, Ecolab, Kurita, SNF



Industry & Water -stronger platformfor profitable growth

Industry & Water relevant chemicals market estimated to grow 3-4%

• Demand for water treatment chemicals expected to increase due to

– Higher demand for water driven by industrial growth and population growth

– More stringent discharge limits for waste water

– Better dewatering of sludge

– Phosphorus recovery

– Water reuse

• Higher demand for Oil & Gas solutions expected

– Shale friction reducer market expected to grow due to higher energy demand and increasing number of wells fracked

– Oil sands operators face regulatory requirements for their tailings treatment

– Chemical Enhanced Oil Recovery lucrative in certain fields due to better yield from existing reservoirs


947 956906

1,009 1,073

116 116 107 114131

2014 2015 2016 2017 2018


◼ 65%

Water treatment

◼ 10%

Other◼ 25%

Oil & Gas

2-3%5-6%2-3%Market

growth

REVENUE BY APPLICATION

2014-2016 figures are pro forma; combination of Municipal & Industrial and

Oil & Mining segments

Kemira is a market leader in water treatment chemistry


Serving most European cities

Drinking water plants and wastewater plants

• No of ship-to countries ~ 80

• No of ship-to points ~ 9 000

• No of ship-from points ~ 30-40

I&W EMEA customer locations. Dot size

correlates with ship-to volumes.

Not representative for Eastern Europe due to

roll-out of Kemira ERP system.

1. The requirements of the Urban Wastewater Treatment Directive (UWWTD) must be implemented fully and equally in all member states.

2. Emission limit values (especially phosphorus) in water discharges should be tightened.

3. Digitalization can improve both the quality of monitoring and the cost efficiency of water treatment.

4. Emerging pollutants need to be included in the legislation.

5. Pollution from storm-water overflows must be limited and discharges safely disinfected.

6. Clearer guidance is needed on applying innovation and sustainability criteria in public procurement for water treatment.

Kemira’ssix actions for cleaner waters


Implementation of wastewater treatment directive varies in EU• There are significant

implementation gaps of the Urban Wastewater Treatment Directive, even though the first collection and treatment requirements of the Directive already entered into force in 2001


0

10

20

30

40

50

60

70

80

90

100

Austr

ia

Belg

ium

Bulg

aria

Cro

atia

Cypru

s

Cze

ch R

ep

ub

lic

Denm

ark

Esto

nia

Fin

land

Fra

nce

Germ

any

Gre

ece

Hung

ary

Ire

land

Italy

Latv

ia

Lithu

ania

Luxe

mb

ou

rg

Ma

lta

Neth

erla

nds

Pola

nd

Port

ug

al

Rom

ania

Slo

vakia

Slo

ven

ia

Spa

in

Sw

ede

n

United

Kin

gd

om

2010 2012 2014

Degree of compliance in water discharges*

% of subjected load

* Degree of compliance with Article 5 of the Directive, which sets the requirements for water discharges to sensitive areas.

Source: European Commission, 9th report on the implementation status concerning urban waste water treatment.

Oil & Gas growing fast

Growing market demand with our selective market diversification assuring growth

Kemira’s offering

• Process efficiencies: polymers that reduce energy consumption by 60% in shale oil fields

• Cost reduction: higher concentrated liquids that make offshore oil recovery more cost effective (CEOR)

• Addressing environmental regulations: tailing treatment in oil sands

New innovative technologies driving expansion


0

50

100

150

200

250

300

2013 2014 2015 2016 2017 2018

REVENUE IN OIL & GASEUR million

REVENUE SPLIT

◼ 10%Other

◼ 60%Shale fracking

◼ 30%Oil sands and

Chemical Enhanced

Oil Recovery Figures rounded to closest 5%

Oil

price

Organic growth

>30%

CEOR-polymer deal with Chevron

• Strategically important multi-year Chemical Enhanced Oil Recovery deal with Chevron

• EUR 30 million polymer capacity addition, announced in October 2017, progressing well

• CEOR market size approximately EUR 1 billion of which EUR 500 million accessible to Kemira

• Market growth estimated to be 5% driven by enhanced production from existing fields

• Kemira is committed to provide enhanced solutions for challenging water intensive environments and technologies that can enable CEOR


Industry & Water


TECHNOLOGY AND MARKET LEADER IN WATER TREATMENT AS WELLAS IN NICHE APPLICATIONS IN OIL & GAS

MAIN COMPETITORS

Coagulants: mainly local small companies, Feralco, USALCO, Kronos, PVS,

Polymers: SNF, Solvay, Ecolab, SolenisValue chain part covered by Kemira

INTERMEDIATES PRODUCTS APPLICATIONS SALES CHANNELS CUSTOMERS

Acrylonitrile

Acrylic acid

Sulfuric acid

Hydrochloric acid

Aluminium hydrate

Iron ore

Pickling liquor

Copperas

Various monomers

Acrylamide

Cationic monomer

Polymers (EPAM, DPAM)

Al Coagulants

Fe Coagulants

Dispersants &antiscalants

Biocides

Emulsifiers

Defoamers

Formulations

Raw water & waste water treatment

Sludge treatment

Friction reduction

Enhanced oil recovery

Tailings treatment

Mining processes

Direct sales

Distributor/reseller

Service companies

RAW

MATERIALS

Municipalities

Private operators

Industrial customers

Pumpers

Oil & Gas operators

Service companies

Mine operators


Appendix


SHAREHOLDERS ON SEPTEMBER 30, 2019

% OF SHARES

1. Oras Invest 18.2%

2. Solidium (owned by State of Finland) 14.0%

3. Varma Mutual Pension Insurance Company 3.4%

4. Ilmarinen Mutual Pension Insurance Comp. 2.6%

5. Kemira Oyj 1.7%

Total number of shares 155,342,557

Foreign ownership of shares 30.4%

Total number of shareholders 32,755

KEMIRA BOARD OF DIRECTORS


Kemira – largest shareholders andBoard of Directors

JARI PAASIKIVI

Chairman

Member since 2012

Oras Invest Oy, CEO

KERTTU

TUOMAS

Vice Chairman

Member

since 2010

WOLFGANG

BÜCHELE

Member in

2009-2012 and

since 2014

KAISA

HIETALA

Member

since 2016

TIMO

LAPPALAINEN

Member since

2014

SHIRLEY

CUNNINGHAM

Member

since 2017

Kemira’s Management Board


Jukka Hakkila, Chief Legal Officer, (with Kemira since 2005) acts as secretary of Management Board and Board of Directors.

JARI ROSENDAL

President and CEO

With Kemira since 2014

KIM POULSEN

President

Pulp & Paper


ANTTI SALMINEN

President

Industry & Water


PETRI CASTRÉN

CFO


MATTHEW PIXTON

CTO


ESA-MATTI PUPUTTI

EVP, Operational

Excellence


EEVA SALONEN

EVP, Human Resources


Priority KPI+Target Performance Comments Progress

Sustainable products

and solutions

Product sustainability

Share of revenue from products used for

use-phase resource efficiency. At least

50% of Kemira’s revenue generated

through products improving customers’

resource efficiency.

During Q3, four new R&D projects were initiated to improve

customer resource efficiency. One additional project was re-

opened for this same purpose. Other R&D projects are

aimed at improving product quality or safety. In Q3, one

project was commercialized to improve customer use-phase

resource efficiency.

Responsible

operations and supply

chain

Workplace safety

Achieve zero injuries on long term;

TRIF* 2.0 by end of 2020.

Preventive work has continued, and in July we achieved an

incident-free month for the first time ever. We are now well

below the 2019 target of 3.1.

Incident severity remains low.

Climate change

Kemira Carbon Index ≤ 80 by end of

2020 (2012 = 100). This KPI is reported

once a year.

Efforts to decrease the carbon footprint continue with a

focus on sourcing a higher share of electricity from low-

carbon sources. During Q3, Kemira continued E3 Energy

Reviews at seven of our manufacturing plants. Work on

developing a longer-term climate change target continued

in Q3.

Supplier Management

% of direct key suppliers screened

through sustainability assessments and

audits (cumulative %). The target

includes 5 sustainability audits for

highest risk** suppliers every year, and

cumulatively 25 by 2020.

Sustainability screening of key suppliers continues as

planned. A total of 38 suppliers have been screened via

sustainability assessments or audits during 2019. Two

additional audits are planned for Q4 and several new

assessments initiated.

Corporate responsibility performance Q3/2019

OCT OB E R 2019 INV E S T OR P RE S E NT A T ION

49%

51%

Baseline average2016-2017

2018

10088 91 93

86 85 83 80

12 13 14 15 16 17 18 Target2020

* TRIF = Number of Total Recordable Injury Frequency per million hours, Kemira + contractor, year-to-date

** Suppliers with lowest sustainability assessment score57

Priority KPI+target Performance CommentsProgress

People and

integrity

Employee engagement index based on

Voices@Kemira biennial survey

The index at or above the external

industry norm. The participation rate

target in Voices@Kemira is 75% or

above.

Engagement currently 2% above external industry norm.

Company wide strategy communication and engagement is

ongoing across staff and stakeholders.

Leadership development activities

provided, average

Two leadership development activities

per person in manager position during

2016-2020, the cumulative target is 1,500

by 2020.

Leadership activities continued in Q3, and the total number

is now well above the 2020 target of 1,500.

Integrity index

KPI to measure compliance with the

Kemira Code of Conduct. The target is to

maintain the Integrity Index level above

the external industry norm.

Currently at 10% above external industry norm. Mandatory

training on the Kemira Code of Conduct and general

awareness-building on GDPR was continued for Kemira

employees.

Corporate responsibility performance Q3/2019

OCT OB E R 2019 INV E S T OR P RE S E NT A T ION

58%67% 71%75%

85% 84%

2013 2015 2017 2018

Engagement Participation

494

1 036

1 533 1 500

2016 2017 2018 Target 2020

87%

84%

2018

Integrity Index Participation

Read more about Corporate

Responsibility in Kemira

58

https://kemira.sharepoint.com/sites/intra/SitePages/content/Corporate-responsibility.aspx?nodeId=1915f489-0ecf-46fb-b9f8-801d88a1b32d

Important information about financial figuresKemira provides certain financial performance measures (alternative performance measures) on non-GAAP basis. Kemira believes that alternative performance measures, such as organic growth*, EBITDA, operative EBITDA, cash flow after investing activities, and gearing followed by capital markets and Kemira management, provide useful information of its comparable business performance and financial position. Selected alternative performance measures are also used as performance criteria in remuneration.

Kemira’s alternative performance measures should not be viewed in isolation to the equivalent IFRS measures and alternative performance measures should be read in conjunction with the most directly comparable IFRS measures. Definitions of the alternative performance measures can be found in the Definitions of the key figures in this report, as well as at www.kemira.com > Investors > Financial information.

All the figures in this interim report have been individually rounded and consequently the sum of individual figures may deviate slightly from the sum figure presented.

* Revenue growth in local currencies, excluding acquisitions and divestments


october 24, 2019 excellent profitability in seasonally ......kemira’s mid- to long-term financial...

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