growth and solid results INVESTOR PRESENTATION Kemira in brief - - PowerPoint PPT Presentation

INVESTOR PRESENTATION

Strong organic growth and solid results

FEBRUARY 8, 2019

SEGMENT SPLIT PRODUCTS

GEOGRAPHIES

Kemira in brief

FY2018: REVENUE EUR 2,593 MILLION, OPERATIVE EBITDA EUR 323 MILLION, OPERATIVE EBITDA MARGIN 12.5%, OPERATIVE ROCE 9.8%

◼ 25% Bleaching and pulping ◼ 20% Polymers ◼ 20% Other: e.g. defoamers, dispersants, and biocides ◼ 20% Coagulants ◼ 15% Sizing and strength

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

◼ 59%

Pulp & Paper

◼ 41%

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

Global megatrends favor Kemira

REGULATION

Safe drinking water More stringent discharge limits

GROWING MIDDLE CLASS & URBANIZATION

E-commerce /

• nline shopping

Higher use of water, energy, tissue and board

SCARCITY OF RESOURCES

Material and resource efficiency Alternative materials for single-use plastic products

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

• During 2018, we have done debottlenecking in

Finland

• In Q3 2018 announced decision to direct

bleaching chemical capacity to pulp customers resulting in closure of sodium percarbonate production line in Sweden by the year end

Regulation trends favorable to demand of water treatment chemicals

Emerging contaminants (pharma, microplastics) Better dewatering of sludge and phosphorus recovery

Increased demand for water treatment chemicals Stormwater Overflows More efficient implementation Water reuse More stringent discharge limits

REVENUE EUR million

2,229 2,137 2,373 2,363 2,486 2,593 2013 2014 2015 2016 2017 2018

OPERATIVE EBITDA OPERATIVE EBITDA MARGIN EUR million

252 253 287 303 311 323 11.3% 11.8% 12.1% 12.8% 12.5% 12.5% 2013 2014 2015 2016 2017 2018

Delivering profitable growth

1,170 1,417 1,457 1,477 1,520 137 171 195 198 192 2014 2015 2016 2017 2018

REVENUE AND OPERATIVE EBITDA REVENUE BY PRODUCT CATEGORY

REVENUE BY CUSTOMER TYPE AND MARKET GROWTH

Pulp & Paper – market leader 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

• ther 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%

* Solenis-BASF combined entity

Kurita (paper) #5

REVENUE BY PRODUCT CATEGORY

REVENUE BY APPLICATION TYPE 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

924 945 973 1,009 1,016 1,040 1,065 1,073 105 105 112 113 117 123 123 131

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018

REVENUE AND OPERATIVE EBITDA ROLLING 12 MONTHS 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

• il & 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

Kemira’s mid- to long-term financial targets

Targets 2017 2018 IFRS 16 impact Mid- to long-term target Revenue EUR 2,486 million Change +5% EUR 2,593 million Change +4%

• Above-the-market growth

Operative EBITDA* 12.5% 12.5% Around +1 %-point 15-17% Gearing* 59% 62% Around +10 %-points Below 75% Factors FY 2018 comments Organic growth through volume and sales price increases Group’s organic growth +7% Oil & Gas becoming larger share of Group (incl. shale, CEOR and oil sands) Revenue from EUR 126m in 2016 to EUR 242m in 2018 Sales price vs raw material price development Raw material inflation in 2017 and 2018, sales prices starting to offset raw material cost pressure in 2018 Capex projects – Polymer capacity expansion in Netherlands, AKD 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.

Healthy market growth for Kemira’s relevant markets

2018 2023 Americas EMEA APAC

Source: Management estimation based on various sources

KEMIRA RELEVANT MARKET

EUR billion

PULP & PAPER RELEVANT MARKET

EUR billion

INDUSTRY & WATER RELEVANT MARKET

EUR 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 10 9 17 13

Dividend proposal EUR 0.53 per share

• Kemira’s dividend policy is to pay a stable

and competitive dividend

• Board of Directors’ proposal to the AGM a

dividend of EUR 0.53 per share, totaling EUR 81 million

• Kemira has paid dividend every year since

listing of shares in 1994

• Kemira offers 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

*

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

*BoD proposal to the AGM 2019

Our three sustainability priorities

Sustainable products and solutions People and integrity Responsible

• perations &

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

• ur 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

INVESTOR PRESENTATION

Latest news and financials

Selected highlights in 2018

• Favorable market trends – good global

demand in all our business areas – organic growth +7%

• Customer satisfaction and employee

engagement improved

• Systematic improvements in operational

excellence to meet changing market dynamics

• Second half of the year was better than the

first

• Investments – acquisition/JV in China and

CEOR polymer capacity ramp-up proceeding, decision made to increase emulsion polymer capacity in the US

Strong organic growth and solid results in 2018

Organic growth +7%

• All businesses grew, growth driven mainly by

higher sales prices

• Especially Oil & Gas chemicals was strong,

growth over 40% Operative EBITDA +4%

• Profitability impacted by currencies in H1 and

higher raw material prices – passing on variable cost increases continues Earnings per share +13%

• Increase driven by higher operative EBITDA

and lower items affecting comparability Dividend

• Board of Directors proposes a dividend of

EUR 0.53 per share

EUR million (except ratios) FY 2018 FY 2017 Δ% Revenue 2,592.8 2,486.0 +4 Operative EBITDA 323.1 311.3 +4

• f which margin

12.5% 12.5%

• Operative EBIT

173.8 170.3 +2

• f which margin

6.7% 6.9%

• Net profit

95.2 85.2 +12 EPS, EUR 0.58 0.52 +13 Dividend per share, proposal by the BoD, EUR 0.53 0.53

Pulp & Paper – good organic growth, profitability unsatisfactory in paper chemicals

Organic growth +6% in 2018

• Good volume growth in bleaching and sizing
• Growth driven also by higher sales prices,

especially in caustic soda Operative EBITDA

• Sales price increases started to compensate higher

raw material prices

• Currency impact EUR -8 million vs prior year

Capacity additions to fuel volume growth

• Deal to acquire 80% of Chinese AKD

manufacturing plant completed, final construction proceeding, production ramp-up expected in H2

• Multimillion JV in South Korea announced in

January 2019 for additional dry polymer capacity – investment supports also growth in Industry & Water

REVENUE EUR million OPERATIVE EBITDA AND EBITDA-% EUR million

1,477 1,520

2017 2018

198 192

2017 2018 12.6% 13.4%

Industry & Water – profitable growth in water treatment and oil & gas

Organic growth +9% in 2018

• Growth driven mainly by Oil & Gas
• Water treatment also grew driven by pricing as

we continue to pass on inflationary pressure Operative EBITDA increased by 15%

• EBITDA improvement driven mainly by higher

sales prices

• Currency impact EUR -6 million vs 2017

Growth investments

• CEOR polymer capacity expansion in

Netherlands under construction, ramp-up in H2 2019

• New EUR 60 million investment into expansion
• f emulsion polymers capacity in the US, in

commercial operation beginning of 2021

REVENUE EUR million OPERATIVE EBITDA AND EBITDA-% EUR million

1,009 1,073

2017 2018

114 131

2017 2018 12.3% 11.3%

Organic growth continued driven by pricing

Q4 2018

Group’s organic growth +3%

• Pulp & Paper +4%, Industry & Water +2%
• Sales volumes grew in Pulp & Paper and Oil & Gas

chemicals

– Volume growth negative due to equipment delivery in Oil & Gas in 2017 and weak water treatment volumes as focus has been on profitable contracts

72.8 78.9 80.8 70.0 69.0 77.1 84.5 80.7 69.4 80.2 89.0 84.5 12.5%13.4%13.6% 11.7%11.3%12.5%13.6%12.7% 13.3% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 637

• 3%

+1% 662 Q4 2017 Sales volumes Sales prices Currency impact Acquisitions Q4 2018 +6%

REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million

12.8% 11.3%

Operative EBITDA +5%, margin 12.8%

• Good growth in absolute EBITDA, margin improved

slightly as sales prices more than compensated higher raw material prices

Earnings per share +5%

• Reported tax rate for the year was 23%

12.4%

Pulp & Paper – good growth driven by pricing and volume

• Organic growth +4% driven by high demand for caustic soda and bleaching chemicals
• Operative EBITDA 13.1% – higher sales prices were not enough to compensate increasing

raw material prices

362 361 365 369 372 369 363 373 369 376 385 390 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 47.9 49.3 51.8 46.3 46.0 47.8 48.5 55.4 42.7 45.4 52.3 51.2 13.2% 13.7% 14.2% 12.6%12.4%13.0%13.4% 14.9% 11.6%12.1% 13.6%13.1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018

+3% +1%

• 4%
• 2%

0% +1% +2% +5%

REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million

+5% +6% +7% +4%

Industry & Water – record-high Q4 EBITDA

• Growth was muted due to equipment deal in comparison period as well as change in

customer mix and related timing of deliveries

• Oil & Gas has grown +92% from EUR 126 million in 2016 to EUR 242 million in 2018

– Organic growth over 30% in Q4 driven by pricing excl. the equipment deal made in 2017

220 227 231 228 238 248 259 264 245 272 284 271 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 24.9 29.6 29.0 23.7 22.9 29.3 36.0 25.3 26.6 34.8 36.7 33.3 11.3% 13.1%12.5% 10.4% 9.6% 11.8% 13.9% 9.6% 10.9% 12.8%12.9%12.3% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018

• 7%
• 5%

0% +9% +15%

• 5%

+6% +20% +14%

REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million

+11% +11% +2%

SALES PRICE VS VARIABLE COST TREND

• 200
• 150
• 100
• 50

50 100 150 200 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Brent oil, USD Sales prices* Variable costs*

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

9 5

• 3
• 10
• 16
• 20
• 10
• 2
• 2

11 4 8

• 9
• 18
• 26
• 23
• 16
• 4

3 11 23 47 42 37

• 18
• 23
• 23
• 13

16 13 13 26 36 38 29

• 40
• 30
• 20
• 10

10 20 30 40 50 60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 Net impact on EBITDA (sales prices-variable costs) Sales prices Variable costs

Net impact of sales price & variable costs positive

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

EUR million EUR million

VARIABLE COST SPLIT 2018 EUR 1.6 billion TOP 10 RAW MATERIALS BY 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%

• f Kemira’s raw material spend

OD = Oil & gas derivative * Mainly trading materials

EXPOSURE TO OIL RELATED RAW 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

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

• utlook

Operative EBITDA 253 287 303 311 323 Increase

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

• IFRS 16 will affect primarily the accounting for

Kemira Group’s operating leases

• On December 31, 2018, Group’s operating lease

commitments were EUR 205 million

• Operating lease expenses are replaced by the

depreciation of the right-of-use assets and interest cost associated with lease liability. As a result, the impact on net profit is immaterial

• The adaptation of IFRS 16 will increase total amount
• f balance sheet by approximately EUR 120 million,

and EBITDA will increase by around EUR 30 million leading to EBITDA margin increase of approximately 1 percentage point

• IFRS 16 will also have an impact on key figures such

as net debt and gearing

• No restatement of prior years – instead we will

provide enough detail during the year for analysis

2019 – IFRS 16 impacting financials – EBITDA margin lifted by around 1 %-point

EUR million (except ratios) FY 2018 Estimated impact in 2019, around Operative EBITDA 323.1 +30

• f which margin

12.5% +1 %-point Operative EBIT 173.8 Small positive Impact on opening balance sheet EUR million (except ratios) Dec 31, 2018 PRE-IFRS 16 Impact on

• pening balance

sheet, around Balance sheet 2,764 +120 Gearing 62% +10%-points

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

Currencies

Currency exchange rates had around EUR -70 million impact on revenue and EUR -14 million impact on the operative EBITDA in 2018 compared to 2017. Guidance: 10% change in our main foreign currencies would approximately have EUR 15 million impact on operative EBITDA on an annualized basis.

◼ 44% EUR ◼ 10% Others KEMIRA REVENUE DISTRIBUTION 2018 KEMIRA COST DISTRIBUTION 2018 ◼ 2% SEK ◼ 3% CNY ◼ 4% CAD ◼ 35% USD ◼ 9 % Others ◼ 5 % CNY ◼ 5 % CAD ◼ 7 % SEK ◼ 30 % USD ◼ 44 % EUR ◼ 2% BRL

Development of selected key figures

9.8% 9.9% 9.7% 9.8% 2015 2016 2017 2018 642 634 694 741 2015 2016 2017 2018

ALL KEY FIGURES IN EUR MILLION EXCEPT RATIOS

248 271 205 210 2015 2016 2017 2018 104 118 124 106 78 95 66 44 2015 2016 2017 2018

213

CASH FLOW FROM OPERATIONS CAPITAL EXPENDITURE EXCL. ACQUISITIONS NET DEBT AND LEVERAGE RATIO OPERATIVE RETURN ON CAPITAL EMPLOYED

2.3 2.2 2.2 2.1 ◼ Growth capex 182 190 150

• Bleaching chemicals – new chlorate plant in Brazil

and new chlorate line in Finland

• Polymers – capacity additions in Italy, UK and

Netherlands

• Sizing chemicals – capacity additions due to

integration of acquisitions

60 59 53 58 65 53 95 66 44

2016 2017 2018

2018 CAPEX WAS LOWER DUE TO TIMING OF INVESTMENT PROJECTS

CAPEX guidance 180-220 MEUR in 2019

Expansion Improvement Maintenance

190

CAPITAL EXPENDITURE EXCLUDING ACQUISITIONS

EUR million and share of revenue

213

CAPEX FOCUS IN CORE PRODUCT GROUPS SINCE 2016 CAPEX GUIDANCE

• In 2019, capital expenditure estimated to increase from

2018 and be approximately EUR 180-220 million, including

– Expansion of Oil & Gas CEOR polymers in Netherlands – New capacity expansion in Oil & Gas polymers in the US – Completion for the new Pulp & Paper AKD JV site in China

9.0% 7.6% 5.8% 150

NET DEBT / OPERATIVE EBITDA AND GEARING

42% 41% 42% 54% 54% 59% 62% 2012 2013 2014 2015 2016 2017 2018

GROSS DEBT MATURITY PROFILE, END OF DECEMBER 2018 EUR 886 MILLION (Cost of debt 1.9%)

Debt portfolio is well diversified

1.9x 2.1x 2.1x 2.2x 1.8x 2.2x 532m 694m 456m 486m 634m 642m NET DEBT OPERATIVE EBITDA

249m 311m 252m 253m 303m 287m 323m 741m 2.3x

156

50 100 150 200 250 300 350 400 450 2019 2020 2021 2022 2023 2024 2025 Bilaterals Bonds Undrawn RCF Undrawn Bilaterals Others

150 200 400 240 57 90 40

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

• f which margin

11.8% 12.1% 12.8% 12.5% 12.5% Operative EBIT 158.3 163.1 170.1 170.3 173.8

• f 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 summary

2014 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

Key figures

EUR million Q4 2018 Q4 2017 Δ% 2018 2017 Δ% Revenue 661.8 636.5 +4 2,592.8 2,486.0 +4 Operative EBITDA 84.5 80.7 +5 323.1 311.3 +4 margin 12.8% 12.7%

• 12.5%

12.5%

• Operative EBIT

44.8 44.0 +2 173.8 170.3 +2 margin 6.8% 6.9%

• 6.7%

6.9%

• Net profit

26.5 25.8 +3 95.2 85.2 +14 Earnings per share, EUR 0.17 0.16 +5 0.58 0.52 +13 Cash flow from operations 88.2 71.4 +24 210.2 205.1 +2 Capex excl. acquisitions 53.2 64.2

• 17

150.4 190.1

• 21

Net debt 741 694 +7 741 694 +7 NWC ratio 10.2% 9.4%

• 10.2%

9.4%

• Operative ROCE % (rolling 12 months)

9.8% 9.7%

• 9.8%

9.7%

• Personnel at period-end

4,915 4,732 +4 4,915 4,732 +4

EUR million Q4 2018 Q4 2017 2018 2017 Net profit for the period 27 26 95 85 Total adjustments 59 37 220 204 Change in net working capital 17 18

• 51
• 34

Finance expenses

• 6
• 6
• 25
• 25

Income taxes paid

• 7
• 4
• 24
• 25

Net cash gen. from operating activities 88 71 210 205 Purchases of subsidiaries and acquisit.

• 44
• 43

Capital expenditure

• 53
• 64
• 150
• 190

Proceeds from sale of assets 1 2 7 3 Change in long-term loan receivables 5

• 5

5

• 5

Cash flow after investing activities

• 3

4 29 13

Cash flow

KEY FINANCIALS

Pulp & Paper

*12-month rolling average

EUR million Q4 2018 Q4 2017 Δ% 2018 2017 Δ% Revenue 390.4 372.8 +5 1,520.2 1,476.9 +3 Operative EBITDA 51.2 55.4

• 8

191.7 197.7

• 3

margin 13.1% 14.9%

• 12.6%

13.4%

• Operative EBIT

24.1 30.9

• 22

91.6 104.8

• 13

margin 6.2% 8.3%

• 6.0%

7.1%

• Operative ROCE*, %

7.8% 9.0%

• 7.8%

9.0%

• Capital expenditure (excl. M&A)

28.8 41.1

• 30

85.1 138.3

• 38

Cash flow after investing activities

• 13.5

4.4

• 29.9

15.7 +90

KEY FINANCIALS

Industry & Water

*12-month rolling average

EUR million Q4 2018 Q4 2017 Δ% 2018 2017 Δ% Revenue 271.5 263.8 +3 1,072.6 1,009.1 +6 Operative EBITDA 33.3 25.3 +32 131.5 113.6 +15 margin 12.3% 9.6%

• 12.3%

11.3%

• Operative EBIT

20.8 13.1 +59 82.2 65.5 +25 margin 7.7% 5.0%

• 7.7%

6.5%

• Operative ROCE*, %

13.6% 11.0%

• 13.6%

11.0%

• Capital expenditure

24.4 23.1 +6 65.3 51.7 +26 Cash flow after investing activities 23.8 8.3 +187 52.5 46.9 +12

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%

INVESTOR PRESENTATION

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

• f growing demand

REVENUE AND OPERATIVE EBITDA EUR million

1,170 1,417 1,457 1,477 1,520 137 171 195 198 192 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 opportunities

New pulp mill projects are driven by increasing demand for board and tissue

• Food and liquid packaging board is

growing particularly fast in Asia

• Pulp is produced close to fiber sources and

then 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

• pportunities for Kemira to grow with

the market In addition, a few large scale pulp mill projects 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 will have 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 synergies with our global production

Telêmaco Borba Washougal

• St. Catharines

Helsingborg Joutseno Nanjing Hallam Gunsan Pasuruan Wellgrow Krems Tarragona Yanzhou NewCo

Acquisition in China is excellent strategic fit

Acquired 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-PRODUCTS WHERE AKD WAX IS USED

Pulp & Paper

TECHNOLOGY AND MARKET LEADER

Value chain part covered by Kemira RAW MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS CUSTOMER INDUSTRIES CUSTOMERS Electricity Sodium chloride (salt) Crude tall oil Cationic monomer Acrylonitrile Acrylic acid Olefins Fatty acids Maleic anhydride Sulfur Tall oil rosin AKD Wax Isomerized olefins Acrylamide Sodium chlorate Hydrogen peroxide Polymers Defoamers Coagulants Biocides Sizing Strength Additives Surface additives Colorants Sulfuric acid Pulping Bleaching Retention Wet-end process control WQQM Sizing Strength Surface treatment Coloring Pulp Packaging and board Printing and writing Tissue All the major global paper and pulp producers MAIN COMPETITORS: Solenis, Nouryon, Ecolab, Kurita, SNF

INVESTOR PRESENTATION

Industry & Water - stronger platform for 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

947 956 906 1,009 1,073 116 116 107 114 131 2014 2015 2016 2017 2018

REVENUE AND OPERATIVE EBITDA EUR million

◼ 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 East Europe due to roll-

• ut of Kemira ERP system in H2/2018.

Major re-fit of the European water laws

W AT E R F R A M E W O R K D I R E C T I V E Environmental Quality Standards Directive Ground-water Directive Floods Directive Urban Waste Water Treatment Directive Drinking Water Directive Marine Strategy Framework Directive Nitrates Directive Bathing Water Directive C I R C U L A R E C O N O M Y P A C K A G E Sewage Sludge Directive Industrial Emissions Directive Environmental Impact Assessment Directive Fertilizer Directive

New regulation

Critical Raw Materials Water Re-use Plastics Strategy (microplastics)

Proposal Proposal Evaluation Proposal Fitness check

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

50 100 150 200 250 300 2013 2014 2015 2016 2017 2018

REVENUE IN OIL & GAS

EUR million

REVENUE SPLIT

◼ 15%

Other

◼ 65%

Shale fracking

◼ 20%

Oil sands and Chemical Enhanced Oil Recovery

Figures rounded to closest 5%

Oil price Organic growth >30%

LTM = Last Twelwe Months ending June 2018

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 WELL AS IN NICHE APPLICATIONS IN OIL & GAS

MAIN COMPETITORS Coagulants: mainly local small companies, Feralco, USALCO, Kronos, PVS, Polymers: SNF, Solvay, Ecolab, Solenis

Value 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

INVESTOR PRESENTATION

Appendix

SHAREHOLDERS ON JANUARY 31, 2019

% OF SHARES

• 1. Oras Invest

18.2%

• 2. Solidium (owned by State of Finland)

15.8%

• 3. Varma Mutual Pension Insurance Company

3.4%

• 4. Ilmarinen Mutual Pension Insurance Comp.

2.1%

• 5. Kemira Oyj

1.8% Total number of shares 155,342,557 Foreign ownership of shares 27.5% Total number of shareholders 34,357

KEMIRA BOARD OF DIRECTORS

Kemira – largest shareholders and Board 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, acts as secretary of Management Board and Board of Directors.

PULP & PAPER

Kim Poulsen

• OPER. EXCELLENCE

Esa-Matti Puputti

INDUSTRY & WATER

Antti Salminen

CFO

Petri Castrén

HUMAN RESOURCES

Eeva Salonen

CTO

Matthew R. Pixton

PRESIDENT AND CEO

Jari Rosendal

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. 15 new R&D projects were started and 9 projects were commercialized in 2018 to improve customer’s resource efficiency.

Responsible

• perations and supply

chain

Workplace safety Achieve zero injuries on long term; TRIF* 2.0 by end of 2020. Our health and safety performance improved in 2018 compared to 2017 and is consistent with 2016

• performance. There was a decline in severity and

permanent injuries which is responding to ongoing management commitment, progressive safety messaging and an overall improvement in safety culture. Climate change Kemira Carbon Index ≤ 80 by end of 2020 (2012 = 100). This KPI is reported

• nce a year.

Carbon Index decreased mainly due to higher share of purchased electricity from renewable and low carbon sources and in some extent through energy efficienc improvements. 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 progressed well as planned for 2018. In total 32 sustainability assessments and 3 Ethical on-site audits were conducted during the

• year. Overall target of 25 Ethical audits is behind the target

but is compensated by active screening via assessments

• f key suppliers with good performance.

.

Corporate responsibility performance Q4 2018

* TRIF = Number of Total Recordable Injury Frequency per million hours, Kemira + contractor, year-to-date ** Suppliers with lowest sustainability assessment score

Priority KPI+target Performance Comments Progress 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. Action planning is ongoing at manager level. Intensive company wide strategy communication and engagement is

• ngoing.

Leadership development activities provided, average Two leadership development activities per people manager position during 2016-2020, the cumulative target is 1,500 by 2020. Above target level for activities consisting of the best practice 70-20-10 model for Learning and Development (on-the-job learning 70%, coaching and mentoring 20%, and development programs 10%). Total by the end of 2018 is already 1,533; the target for 2020 is 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. To comply with EU's General Data Protection Regulation (GDPR), data processing activities were extensively reviewed and documented, and a privacy impact assessment process was implemented. Privacy notices, data processing agreements and global privacy policy were

• created. A mandatory online training course on GDPR was

assigned to over 300 Kemira employees who work in roles that involve the processing of personal data while general awareness-building was continued to all Kemira employees.

Corporate responsibility performance Q4 2018

Important information about financial figures

Kemira provides certain financial performance measures (alternative performance measures)

• n 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

• f individual figures may deviate slightly from the sum figure presented.

* Revenue growth in local currencies, excluding acquisitions and divestments