improvement continued in Q2 INVESTOR PRESENTATION Kemira in brief - - PowerPoint PPT Presentation

INVESTOR PRESENTATION

Strong earnings improvement continued in Q2

JULY 19, 2019

SEGMENT SPLIT PRODUCTS

GEOGRAPHIES

Kemira in brief

LAST 12 MONTHS: REVENUE EUR 2,643 MILLION, OPERATIVE EBITDA EUR 375 MILLION, OPERATIVE EBITDA MARGIN 14.2%, OPERATIVE ROCE 10.8%

◼ 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

◼ 58%

Pulp & Paper

◼ 42%

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

Revenue by geographies and product category represent FY 2018.

Why invest in Kemira

Profitable growth

Operative EBITDA improved by +35% and

• perative EBIT +40% in H1 2019

1 2 3

Attractive dividend

Stable dividend and competitive yield (avg. close to 5%)

Sustainable investment

Excellent 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

• ur 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

• n capital employed

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

REVENUE EUR million

2 137 2 373 2 363 2 486 2 593 2014 2015 2016 2017 2018

OPERATIVE EBITDA OPERATIVE EBITDA MARGIN EUR million

253 287 303 311 323 11.8% 12.1% 12.8% 12.5% 12,5% 2014 2015 2016 2017 2018

Delivering profitable growth

PRE IFRS 16

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

REVENUE BY PRODUCT CATEGORY

REVENUE BY CUSTOMER TYPE 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

• 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 AND OPERATIVE EBITDA

EUR million

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

REVENUE AND OPERATIVE EBITDA

EUR million

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

947 956 906 1,009 1,073 116 116 107 114 131 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

Targets 2017 2018 IFRS 16 impact H1 2019 Mid- to long-term target Revenue MEUR 2,486 Change +5% MEUR 2,593 Change +4%

• MEUR 1,311

Change +4% Above-the-market growth Operative EBITDA* 12.5% 12.5% Around +1 %-point 15.4% 15-17% Gearing* 59% 62% Around +10 %-points 79% Below 75% Factors H1 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.

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

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

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

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

Investing in core product categories with higher return

• Top 4 product categories represent 80% of

Group’s revenue, above EUR 2 billion

• Our investments have focused on:

– Bleaching chemicals – Polymers – Sizing* chemicals

• Current investments projects

– Netherlands – Expansion of Oil & Gas polymers – US – Expansion of Oil & Gas polymers – China – Completion of new Pulp & Paper AKD site

PRODUCTS

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

Revenue EUR 2,642 million (LTM)

*Sizing = Resistance against water absorption

INVESTOR PRESENTATION

Latest news and financials

Key points in Q2 2019

• Focus on value over volume

continued

• Strong profitability improvement

despite some softness in the market

• Growth investment projects in

China and the Netherlands expected to be ramped-up by year-end

Key financial highlights

Focus on value over volume

• Intention to drive profitability resulted in some

lost volumes

• Oil & Gas organic growth +30%

Operative EBITDA +32% to margin of 16.0%

• Improved product mix
• Effective price and cost management combined

with favorable raw material price development

• IFRS 16 impact EUR +8.3 million in Q2
• Favorable currency development

Operative EBIT +34% to margin of 9.1%

EUR million (except ratios) Q2 2019 Q2 2018 Δ% FY 2018 Revenue 663.6 647.6 +2 2,592.8 Operative EBITDA 106.1 80.2 +32 323.1

• f which margin

16.0% 12.4% 12.5% Operative EBIT 60.3 45.1 +34 173.8

• f which margin

9.1% 7.0% 6.7% Net profit 35.2 23.5 +50 95.2 EPS, EUR 0.22 0.14 +54 0.58

Pulp & Paper – profitability improving

Market environment

• Some short-term softness in the market

Organic growth -3%

• Intentional focus on improving product mix
• Exit of ECOX business impacted sales volumes

Operative EBITDA margin 14.4%

• Value over volume visible also in EBITDA and

EBIT leading to improved profitability

• Cost savings initiated – related one-time costs

recognized in Q2

• *IFRS 16 impact EUR +3.2 million in Q2 and EUR

+6.5 million in H1

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

372 369 363 373 369 376 385 390 381 373 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019

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

• 3%

46.0 47.8 48.5 55.4 42.7 45.4 52.3 51.2 50.7 53.7 12.4% 13.0% 13.4% 14.9% 11.6% 12.1% 13.6% 13.1% 13.3% 14.4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2* 2017 2018 2019

+0%

Industry & Water – exceptional profitability

Market environment

• Water treatment market solid
• Oil & gas shale market growth rate slowing in the

short-term Organic growth +4%

• Our Oil & Gas business had strong organic

growth, +30% to EUR 77 million, partly driven by

• il sands tailings treatment business
• Focus on key customers

Operative EBITDA margin exceptionally high 18.1%

• Favorable product mix and polymer raw material

price development

• *IFRS 16 impact EUR +5.0 million in Q2 and EUR

+9.4 million in H1

22.9 29.3 36.0 25.3 26.6 34.8 36.7 33.3 45.0 52.4 9.6% 11.8% 13.9% 9.6% 10.9% 12.8% 12.9% 12.3% 16.8% 18.1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2* 2017 2018 2019

OPERATIVE EBITDA AND OPERATIVE EBITDA-% EUR million

238 248 259 264 245 272 284 271 267 290 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019

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

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

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

Clear improvement in safety

• We have 5,067 employees and annually 1,000-1,200

contractors working with us

• We produce some 5.3 Mton of products at 64

manufacturing sites in 28 countries every year

• We deliver nearly 1,000 shipments daily by road, rail

and sea

• Our TRIF is 2.5, including own employees and

contractors

• Our LTIF of 1.5 is among the best of the global

chemical companies*

Total Recordable Injuries Frequency # of injuries per 1 million hours (Kemira Employees and Contractors in our facilities)

Safety record on the right track – target has to be zero injuries

5.8 7.2 3.4 3.9 3.5 2.5 2014 2015 2016 2017 2018 2019 YTD

*Based on the ICCA (the International Council of Chemical Associations) database and the latest reported company data

2.7 2.7 1.5 2.2 2.0 1.5 2014 2015 2016 2017 2018 2019 YTD Lost Time Injuries Frequency # of injuries per 1 million hours (Kemira Employees and Contractors in our facilities)

Key operative focus areas in H2 2019

1. Active price management 2. Modify product & service offering to cater better profitable growth 3. Improve operational excellence 4. Ramp-up CEOR* polymer capacity addition in the Netherlands 5. Start-up new AKD sizing manufacturing site in China 6. Construction of emulsion polymer capacity in the US

• n time and in budget, start-up expected beginning of

2021 7. Prudent cost-control in all areas

*CEOR, chemical enhanced oil recovery

PETRI CASTRÉN, CFO JULY 19, 2019

Financials Q2 2019

Successful pricing drives improvement

80.2

Q2 2018 Sales volumes Sales prices Variable costs Fixed costs Currency impact Other Q2 2019 Adoption of IFRS 16 standard "Pre IFRS 16 comparison"

• 6.6

+23.4 +4.8

• 0.5

+5.7

• 0.8

OPERATIVE EBITDA BRIDGE EUR million

648

• 4%

+2% 0% 664 Q2 2018 Sales volumes Sales prices Currency impact Acquisitions Q2 2019 +4%

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

Operative EBITDA margin 16.0%

• 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 +8.3 million in Q2 and EUR +16.0 million in H1

97.8

• 8.3

106.1

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

• 180
• 120
• 60

60 120 180 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 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 24 28

• 9
• 18
• 26
• 23
• 16
• 4

3 11 23 47 42 37 34 23

• 18
• 23
• 23
• 13

16 13 13 26 36 38 29 11

• 5

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 2019 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

Cash flow has improved clearly

ALL KEY FIGURES IN EUR MILLION

271 205 210 58 122 2016 2017 2018 H1 2018 H1 2019 118 124 106 41 34 95 66 44 22 34 2016 2017 2018 H1 2018 H1 2019

213

CASH FLOW FROM OPERATIONS CAPITAL EXPENDITURE EXCL. ACQUISITIONS

◼ Growth capex 190 150

• Cash flow supported by improved profitability
• Kemira’s Pension Fund Neliapila returned excess

capital of EUR 15 million to Group in Q1

• IFRS 16 impact EUR +14 million on cash flow from
• perations in H1
• Typically cash flow is H2-weighted, especially due to

changes in net working capital

• In H1 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

63 68

ROCE improving, adoption of IFRS 16 increased reported net debt

9.9% 9.7% 9.8% 9.7% 10.8% 2016 2017 2018 Q2 2018 LTM Q2 2019 LTM 634 694 741 773 921 Dec 31 2016 Dec 31 2017 Dec 31 2018 Jun 30 2018 Jun 30 2019

NET DEBT (EUR million) AND LEVERAGE RATIO* OPERATIVE RETURN ON CAPITAL EMPLOYED

2.3 2.2 2.1

• 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 135 million) are part of debt

– Excluding IFRS 16 impact, net debt would have been EUR 786 million and leverage ratio 2.2

• Average cost of net debt excluding leases is 1.9%

and duration is 27 months

2.5 2.5

* 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

• utlook

Operative EBITDA 253 287 303 311 323 Increase

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

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

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

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%-points

Below 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

• perating 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 small 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 H1 2019 Estimated impact

• n FY 2019, around

Operative EBITDA 323.1 +16.0 +30

• f which margin

12.5% +1.2 %-point +1 %-point Impact on balance sheet EUR million (except ratio) Dec 31, 2018 Impact on June 30, 2019 Net debt 741 +135 Gearing 62% +12%-points

EUR million Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 2018 2017 Revenue 663.6 647.8 661.8 669.6 647.6 2,592.8 2,486.0 Operative EBITDA 106.1 95.6 84.5 89.0 80.2 323.1 311.3 margin 16.0% 14.8% 12.8% 13.3% 12.4% 12.5% 12.5% Operative EBIT 60.3 50.1 44.8 50.0 45.1 173.8 170.3 margin 9.1% 7.7% 6.8% 7.5% 7.0% 6.7% 6.9% Net profit 35.2 29.3 26.5 22.1 23.5 95.2 85.2 Earnings per share, EUR 0.22 0.18 0.17 0.14 0.14 0.58 0.52 Cash flow from operations 57.2 65.2 88.2 64.2 23.4 210.2 205.1 Capex excl. acquisitions 39.9 28.3 53.2 34.3 39.8 150.4 190.1 Net debt 921 842 741 744 773 741 694 NWC ratio (rolling 12 m) 10.9% 10.6% 10.2% 9.8% 9.6% 10.2% 9.4% Operative ROCE (rolling 12 m) 10.8% 10.3% 9.8% 9.8% 9.7% 9.8% 9.7% Personnel at period-end 5,067 4,973 4,915 4,798 4,858 4,915 4,732 PLEASE NOTE FINANCIAL IMPACT OF IFRS 16 ADOPTION FROM THE PREVIOUS SLIDE

Key figures

EUR million Q2 2019 Q2 2018 2018 2017 Net profit for the period 35 24 95 85 Total adjustments 69 53 220 204 Change in net working capital

• 22
• 32
• 51
• 34

Finance expenses

• 17
• 11
• 30
• 25

Income taxes paid

• 8
• 10
• 24
• 25

Net cash generated from operating activities 57 23 210 205 Purchases of subsidiaries, acquisitions and assoc. comp.

• 2

2

• 43

Capital expenditure

• 40
• 40
• 150
• 190

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

• 5

Cash flow after investing activities 17

• 13

29 13

Cash flow

Currencies

Currency exchange rates had around EUR +31 million impact on revenue and EUR +12 million impact on the operative EBITDA in H1 2019 compared to H1 2018. Guidance: 10% change in our main foreign currencies would approximately have EUR 15 million impact on operative EBITDA on an annualized basis.

◼ 42% EUR ◼ 7% Others KEMIRA REVENUE DISTRIBUTION H1 2019 KEMIRA COST DISTRIBUTION H1 2019 ◼ 2% SEK ◼ 4% CNY ◼ 4% CAD ◼ 37% USD ◼ 6% Others ◼ 5% CNY ◼ 5% CAD ◼ 6% SEK ◼ 30% USD ◼ 43% EUR ◼ 2% BRL ◼ 2% GBP ◼ 3% GBP ◼ 2% PLN

KEY FINANCIALS

Pulp & Paper

*12-month rolling average

EUR million Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 2018 2017 Revenue 373.4 380.8 390.4 385.2 376.0 1,520.2 1,476.9 Operative EBITDA 53.7 50.7 51.2 52.3 45.4 191.7 197.7 margin 14.4% 13.3% 13.1% 13.6% 12.1 12.6% 13.4% Operative EBIT 24.0 20.6 24.1 26.6 22.0 91.6 104.8 margin 6.4% 5.4% 6.2% 6.9% 5.9% 6.0% 7.1% Operative ROCE*, % 7.6% 7.7% 7.8% 8.5% 8.3% 7.8% 9.0% Capital expenditure (excl. M&A) 23.3 17.3 28.8 20.7 21.4 85.1 138.3 Cash flow after investing activities 36.2 25.1

• 13.5

20.6 2.3 29.9 15.7

KEY FINANCIALS

Industry & Water

*12-month rolling average

EUR million Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 2018 2017 Revenue 290.2 267.0 271.5 284.4 271.7 1,072.6 1,009.1 Operative EBITDA 52.4 45.0 33.3 36.7 34.8 131.5 113.6 margin 18.1% 16.8% 12.3% 12.9% 12.8% 12.3% 11.3% Operative EBIT 36.3 29.5 20.8 23.4 23.0 82.2 65.5 margin 12.5% 11.0% 7.7% 8.2% 8.5% 7.7% 6.5% Operative ROCE*, % 16.9% 15.4% 13.6% 12.5% 12.6% 13.6% 11.0% Capital expenditure (excl. M&A) 16.5 11.0 24.4 13.6 18.4 65.3 51.7 Cash flow after investing activities 5.7 27.8 23.8 26.8 6.1 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

• 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

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 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 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 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

• f 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’s six 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

• f the Directive already

entered into force in 2001

10 20 30 40 50 60 70 80 90 100 Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom 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

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

REVENUE IN OIL & GAS

EUR 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 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 JUNE 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 30.0% Total number of shareholders 32,919

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, (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 With Kemira since 2015 ANTTI SALMINEN President Industry & Water With Kemira since 2011 PETRI CASTRÉN CFO With Kemira since 2013 MATTHEW PIXTON CTO With Kemira since 2016 ESA-MATTI PUPUTTI EVP, Operational Excellence With Kemira since 2015 EEVA SALONEN EVP, Human Resources With Kemira since 2008

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. In Q2 2019 four R&D projects and two joint R&D projects were started to improve customer resource efficiency. Other R&D projects are targeted to improve product quality or

• safety. In Q2 one R&D project to improve customer phase

resource efficiency was commercialized.

Responsible

• perations and supply

chain

Workplace safety Achieve zero injuries on long term; TRIF* 2.0 by end of 2020. YTD 2019 TRIF was 2.5. The preventive work with Behaviour Based Safety and using leading indicators like hazardous conditions and activities on a daily basis are beginning to show results via lower number of people incidents as well as severity. EMEA completed face-to- face EHSQ training in June. Climate change Kemira Carbon Index ≤ 80 by end of 2020 (2012 = 100). This KPI is reported

• nce a year.

Efforts to decrease carbon footprint continue mainly by sourcing a higher share of electricity from low carbon

• sources. During Q2, started E3 Energy Reviews in six of
• ur manufacturing plants. Work to develop a longer-term

climate change target started in Q2. 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. During Q2 two ethical audits and 8 new

assessments were conducted. Total 29 suppliers are currently in progress to be evaluated during the second half of the year.

Corporate responsibility performance Q2/2019

* 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. Engagement currently 2% above external industry norm. Company wide strategy communication and engagement is

• ngoing 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. 123 leadership activities in Q2. Leadership activities overall 1671 vs target 1500 by year 2020. 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 Q2/2019

Read more about Corporate Responsibility in Kemira

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