Petri Castrén | May, 2014 Kemira Credit investor presentation
Disclaimer This presentation contains, or may be deemed to contain, forward-looking statements. These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expenditures and future cash sources and requirements, that involve known and unknown risks, uncertainties and other factors that may cause Kemira Oyj’s or its businesses’ actual results of operations, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, such forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the forward-looking statements contained in this presentation, possibly to a material degree. All forward- looking statements made in this presentation are based on information presently available to management and Kemira Oyj assumes no obligation to update any forward-looking statements, unless obligated to do so under applicable law or regulation. 2
Agenda Our business 1 Our strategic focus 2 Review of financials 3 Key debt metrics 4 Potential bond transaction 5 Appendix 6
1. Our business 4
Kemira – global EUR 2.2 billion chemicals company KEMIRA HEADQUARTERS Helsinki, Finland NORTH AMERICA 30% 1,300 ASIA PACIFIC 6% M&I management Frankfurt, Germany 340 O&M management Houston, USA Regional HQ EUROPE, MIDDLE EAST Shanghai, China AND AFRICA 57% Regional HQ Atlanta, USA 2,600 Paper management 4,500 employees Hong Kong SOUTH AMERICA 7% 59 manufacturing sites 250 Presence in ~40 countries Sales in > 100 countries R&D and technology centers Employees 5
Focus on paper, oil & gas, mining and water Kemira in the value chain of WQQM* treatment Expertise and tailored combinations of chemicals for water- intensive industries Improving our customers ’ water, energy and raw material efficiency *) Water Quality and Quantity Management 6
Key figures EUR million (except ratios) 2013 2012 2011 2010 Revenue 2,229 2,241 2,207 2,161 Operating profit, excluding non-recurring items 164 156 157 162 % of revenue 7.4 6.9 7.1 7.5 Gearing, % at period-end 41 42 38 39 Personnel at period-end 4,453 4,857 5,006 4,977 7
Our business is organized into customer-based segments SALES BY SEGMENT (2013) OPERATIVE EBIT BY SEGMENT (2013) OIL & MINING 14% 11% PAPER 48% 28% 53% 30% MUNICIPAL & INDUSTRIAL 8% 8% CHEMSOLUTIONS* *) Kemira closed the divestment of formic acid business on March 6, 2014. The remaining business of ChemSolutions will be transferred to Paper and ChemSolutions will be discontinued. 8
We support pulp and paper producers in innovation and process efficiency 1. PAPER, Packaging, Revenue 2013: EUR 1,068 million board and Operative EBIT 2013: EUR 86.5 million, 8.1% margin tissue grades Expertise We have unique expertise in applying chemicals and supporting pulp & paper producers to innovate and constantly improve their operational efficiency and end- 35% product quality. Offering We develop and commercialize new products to 45% fulfil customer needs and to ensure a leading portfolio for the pulp and paper industry. Market position: Chemical, #1 in EMEA mechanical and 20% recycled pulp #2 in North America, South America and APAC Paper grades 9
Our innovative chemicals improve yield in oil, gas and metals recovery 2. OIL & MINING, Business management Revenue 2013: EUR 312 million Minerals & Metals Operative EBIT 2013: EUR 17.4 million, 5.6% margin Expertise We provide a unique combination of innovative 20% chemicals and application knowledge that improves process efficiency and yield in oil, gas and metals recovery. Offering We use our in-depth understanding of extraction processes to tailor solutions for water management and re- use. 80% Market position: #2 in unconventional Oil & Gas in North America. Business management Oil & Gas 10
With our chemistry we enable the whole range of water treatment 3. MUNICIPAL & INDUSTRIAL, Other Revenue 2013: EUR 659 million Operative EBIT 2013: EUR 45.8 million, 6.9% margin Expertise We enable our customers to improve their water 10% treatment efficiency by providing value adding support and 25% high performing chemicals. Polymers Offering We are the only company that manufactures and supplies such a broad range of water treatment chemicals – both polymers and coagulants, as well as antiscalants, defoamers and water disinfectant. Market position: 65% In water treatment chemicals #1 in EMEA Coagulants #2 in North America 11
2. Our strategic focus INNOVATION We invest in innovation and expertise. BUSINESS FOCUS We provide expertise and chemicals for water-intensive industries. GROWTH We target profitability and above-the- market growth. GEOGRAPHICAL FOCUS We strengthen position in mature markets and expand selectively in emerging markets.
Expanding to leadership in target markets 2017 – 2020 Expand Become leader in target markets. 2015 – 2017 Accelerate Grow in emerging markets through new 2014 – 2015 products & services. Focus Achieve a sustainable position in key 2012 – 2013 markets. Redesign Reach target profitability by implementing “Fit for Growth”. 13
Transformation into a water pure-play is now accomplished New Performance Acquisition of BASF’s AKD Sharpened 3F and organization management strategy Soto structure system emulsion acquisition business Fit for Growth Q2 2012 AGM 2014 Result JV Sachtleben Coagulants Formic Divestments business in Brazil acid business Food and pharmaceuticals Danish distribution business business 14
Differentiated products’ revenue share increasing to 50%, after the announced portfolio changes In differentiated products 40% we are looking for 50% innovation-driven growth above the market. Higher value to customer means higher margins. In commodity products we 60% 50% are aiming to maximize profitability and cash flow. 2012 2013* *) Pro forma revenue split, including the revenue impact of all the already announced M&A activities. 15
Double-digit revenue growth in polymers, sizing and strength in Q1 2014 Other process chemicals Coagulants +3 % - 17 % 19% 11% Sizing and strength +13 % Bleaching and 12% EUR 530 pulping million 24% +1 % 22% 8% Polymers 4% Other commodities +14 % 0 % Organic acids* Differentiated products -60 % Commodity products *) Propionic acid and acetates divested on March 1, 2013 and formic acid on March 6, 2014 16
Leverage mature markets and expand in selected emerging markets • Innovation driven growth in mature markets • Emerging market revenue expected to grow from 14% to 16% in 2016 Paper, O&M and M&I Paper, O&M and M&I Paper (China, Indonesia and South Korea) O&M (Middle East and Africa) O&M and Pulp & Paper 17
M&A strategy focusing to strengthen market position in the core segments • 30% gearing in Q1 2014 provides capacity for inorganic growth • Strict M&A criteria for focused growth – Must strengthen our market position and/or our technologies/competencies – EBIT accretive in second full year after closing • 3F acquisition demonstrates Kemira’s M&A strategy – Accessing technologies lacking in the portfolio (e.g. monomers) – Accelerating geographical expansion in order to shorten the strategic path (e.g. dry polyacrylamides in the US) 18
Capital allocation focuses on high growth product lines Capex split average 2010-2012 Capex split in 2013 35% 50% 50% 65% Commodity products Differentiated products 19
Innovation revenue target EUR 250 million in 2016 Revenue from new products or from products into new applications launched within the past 5 years CONTRIBUTING TO 2013’S INNOVATION REVENUE Targeting to double innovation revenue from 5% in 2012 to ~10% of total sales in 2016 Paper • Expanding Fennobind binder production capacity sets the stage for second-generation Fennobind product launch. EUR 160 million • FennoBond benefits boardmakers, graphical papermakers, and also tissue and towel manufacturers. Oil & Mining • Focus on shale gas including friction reducers and microbial control EUR 106 million enhancements. • New tagged scale inhibitor products enable measurement of scale inhibitor levels at oil and gas wells. • Tailoring binders that minimize bentonite need and more innovation projects at commercialization phase. NEW INNOVATION AREAS: • Next Fennobind generation • Tagged antiscalants 2012 2013 • Guar replacement • New friction reduction technology • Rheology modifiers 20
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