in seasonally strong third quarter INVESTOR PRESENTATION Kemira in - - PowerPoint PPT Presentation

INVESTOR PRESENTATION

Excellent profitability in seasonally strong third quarter

OCTOBER 24, 2019

SEGMENT SPLIT PRODUCTS

GEOGRAPHIES

Kemira in brief

LAST 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 growth

Operative EBITDA improved by +34% and Operative EBIT +41% in January-September 2019

1 2 3

Attractive dividend

Stable dividend and competitive yield

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 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.

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

Capacity additions and cost savings via investments

Ongoing 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

INVESTOR PRESENTATION

Latest news and financials

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

• f which margin

17.1% 13.3% 12.5% Operative EBIT 71.1 50.0 +42 173.8

• f 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

372 369 363 373 369 376 385 390 381 373 383 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 48.5 55.4 42.7 45.4 52.3 51.2 50.7 53.7 61.3 12.4% 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 level

Market 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
• perations business in Finland (Operon) divested
• *IFRS 16 impact EUR +5.4 million in Q3 and EUR

+14.9 million in 1-9/2019

22.9 29.3 36.0 25.3 26.6 34.8 36.7 33.3 45.0 52.4 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

238 248 259 264 245 272 284 271 267 290 307 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

• perations, 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

• ver volume’ to ‘Active

price management’ Acquisition Organic 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

Q3 2018 Sales volumes Sales prices Variable costs Fixed costs Currency impact Other Q3 2019 Adoption of IFRS 16 standard "Pre IFRS 16 comparison"

• 6.1

+18.8 +13.0

• 3.7

+6.3 +0.8

OPERATIVE EBITDA BRIDGE EUR million

670

• 2%

+2% 0% 690

Q3 2018 Sales volumes Sales prices Currency impact Acquisitions & Divestments Q3 2019

+3%

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

Operative 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

• 9.1

118.1

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

9 5

• 3
• 10
• 16
• 20
• 10
• 2
• 2

11 4 8 24 28 32

• 9
• 18
• 26
• 23
• 16
• 4

3 11 23 47 42 37 34 23 19

• 18
• 23
• 23
• 13

16 13 13 26 36 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 million EUR million

• 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*

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 33 62 2016 2017 2018 1-9 2018 1-9 2019

213

CASH FLOW FROM OPERATIONS CAPITAL EXPENDITURE EXCL. ACQUISITIONS

◼ Growth capex 190 150

• Cash flow improvement driven by strong results
• IFRS 16 impact EUR +21 million on cash flow from
• perations 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

97 120

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 2018 LTM Q3 2019 LTM 634 694 741 744 866 Dec 31 2016 Dec 31 2017 Dec 31 2018 Sep 30 2018 Sep 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 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

2.1 2.3

* 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

• 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 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

• n FY 2019

Operative EBITDA 323.1 +25.1 Around +30

• f 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

• f cash acquired
• 2
• 43

Capital expenditure

• 52
• 34
• 150
• 190

Proceeds from sale of assets 4 1 7 3 Change in long-term loan receivables 5

• 5

Cash flow after investing activities 73 29 29 13

Currencies

Currency exchange rates had around EUR +46 million impact on revenue and EUR +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 have EUR 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

EUR million Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 2018 2017 Revenue 382.9 373.4 380.8 390.4 385.2 1,520.2 1,476.9 Operative EBITDA 61.3 53.7 50.7 51.2 52.3 191.7 197.7 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

EUR million Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 2018 2017 Revenue 306.9 290.2 267.0 271.5 284.4 1,072.6 1,009.1 Operative EBITDA 56.8 52.4 45.0 33.3 36.7 131.5 113.6 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

• 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 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 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. During Q3, four new R&D projects were initiated to improve customer resource efficiency. One additional project was re-

• pened 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

• perations 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

• nce 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

* 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. 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

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