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profitable water pure-play Structural changes starting to deliver - - PowerPoint PPT Presentation

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Wolfgang Bchele, President and CEO Kemira Capital Markets Day 2013, September 10 Delivering a profitable water pure-play Structural changes starting to deliver results LEAN Performance manufacturing Stringent Lean management capital

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SLIDE 1

Delivering a profitable water pure-play

Kemira Capital Markets Day 2013, September 10

Wolfgang Büchele, President and CEO

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SLIDE 2

Structural changes starting to deliver results

Food and pharmaceuticals business divestment Sachtleben divestment Stringent capital allocation LEAN manufacturing 3F acquisition New organization structure Fit for Growth Segment roles: growth and/or cash focus

  • 28%

+35%

Net debt Equity value

Kemira Capital Markets Day 2013 2

Performance management system Compensation structure Process architecture Lean

  • peration

Q2 2012 Result CMD 2013

slide-3
SLIDE 3

Managing businesses from their growth regions

Oil & Mining management based in Atlanta, US Municipal & Industrial management relocating from Helsinki to Frankfurt Paper management relocating from Helsinki to Hong Kong EMEA Paper management relocating from Helsinki to Frankfurt

Kemira Capital Markets Day 2013 3

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SLIDE 4

68 70 72 74 76 78 80 82 2012 Q4 2012 Q1 2013 Q2 2013 200 400 600 800 1,000 1,200 1,400 1,600 Jan 2012 Jun 2012 Dec 2012 Mar 2013 Jun 2013

Differentiated products together with balanced wet and dry shale portfolio driving revenue recovery in Oil & Mining

15% reduction in total number of US oil (+17%) and gas (-56%) rigs in 2013 compared to January 2012 Oil & Mining revenue increasing sequentially despite decreased oil and gas drilling activity Differentiated products share of revenue increasing to 82%

+6% +5% # of Oil rigs in the US* EUR million 82% # of Gas rigs in the US*

*) Source: Baker Hughes International Kemira Capital Markets Day 2013 4

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SLIDE 5

Restructuring initiatives improving profitability in Municipal & Industrial

100 200 300 400 500 600 700 800 2010 2011 2012 1-6 2013

7.1% 5.7% 7.1% 9.2%

644 665 687 343 Others Polymers Coagulants Operative EBIT margin Revenue, EUR million

Kemira Capital Markets Day 2013 5

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SLIDE 6

2013

Revenue (local currencies and excl. divestments)

2014 2016

Operative EBIT 0%-5% growth vs 2012 EBIT margin 10% Revenue EBITDA margin Gearing EUR 2.6 – 2.7 billion 15% below 60% increase >15% vs 2012

No change in outlook for 2013 or financial targets for 2014 and 2016

Kemira Capital Markets Day 2013 6

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SLIDE 7

Fit for Growth helping to deliver 2013 profit target*

Fit for Growth savings expected to be EUR 15-20 million higher in H2 2013 vs H2 2012 Input prices trending up

*) Revenue in local currencies, excl. divestments 0%-5% growth vs 2012, Operative EBIT +15% vs 2012

2012-2013

Propylene price trend

Kemira Capital Markets Day 2013 7

0.40 0.50 0.60 0.70 0.80 850 1000 1150 1300

1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/1211/1212/12 1/13 2/13 3/13 4/13 5/13 6/13

EU (EUR/MT, ICIS) NA (USD/pound, CMAI) 3 7 9 10 5 10 15 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

Fit for Growth savings, EUR million

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SLIDE 8

External indicators show stable economic development in EMEA and NAFTA, uncertainty in emerging markets

Kemira early warning dashboard

Kemira Capital Markets Day 2013 8

  • 1. Lead time is the estimated time (months) between movement of indicator vs. resultant 2. Average new order value (3 months rolling)

Indicators Status Trend Change Lead1

Overall

WTI crude oil futures (9/13)

6

OECD + Emerging market bus. confidence index (6/13)

4

FOEX China BHKP pulp (9/13)

4

Chicago fed nat. activity (7/13)

8 EMEA

IFO manufacturing business expectations (8/13)

6

Eurozone PMI survey (8/13)

6 NA

S&P 500 index (9/13)

4

ISM business supplier deliveries (8/13)

6 SA

Brazil industry production % growth (6/13)

6

Brazil company leading indicator (6/13)

6 APAC

Major 5 Asia companies leading indicator (6/13)

8

China containerized freight index (8/13)

2

Contracting: indicator has decreased for at least 3 consecutive months Expanding: indicator has increased for at least 3 consecutive months Normal: indicator moves within standard deviation corridor Above: indicator moves above standard deviation corridor Below: indicator moves below standard deviation corridor Trend

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SLIDE 9

Operative EBIT margin target of 10% in 2014

Fixed cost inflation is expected to be compensated through additional benefits from LEAN manufacturing roll-out, further M&I turnaround measures and growth

Q2 operative EBIT 2013 Excluding one off expenses in Q2 2013 Fit for Growth full run rate M&I restructuring Additional efficiency measures (Vaasa, BSC, 3F synergies) Average quarterly EBIT, including all the announced efficiency measures

2013-2015

40 55 4 1 5 5

Kemira Capital Markets Day 2013 9

10% Quarterly operative EBIT bridge, EUR million 7%

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SLIDE 10

Capital allocation focusing on growth markets and product lines

Targeted payback time for new greenfield investments is max. 7 years and max. 5 years for capacity additions on existing products Focus on Paper in China, strengthening Oil & Mining in mature markets, South America, Middle East and Africa

65% 35% 6.0% 5.0%

2012 2016e

Capex split average 2010-2012 Targeted capex split 2016 Capex-to-sales ratio

30% 70%

Kemira Capital Markets Day 2013 10

2013-2015

Differentiated products Commodity products

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SLIDE 11
  • Current 36% gearing means EUR 280 million

headroom against the targeted <60% gearing

  • 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)

Acquisitions expected to contribute to growth target

2013-2015

Kemira Capital Markets Day 2013 11

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SLIDE 12

Positioning based on 2 years performance

Portfolio focus shifting from commodity to differentiated business

Kemira Capital Markets Day 2013 12

2013-2015

Revenue growth Profitability O&M SA O&M APAC M&I SA M&I APAC M&I NAFTA O&M EMEA Paper SA O&M NAFTA Paper NAFTA Paper EMEA Paper APAC CS Evaluating exit

  • ptions

M&I EMEA

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SLIDE 13

Portfolio restructuring improving return on capital employed

June 2013 Ambition in 2016 Goodwill 520m Lower Other intangible assets* 58m Unchanged Property, plant and equipment* 650m >30% higher Investment in associates 2 Unchanged NWC 11.3% 11%-11.5% Operative EBIT margin 1-6 2013 7.3% ~11% Operative ROCE, rolling 12 months 10.4% >15% 5% capex to sales target in 2016 LEAN manufacturing and SKU reduction Fit for Growth and continuous efficiency measures

*) Prepayments (see note 13 in the Financial Statements 2012) of EUR 111 million are excluded from Kemira operative ROCE.

13

2013-2015

Kemira Capital Markets Day 2013

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SLIDE 14

Innovation focusing on Paper and Oil & Mining

Technology Management Board targeting 50% reduction in development times for ”R” and ”D” projects Dedicated global team and structured process to drive ideation R&D projects per New Product Development stage

Development Scale-up

Kemira Capital Markets Day 2013 14

2015-2017

Paper Oil & Mining Municipal & Industrial ChemSolutions Paper Oil & Mining Municipal & Industrial ChemSolutions

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SLIDE 15

Heading towards remote control and combining waste water treatment with energy generation

Remote control and monitoring of water management: serving industries from a central location

Kemira Capital Markets Day 2013 15

Energy and clean water from waste by Microbial Fuel Cell assisted water treatment

2017-2020

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SLIDE 16

Renewed revolving credit facility further improves financial position and secures future growth financially

Debt per June, 2013 Gross debt: EUR 565 million Net Debt: EUR 425 million Net Debt/Annualized

  • perative EBITDA

YTD 2013: 1.7 Gross debt maturing in 2013 relates mainly to commercial papers issued on the Finnish markets

4.3% 1.7% 2.0% 2.0% 1.6% 1.7% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2008 2009 2010 2011 2012 6/2013

  • 500
  • 400
  • 300
  • 200
  • 100

2013 2014 2015 2016 2017 2018 2019 2020 2021 >2022 Gross debt Undrawn EUR 400 million 5+1+1 year Revolving Credit Facility

Debt maturity profile, EUR million Kemira average interest rate (at the end of the period)

Kemira Capital Markets Day 2013 16

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SLIDE 17

Dividend policy remains unchanged

Dividend policy is to distribute a dividend that is 40%-60% of Kemira’s operative net profit Dividend yield has on average been over 4% in 2005-2012 (leading yield in the European chemical sector)

Kemira Capital Markets Day 2013 17 *) In addition in March, 86% of Tikkurila shares were distributed as dividend to Kemira shareholders (Tikkurila market capitalization was EUR 600 million after its listing) **) Gearing at the end of June, 2013

53% 39% 38% 42% 36% 37% 61% 60% 59% 69% 2009 2010* 2011 2012 2013** Gearing Payout ratio

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SLIDE 18

Cultural change supporting Kemira’s transformation into water quality and quantity management pure-play

2013-2015 Focus 2017-2020 Expand Be recognized industry and technology leader in chosen target markets 2015-2017 Accelerate Grow through new products & services and accelerate expansion in emerging markets Achieve a sustainable position in all target markets 2012-2013 Redesign Reach target profitability by implementing “Fit for Growth” Best-in-class in its ability to leverage global performance culture, talents and operations Build a strong employer brand to attract and retain leadership and expert talents Establish a performance and innovation driven culture that fosters collaboration, learning and

  • rganizational agility

Building blocks for a high performing organization in place: Clear accountabilities, performance management system, process architecture

Kemira Capital Markets Day 2013 18

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SLIDE 19

Increased focus

  • n efficiency and

savings

Kemira Capital Markets Day 2013, September 10

Michael Löffelmann, SVP restructuring

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SLIDE 20

EUR 60 million Fit for Growth savings in 2014

>45 60 10 19 Savings impact 2012 Savings impact 2013 Savings impact 2014 Expected savings Realized savings

Zero loss of identified Fit for Growth savings, implementation timeline sharpened

EUR million

Kemira Capital Markets Day 2013 20

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SLIDE 21

Offsetting Kemira’s fixed cost inflation through ongoing cost savings driven by continuous improvement process

Implementing LEAN to continue focus on cost efficiencies

Why is LEAN important for Kemira?

Reduce complexity Reduce costs Increase competitiveness

Kemira Capital Markets Day 2013 21

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SLIDE 22

LEAN savings of EUR 6 million already implemented

Kemira Capital Markets Day 2013 22

5 0.5 0.5 6

Helsingborg Botlek Bradford Total

EUR million

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SLIDE 23
  • 5. Remote
  • perators

4. Self-loading 3. LEAN lab & in-process analysis

Global roll-out of standardized LEAN savings modules

Kemira Capital Markets Day 2013 23

2. Material handling benchmark 1. Weighing & filling

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SLIDE 24

Strong focus on implementation discipline

Kemira Capital Markets Day 2013 24

Enhanced implementation

  • Higher and constant drive to achieve results
  • Continuous identification of savings
  • Greater sense of urgency

Resources

  • Closer interaction and follow-up
  • Full time LEAN resources
  • Dedicated manufacturing
  • ptimization resources

Tools

  • Action based with financial tracking
  • Standardized LEAN tools
  • Additional training for sites

Delivering high performance driven culture

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SLIDE 25

Accelerating the turnaround in Municipal & Industrial

Kemira Capital Markets Day 2013, September 10

Frank Wegener, President, Municipal & Industrial

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SLIDE 26

Fit for Growth has started to improve profitability

Revenue

EUR million

Operative EBIT %

Municipal & Industrial targets cross-the-cycle operative EBIT margin of 10% in 2014 1) Targeted Fit for Growth savings above EUR 20 million 2) New organization and customer segmentation leading to more than EUR 5 million additional savings 3) Further benefits from manufacturing network optimization, SKU reduction and R&D portfolio improvements

161 165 174 178 150 155 160 165 170 175 180 Q1 2012 Q1 2013 Q2 2012 Q2 2013 3.5% 5.2% 6.9% 8.9% 0% 2% 4% 6% 8% 10% Q1 2012 Q1 2013 Q2 2012 Q2 2013 +2% +2% +49% +29%

Kemira Capital Markets Day 2013 26

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SLIDE 27

Municipal & Industrial faces challenges

  • Municipal business under

margin pressure in emerging markets

  • Coagulant business facing local

competition - players of very different sizes and business drivers

608 644 665 687 11% 9% 7% 6% 0% 2% 4% 6% 8% 10% 12% 560 580 600 620 640 660 680 700 2009 2010 2011 2012 Revenue Operative EBIT margin EUR million

Kemira Capital Markets Day 2013 27

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SLIDE 28

Historic business model New business model

New business model and organization to address the challenging business environment

Kemira Capital Markets Day 2013 28

  • Sales model with simplified organization

and channel strategy

  • Headcount reduction of ~50 employees
  • R&D focus in line with strategy, portfolio reduced

by 40%

  • Uniform service approach with limited

customer segmentation

  • Sales force weighted more towards

direct sales vs. distribution sales

  • Global geographical focus with scattered

manufacturing footprint

  • Limited focus on production technology
  • World class coagulant footprint focusing on

mature markets

  • Over 1,000 SKU’s
  • Number of SKU’s reduced by 50%
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SLIDE 29

Segmented customer business model increasing profitability

Historic model – unsegmented New model with two customer segments

Kemira Capital Markets Day 2013 29

Kemira offering:

  • Reliable delivery and effective treatment
  • Tailor made solutions
  • Fast time to resolution
  • Technical support

Paying for:

Reliable delivery and effective treatment Value and performance Price

>9,000 municipal and industrial customers buying coagulants and polymers

>9000 customers >4500 customers >4500 customers

Paying for: Effective treatment Paying for: Faster resolution Some technical support and Tailored solutions with immediate resolution, tech support part of

  • ffering
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SLIDE 30

Securing competitive position through manufacturing network consolidation

Fit for Growth measures will be fully implemented by the end of Q2 2014

  • 6 sites closed, closure of 2 sites and 2 production plants under implementation
  • 2 sites to be closed only after new Tarragona coagulant site is on stream (delayed to Q1 2014)

Further manufacturing optimization through economies of scale and the use of industrial by-products Additional rationalization expected in NAFTA

*) Europoort and Krems (production plants), Lauterburg, Sevilla, Flix, Tarragona old, St. Petersburg, Houston, Savannah, Xoxla, Camacari, Romania

Coagulants New product sites Sites and production plants closed or decided to be closed

Kemira Capital Markets Day 2013 30

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SLIDE 31

Legislation and regulatory enforcement driving demand

  • Sludge treatment (dewatering)

in Europe

  • China expected to invest EUR 50

billion to water in the next 5 years R&D to secure competitive offering and meet long term growth opportunities Positive regulatory developments Market growth expected to accelerate in 2016

2.6 3.0 3.4 1.6 1.8 1.9 3.4 3.8 4.4 2012 2016 2020 Coagulants Others Polymers

Kemira Capital Markets Day 2013 31

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SLIDE 32

Accelerating the turnaround in Municipal & Industrial

Streamlined business model focused on maximizing cash flow generation Focus on mature markets, capture selected growth

  • pportunities in APAC

Structural profitability improvement through reduction of complexity, customer segmentation and

  • rganizational optimization

Selective application and production process development as well as new products paving the way to a sustainable future

4 3 2 1

BUSINESS INNOVATION GEOGRAPHY EFFICIENCY

Kemira Capital Markets Day 2013 32

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SLIDE 33

Innovating for growth

Kemira Capital Markets Day 2013, September 10

  • Dr. Heidi Fagerholm, CTO
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SLIDE 34

Research Center network focusing on competence development and regional business support

Shanghai, China

  • Paper

applications

  • Tissue
  • TCS

Espoo, Finland

  • Fundamental
  • Paper research
  • M&I
  • TCS

Sao Paolo, Brazil

  • Minerals & Metals
  • TCS

Atlanta, GA, USA

  • Oil & Gas
  • Minerals & Metals
  • Paper
  • TCS

TCS = Technical Customer Service & Production Support Kemira Capital Markets Day 2013 34

T

  • tal personnel 250

Patent families ~350

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SLIDE 35
  • Increase in total portfolio value by

50% from 2013 to 2020

  • Increase in cross-regional

participation across R&D projects

  • Every second project has an external research

partner

  • FTE per project growing more than 50% due to

increased focus

R&D portfolio aligned with strategy

Kemira Capital Markets Day 2013 35

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SLIDE 36

Innovation focusing on Paper and Oil & Mining

Development Scale-up

Share of R&D projects in various NPD stages

Commercialization

Paper O&M M&I CS M&I CS Paper O&M SWEET* Other

*) Center of water efficiency excellence Kemira Capital Markets Day 2013 36

slide-37
SLIDE 37

40 106 140

20 40 60 80 100 120 140 160 2011 2012 2013**

Innovation sales target EUR 250 million in 2016

Kemira innovation sales*, EUR million

*) Sales from new products or existing products for new applications launched within the previous 5 years **) Annualized Jan-Jun 2013 innovation sales

Fennobond strength Fennobind binders Kemflite, control & monitoring KemFlow friction reducer KemFlow biocide

Kemira Capital Markets Day 2013 37

O&M Paper

M&I Tagged antiscalants Guar replacement Green friction reducer Rheology modifiers Performic acid Next Fennobind generation

New innovation areas

Targeting to double innovation driven sales from 5% in 2012 to ~10% of total sales in 2016

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SLIDE 38

Polymers account for 50%

  • f Kemira’s differentiated

product revenue

  • Case study: Polymers in flocculation

and sludge dewatering

  • Technical benefits for customer include

improved reject water quality and increased solid content of sludge

  • Global polymer market growing from

EUR 7 billion to EUR 10 billion in 2020

  • Kemira targeting faster than market

growth

Kemira Capital Markets Day 2013 38

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SLIDE 39

Benefits for customer:

  • Significant cost savings via decreased binder

demand on coating application

  • Increased sustainability through reduced

dependency on oil-based chemistry

Kemira:

  • Creating innovative high performance binder

concept based on future chemistry and application requirements

The global binder market for paper and board is EUR 2.5 billion

Case Fennobind – For better printability in Paper & Board

Innovative binder concept

Kemira Capital Markets Day 2013 39

Fennobind

Particle diameter 46 nm

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SLIDE 40

Shale Gas & Oil

Slick water and hybrid fracturing uses Kemira’s polymers

Kemira Capital Markets Day 2013 40

Dynamic Market

  • Gas and oil rigs dependent on energy price
  • Guar price volatility - key for gel fracturing (wet shale)

New fracturing technologies developing rapidly to improve production rates

  • Hybrid fracturing
  • New and rapidly developing fracturing methods

Implications

  • Increased water usage → water reuse → high brine
  • Polymer usage increasing in wet shale
  • Polymer as a co-treatment/replacement for gel fracturing

200 600 1,000 1,400 1/12 6/12 12/12 3/13 6/13 # of Oil rigs in the US* # of Gas rigs in the US* 5 10 15 20 25 30

12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12

Guar price index

India NCDEX guar split quotations

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SLIDE 41

Removing volatility in shale gas and oil through technology and applications

Kemira Capital Markets Day 2013 41

Innovation driven growth

  • Customer focused
  • New products wet and dry shale
  • Portfolio of products for water management

Accomplishments

  • New slick water friction reducers for high brines
  • Products with improved handling → inversion, cold

temperature

  • Guar replacement under development
  • Growing multi-product patented portfolio
  • Applications knowledge & partnerships with key

service companies

Relevant market size for polymers is about EUR 1 billion

Gel Feature Guar Kemira Proppant carrying capacity + + Stability of gel + + Gel formation/Breaking + + Ease of hydration

  • +

Friction reduction properties

  • +

Reduction of number of products to use for hybrid fracs

  • +
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SLIDE 42

Benefits for customer:

  • Deeper water, more complex wells, and the optimization of mature

fields

  • Scale risk minimization, differentiated detection, peace of mind &

production optimization.

  • Lower costs (Capex flexibility, optimized chemical usage, lower

equipment & operational costs)

Kemira:

  • New tagged antiscalant technology based on proven polymeric

scale inhibitor

Relevant market size for downhole scale squeeze business is about EUR 100 million

Success Story

Tagged antiscalants for Oil & Gas stimulation and production

Kemira Capital Markets Day 2013 42

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SLIDE 43

Building a culture of innovation throughout the

  • rganization

Innovation Community to inspire people, to stimulate creativity and to create enablers for an innovation culture Training to enhance innovation capabilities Create measurable success criteria for innovation work ”Innovate today for a prosperous tomorrow”

Kemira Capital Markets Day 2013 43

slide-44
SLIDE 44

44

Appendix

Kemira Capital Markets Day 2013, September 10

Kemira Capital Markets Day 2013

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SLIDE 45

Kemira Group revenue growth trend

  • 15%
  • 10%
  • 5%

0% 5% 10% 15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2009 2010 2011 2012 2013 Organic growth Currency Acquisitions Divestments Total growth

45 Kemira Capital Markets Day 2013

slide-46
SLIDE 46

46

Differentiated products expected to grow substantially above the market, commodity products focusing on efficiency improvements

Differentiated products

  • Growth target substantially above the market
  • Driven by innovation and expertise
  • Higher margins due to higher value to the

customer

  • Flexible manufacturing capabilities with

sufficient scale

  • Higher barriers to entry (technology)

781 843 879 455 200 400 600 800 1000 2010 2011 2012 1-6 2013

Commodity products

  • Targeting growth, but slightly lower than

the market

  • Maximizing profitability and cash flow by

leveraging existing capacity

Differentiated products revenue, EUR million 1380 1365 1362 675 500 1000 1500 2010 2011 2012 1-6 2013 Commodity products revenue, EUR million

slide-47
SLIDE 47

Kemira revenue split into differentiated and commodity products

Differentiated product lines Commodity product lines

%-of total revenue in 1-6 2013 Polymers Sizing and strength Defoamers, dispersants, biocides and

  • ther process

chemicals Coagulants Bleaching chemicals Formic acid and derivatives Miscellaneous commodity products*

Paper 10% 20% 15% 5% 25%

  • 25%

M&I 20%

  • 5%

65%

  • 10%

O&M 55%

  • 25%

5%

  • 15%

Chem- Solutions

  • 80%

20% Kemira 20% 10% 10% 25% 15% 5% 15%

47 *) Mainly sodium percarbonate, colorants, acrylamide, inorganic salts and acids as well as caustic soda Kemira Capital Markets Day 2013

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SLIDE 48

Mature markets continue to stay important in all segments

621 646

1-6 2012 1-6 2013

EMEA (57% of total revenue)

Revenue, EUR million 345 333

1-6 2012 1-6 2013

NAFTA (29% of total revenue)

Revenue, EUR million 38% 37%

1-6 2012 1-6 2013

GM % 39% 39%

1-6 2012 1-6 2013

GM %

Kemira Capital Markets Day 2013 48

slide-49
SLIDE 49

Kemira Group operative EBIT bridge, EUR million

10 20 30 40 50 60 70 80 90 100 1-6 2012 Sales volumes Sales prices Variable costs Fixed costs Currency impact Others, incl. acquisitions and divestments 1-6 2013

74.6 17.0 82.2 4.2 3.2

  • 9.1
  • 5.7
  • 2.0

49

EUR million

Kemira Capital Markets Day 2013

slide-50
SLIDE 50

Good balance between sales and raw material prices

Kemira sales prices vs variable costs

*) 12-month rolling change in EUR million vs corresponding period in previous year, excl. Tikkurila and Pigments

  • 150
  • 100
  • 50

50 100 150 200 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2009 2010 2011 2012 2013 Brent oil, USD Sales price* Variable costs*

50

EUR million

Kemira Capital Markets Day 2013

slide-51
SLIDE 51

”Fit for Growth” full EUR 60 million impact in 2014

  • Cost savings impact in operative

EBIT in Q2 2013 was EUR 10 million

– EUR 4 million impacted variable costs – EUR 6 million impacted fixed costs

  • Expected cost savings impact in
  • perative EBIT 2013 is > EUR 45 million
  • Expected cost savings impact in
  • perative EBIT 2014 EUR 60 million

”Fit for Growth” status Q2 2013, EUR million

>45 60 10 19 10 20 30 40 50 60 70 Savings impact 2012 Savings impact 2013 Savings impact 2014 Expected savings Realized savings

Kemira Capital Markets Day 2013 51

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SLIDE 52

”Fit for Growth” required EUR 76 million in restructuring costs

  • EUR 5 million booked YTD 2013
  • Total non-recurring severance payments and external services EUR 46 million
  • Total non-recurring asset write-downs EUR 30 million

41 30 5 15 30 45 Severance payments and external services 2012 Asset write-downs 2012 Severance payments and external services 2013

Realized restructuring charges, EUR million

Kemira Capital Markets Day 2013 52

slide-53
SLIDE 53

Key figures and ratios

EUR million (except ratios) 4-6/2013 4-6/2012 % 1-6/2013 1-6/2012 % 2012 Revenue 569.3 562.3 1 1,130.2 1,115.2 1 2,240.9 Operative EBITDA 61.5 58.2 6 125.0 121.0 3 249.4

  • f which margin

10.8 10.3

  • 11.1

10.8

  • 11.1

Operative EBIT 40.0 36.0 11 82.2 74.6 10 155.5

  • f which margin

7.0 6.4

  • 7.3

6.7

  • 6.9

Share of profit or loss

  • f associates

0.1 5.8

  • 1.1

16.6

  • 11.2

Financing income and expenses

  • 4.2

1.4

  • 28.9
  • 8.9
  • 15.7

Operative EPS, EUR 0.14 0.21

  • 33

0.31 0.41

  • 24

0.77 Operative ROCE* 10.4 10.5

  • 10.4

10.5

  • 10.0

Capital expenditure 30.9 51.0

  • 39

59.9 70.4

  • 15

134.1 Casf flow after investing activities** 10.5 24.2

  • 57

200.4 16.1

  • 71.8

Gearing, % at period-end 36 44

  • 36

44

  • 42

Personnel at period-end 4,664 5,181

  • 10

4,664 5,181

  • 10

4,857

*12-month rolling average **2012 numbers include EUR 5.3 million dividends and EUR 27.3 million paid-in-capital from JV Sachtleben. 1-6/2013 numbers include EUR 97.5 million received from the divestment of the JV Sachtleben shares and EUR 80.6 million from the divestment of the food and pharmaceuticals businesses.

Kemira Capital Markets Day 2013 53

slide-54
SLIDE 54

Profitable growth accelerated in Paper

April-June 2013

Revenue increased by 6% to EUR 265 million (249)

  • EMEA revenue increased more than 10% driven by

sales volume growth in all main product lines

  • Sales prices decreased slightly
  • Currency exchange -1%

EUR million Q2/2013 Q2/2012 % 1-6/2013 1-6/2012 % 2012 Revenue 265 249 6 524 497 5 1,006 Operative EBIT 19.5 16.1 21 39.2 34.9 12 75.3 Operative EBIT, % 7.4 6.5

  • 7.5

7.0

  • 7.5

Cash flow 18 10 80 48 9 433 8

Operative EBIT increased 21% to EUR 19.5 million (16.1)

  • Organic revenue growth
  • Higher sales and marketing expenses compensated by

”Fit for Growth” savings

  • Operative EBIT margin increased to 7.4% (6.5%)

Strong cash flow

Kemira Capital Markets Day 2013 54

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SLIDE 55

Profitable growth in Municipal & Industrial

April-June 2013

Revenue increased 2% to EUR 178 million (174)

  • Revenues increased in all regions, except APAC
  • Currency exchange -1%

EUR million Q2/2013 Q2/2012 % 1-6/2013 1-6/2012 % 2012 Revenue 178 174 2 343 335 2 687 Operative EBIT 15.9 12.0 33 24.5 17.7 38 39.2 Operative EBIT, % 8.9 6.9

  • 7.1

5.3

  • 5.7

Cash flow 5

  • 3
  • 5

4 25 39

Operative EBIT increased 33% to EUR 15.9 million (12.0)

  • Increased sales prices and sales volumes, as well as

lower fixed costs

  • Higher variable costs due to increased propylene

based raw material prices during Q1 2013

  • Operative EBIT margin increased to 8.9% (6.9%)

Kemira Capital Markets Day 2013 55

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SLIDE 56

Oil & Mining sales volume increase offset by sales price decline

April-June 2013

Revenue decreased 5% to EUR 79.9 million (84.5)

  • 4% impact related to exiting from low margin products

as communicated earlier (full impact of EUR 10 million will be realized by the end of 2013, YTD 2013 impact EUR 7 million)

  • Sales volumes increased for the first time in

six quarters

  • Sales prices declined

EUR million Q2/2013 Q2/2012 % 1-6/2013 1-6/2012 % 2012 Revenue 79.9 84.5

  • 5

156 170

  • 8

321 Operative EBIT 3.5 7.2

  • 51

8.6 15.5

  • 45

25.9 Operative EBIT, % 4.4 8.5

  • 5.5

9.1

  • 8.1

Cash flow

  • 8

1

  • 10
  • 18
  • 5

Operative EBIT decreased to EUR 3.5 million (7.2)

  • Price pressure in the market
  • Increased R&D spend to accelerate

the differentiation

  • Variable costs started to come down towards

the end of the quarter

Kemira Capital Markets Day 2013 56

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SLIDE 57

ChemSolutions revenue was impacted by the food and pharmaceuticals businesses divestment

April-June 2013

Revenue decreased 16% to EUR 46 million (55)

  • Organic growth 7%, continued strong sales volumes

growth of formic acid and derivatives product lines

  • Divestment of food and pharmaceuticals businesses

had -22% impact EUR million Q2/2013 Q2/2012 % 1-6/2013 1-6/2012 % 2012 Revenue 46 55

  • 16

107 114

  • 6

228 Operative EBIT 1.1 0.7 57 9.9 6.5 52 15.1 Operative EBIT, % 2.4 1.3

  • 9.2

5.7

  • 6.6

Cash flow

  • 4
  • 2
  • 77

13

  • 24

Operative EBIT increased 57% to EUR 1.1 million (0.7)

  • Higher sales volumes and lower variable costs
  • Strong market pressure on Sodium Percarbonate

product line

Kemira Capital Markets Day 2013 57

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SLIDE 58

Kemira capital expenditure

20 40 60 80 100 120 140 160 2008 2009 2010 2011 2012 1-6 2013

EUR million

Expansion Maintenance and improvement 134 56 98 76 69 109

Kemira Capital Markets Day 2013 58

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SLIDE 59

Net working capital ratio

Kemira ambition is to keep net working capital ratio* between 11%-11.5%

14.1% 13.3% 11.3% 13.4% 12.8% 11.3%

9% 11% 13% 15% 2008 2009 2010 2011 2012 1-6 2013

*) Rolling 12-month average Kemira Capital Markets Day 2013 59

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SLIDE 60

Cash flow statement

EUR million Q2 2013 Q2 2012 1-6/2013 1-6/2012 FY 2012 Operative EBITDA 61.5 58.2 125.0 121.0 249.4 Change in net working capital

  • 6.8
  • 0.6
  • 11.1
  • 43.2
  • 21.1

Cash flow from operations* 38.6 47.5 78.9 57.9 176.3 Capital expenditure

  • 30.9
  • 51.0
  • 59.9
  • 70.4
  • 134.1

Other investing activities 2.8 27.7 181.4 28.6 29.6 Cash flow after investing activities* 10.5 24.2 200.4 16.1 71.8

Kemira Capital Markets Day 2013 60

*2012 numbers include EUR 5.3 million dividends and EUR 27.3 million paid-in-capital from JV Sachtleben. 1-6/2013 numbers include EUR 97.5 million received from the divestment of the JV Sachtleben shares and EUR 80.6 million from the divestment of the food and pharmaceuticals businesses.

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SLIDE 61

Market and product specifications

61

Kemira Capital Markets Day 2013, September 10

Kemira Capital Markets Day 2013

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SLIDE 62

62

Paper and Oil & Mining driving growth

Kemira’s relevant market (EUR 27 billion in 2012) will grow to EUR 34 billion in 2020 (CAGR 3.3%) Paper: Growing above market, targeting wet-end chemistry market leadership O&M: Growing above market M&I: Improving profitability, maximizing cash ChemSolutions: Maximizing cash by a product driven business model

Source: Management estimation based on various sources

7.7 9.3 7.7 9.5 9.4 13.2 2.0 2.3 2012 2020 2012' 2020' O&M Paper 2.4% ChemSolutions M&I 4.3% 2.7% 1.8%

Business focus

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SLIDE 63

1.5 1.7 1.9 2.0 2.1 2.2 0.9 1.0 1.1 1.8 2.0 2.3 1.5 1.6 1.8 2012 2016 2020 2012 2016 2020 Defoamers, biocides and other wet-end process chemicals

Paper segment - Demand for sizing and strength chemicals is growing fastest globally

Pulp and paper industry trends increasing chemical demand:

  • Increased use of recycled fibres
  • Hardwood replacing softwood in virgin

pulp

  • Lightweighting of packaging and board

grades

  • Higher filler loads in graphic papers
  • New digital printing methods
  • Lower water / energy consumption

Market size, EUR billion (CAGR: 2.4%)

GAGR Sizing and strength Miscellaneous commodity chemicals Bleaching chemicals Polymers 3.5% 2.0% 3.0% 1.3% 2.0%

Kemira Capital Markets Day 2013 63

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SLIDE 64

Paper segment - Technology and market leader in paper wet-end chemistry

Value chain part covered by Kemira RAW MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS CUSTOMER IDUSTRIES 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

Kemira Capital Markets Day 2013 64

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SLIDE 65

Oil & Mining segment - Strong market growth across all product lines

  • High oil price spurs demand for

identifying new sources

  • Global growth of shale gas and wet

shale

  • Declining ore assays require improved

processing

  • Increasing environmental pressure

which increases demand for waste water treatment

Market size, EUR billion (CAGR: 4.7%)

3.1 3.6 4.3 2.0 2.4 2.9 4.3 5.1 6.1 2012 2016 2020 2012 2016 2020 Polymers Defoamers, biocides and other process chemicals Miscellaneous commodity products

Kemira Capital Markets Day 2013 65

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SLIDE 66

Oil & Mining segment - Winning market share with competitive combination of innovation chemicals and application knowledge

Value chain part covered by Kemira RAW MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS CUSTOMERS Acrylonitrile Acrylic acid Various monomers Miscellaneous specialty chemicals and commodities Acrylamide Polymers Dispersants & Antiscalants Biocides Emulsifiers Defoamers Coagulants Formulations Friction Reduction Formation & Well Scale Control Asset integrity Microbial Induced Corrosion Enhanced Oil Recovery Drilling muds Concentrate thickening Mineral slurry preservation Mining processes Scale Control Pumpers Oil & Gas

  • perators

Service companies Mine operators

Kemira Capital Markets Day 2013 66

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SLIDE 67

Municipal & Industrial - Commodity product lines expected to grow, but slightly slower than the market

Demand drivers for raw and waste water as well as sludge treatment chemicals:

  • Legislation and regulatory enforcements determine required treated water and

sludge quality standards

  • Water reuse is most cost efficient solution to meet the increasing water demand

2.6 3.0 3.4 1.6 1.8 1.9 3.4 3.8 4.4 2012 2016 2020 GAGR Coagulants Antiscalants, biocides, defoamers, miscellaneous commodity chemicals 3.2% 2.8% 3.3% Polymers

Realized restructuring charges, EUR billion

Kemira Capital Markets Day 2013 67

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SLIDE 68

Municipal & Industrial - Technology and market leader in raw and waste water as well as sludge treatment

  • Kemira is the only major supplier producing major water treatment chemicals, polymers and coagulants – thereby

enabling comprehensive application support

  • Cost competitiveness through backward integration into virgin raw materials
  • 60-70% of sourced raw materials are recycled utilizing waste streams from industrial producers, providing an

additional cost advantage

RAW MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS SALES CHANNEL CUSTOMERS Acrylonitrile Sulfuric acid Hydrochloric acid Aluminium hydrate Iron ore Pickling liquor Copperas Acrylamide Polymers (EPAM, DPAM) Al Coagulants Fe Coagulants Antiscalants Biocides Defoamers Raw water treatment Wastewater treatment Sludge treatment Advanced water treatment Direct sales Distributor/reseller Service companies Municipalities Private

  • perators

Industrial customers Value chain part covered by Kemira

Kemira Capital Markets Day 2013 68

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SLIDE 69