strong earnings improvement in q1...supplier sustainability evaluation • 90% of direct key...

INVESTOR PRESENTATION

Strong earnings improvement in Q1

APRIL 26, 2019

SEGMENT SPLIT PRODUCTS

A P RIL 2019 INV E S T OR P RE S E NT A T ION 2

GEOGRAPHIES

Kemira in briefLAST 12 MONTHS: REVENUE EUR 2,627 MILLION, OPERATIVE EBITDA EUR 349 MILLION, OPERATIVE EBITDA MARGIN 13.3%, OPERATIVE ROCE 10.3%

◼ 25% Bleaching

and pulping

◼ 20%

Polymers

◼ 20% Other:

e.g. defoamers,

dispersants,

and biocides

◼ 20%

Coagulants

◼ 15%

Sizing

and

strength

Revenue by product category rounded to the nearest 5%

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

Global megatrends favor Kemira


REGULATION

Safe drinking

water

More stringent

discharge limits

GROWING MIDDLE

CLASS &

URBANIZATION

E-commerce /

online shopping

Higher use of

water, energy,

tissue and board

SCARCITY

OF RESOURCES

Material and

resource

efficiency

Alternative

materials for

single-use plastic

products

Global trends favor Pulp & Paper –capacity additions in bleaching chemicals


Pulp, board and tissue markets

• Growth driven by e-commerce and growing middle class in APAC

• Above mentioned trends have fueled growth in pulp bleaching, Kemira’s CAGR +6% since 2014

Bleaching chemical capacity additions

• Debottlenecking done in Finland during 2018

• In Q3 2018, decided to close non-core detergent business to direct bleaching chemical capacity to pulp customers

Regulation trends favorable to demand of water treatment chemicals


Emerging

contaminants

(pharma,

microplastics)

Better

dewatering of

sludge and

phosphorus

recovery

Increased

demand for

water

treatment

chemicals

Stormwater

Overflows

More

efficient

implementation

Water

reuse

More stringent

discharge

limits

REVENUE EUR million

2 137

2 373 2 363

2 486

2 593

2014 2015 2016 2017 2018

OPERATIVE EBITDAOPERATIVE EBITDA MARGINEUR million

253

287

303311

323

11.8%12.1%

12.8%12.5% 12,5%

2014 2015 2016 2017 2018

INV E S T OR P RE S E NT A T ION 6

Delivering profitable growth

A P RIL 2019

PRE IFRS 16

1,170

1,417 1,457 1,477 1,520

137

171195 198 192

2014 2015 2016 2017 2018

REVENUE BYPRODUCT CATEGORY


REVENUE BY CUSTOMERTYPE 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

other 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%

A P RIL 2019

* Solenis-BASF combined entity

Kurita (paper) #5

REVENUE AND OPERATIVE EBITDAEUR million

REVENUE BYPRODUCT CATEGORY


REVENUE BY APPLICATIONTYPE 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

A P RIL 2019


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

oil & 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 956906

1,0091,073

116 116107

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

A P RIL 2019 9

Targets 2017 2018 IFRS 16 impact Q1 2019 Mid- to long-term

target

Revenue EUR 2,486 million

Change +5%

EUR 2,593 million

Change +4%

- EUR 648 million

Change +6%

Above-the-market

growth

Operative

EBITDA*

12.5% 12.5% Around +1 %-point 14.8% 15-17%

Gearing* 59% 62% Around +10 %-points 74% Below 75%

Factors Q1 2019 comments

Organic growth through volume and sales price increases Group’s organic growth +2%

Oil & Gas becoming larger share of Group (incl. shale, CEOR and oil sands) Revenue from EUR 126m in 2016 to EUR 258m in Q1/19

Sales price vs raw material price development Raw material inflation in 2017 and 2018, sales prices

started to offset raw material cost pressure during 2018

Capex projects – Polymer capacity expansion in Netherlands, AKD Joint

Venture in China, Polymer capacity expansion in the US

Backward integration and growth benefits 2020-21

FINANCIAL TARGETS AND HISTORICAL FIGURES

KEY FACTORS TO WATCH FOR PROFITABILITY IMPROVEMENT

* Targets updated in February 2019 due to IFRS 16 accounting change. 2017-2018 figures are PRE IFRS 16.

INV E S T OR P RE S E NT A T ION

Healthy market growth for Kemira’s relevant markets

2018 2023

Americas EMEA APAC


Source: Management estimation based on various sources

KEMIRA RELEVANT MARKETEUR billion

PULP & PAPER RELEVANT MARKET EUR billion

INDUSTRY & WATER RELEVANT MARKETEUR 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

109

1713

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

A P RIL 2019

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

Our three sustainability priorities


Sustainable products

and solutions

People and integrity

Responsible operations & 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

our 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



Latest news andfinancials

Selected operational highlights in Q1 2019

• Organic growth continued – market environment fairly good

• Profitability improved clearly –capacity utilization rates remained good

• Investment projects proceeding well


Key financial highlights

Organic growth +2%

• Sales prices increased in all areas of our businesses

Operative EBITDA +38% to margin of 14.8%

• Favorable combination of increasing sales prices and moderate raw material cost impact

• Supply disruptions emerged during the quarter but mitigating actions were done quickly –some financial impact expected in Q2 due to higher raw material and logistic costs

• Operating leases are depreciated in 2019 due to IFRS 16 – impact on EBITDA EUR +7.7 million in Q1

Operative EBIT +48% to margin of 7.7%


EUR million

(except ratios)

Q1

2019

Q1

2018

Δ% FY

2018

Revenue 647.8 613.7 +6 2,592.8

Operative EBITDA 95.6 69.4 +38 323.1

of which margin 14.8% 11.3% - 12.5%

Operative EBIT 50.1 33.9 +48 173.8

of which margin 7.7% 5.5% - 6.7%

Net profit 29.3 23.0 +27 95.2

EPS, EUR 0.18 0.14 +31 0.58

Pulp & Paper – continued sales price growthMarket environment

• Long-term market outlook positive with multiple investments announced recently by major pulp & paper companies like APP, Hamburger Containerbord, Mondi and Nine Dragons

Organic growth flat with positive pricing

• Exit of ECOX business impacted sales volumes

Operative EBITDA margin 13.3%

• Underlying profitability in focus

• *Due to IFRS 16, leasing costs are mostly in depreciations and partly in interest expenses in 2019, positive EBITDA impact EUR +3.3 million


OPERATIVE EBITDA AND OPERATIVE EBITDA-%

EUR million

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

EUR million

372 369 363373 369 376 385 390 381

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2017 2018 2019

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

46.0 47.8 48.555.4

42.7 45.452.3 51.2 50.7

12.4% 13.0% 13.4%14.9%

11.6% 12.1%13.6% 13.1% 13.3%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*

2017 2018 2019

Industry & Water – record-high margin

Market environment

• Water treatment market solid – expecting tighter regulation in Europe

• Oil & gas shale market growth rate moderating in the short-term

Organic growth +5%

• Our Oil & Gas business had strong organic growth, +26% to EUR 62 million

• In water treatment, we are well positioned to meet continued inflationary pressures


• Sales prices increased while propylene-based raw material prices decreased

• Favorable product mix

• *Due to IFRS 16, positive EBITDA impact EUR +4.4 million in Q1 2019


22.929.3

36.0

25.3 26.634.8 36.7 33.3

45.09.6%11.8%

13.9%

9.6%10.9%

12.8% 12.9% 12.3%

16.8%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*

2017 2018 2019

OPERATIVE EBITDA AND OPERATIVE EBITDA-%

EUR million

238 248 259 264245

272 284 271 267

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2017 2018 2019

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

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

EUR million

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

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 2,627

million

(LTM)

*Sizing = Resistance against water absorption

Key operative focus areas in 2019

1. Continue to pass on higher raw material costs to sales prices

2. Optimize capacity allocation

3. Modify product & service offering to cater better profitable growth

4. Improve operational excellence

5. Ramp-up CEOR* polymer capacity addition in Netherlands in H2

6. Start-up new sizing manufacturing site in China in H2

7. Construction of emulsion polymer capacity in the US on time and in budget, start-up expected beginning of 2021

8. Prudent cost-control in all areas


*CEOR, chemical enhanced oil recovery

Successful pricing drives improvement


69.4

Q12018

Sales volumes Sales prices Variable costs Fixed costs Currencyimpact

Other Q12019

Adoption ofIFRS 16standard

"Pre IFRS 16comparison"

-7.0

+34.4 -10.5 +5.4 +6.4 -2.4

OPERATIVE EBITDA BRIDGE

EUR million

614 -4%+3% 0 648

Q1 2018 Salesvolumes

Salesprices

Currencyimpact

Acquisitions Q1 2019

+6%

REVENUE AND ORGANIC GROWTH (Y-ON-Y)

EUR millionGroup’s organic growth +2%


• Strong operational improvement mainly driven by pricing

• 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 7.7 million

87.9-7.795.6

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

-180

-120

-60

0

60

120

180

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Brent oil, USD Sales prices* Variable costs*

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

95

-3 -10

-16-20

-10

-2 -2

114

8

24

-9-18

-26 -23-16

-43

11

23

4742

3734

-18-23

-23 -13

0

1613

13

2636

38

29

11

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

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 millionEUR million

Cash flow improved in Q1


ALL KEY FIGURES IN EUR MILLION

271

205 210

3465

2016 2017 2018 Q1 2018 Q1 2019

118 124 106

16 14

95 66

44

7 14

2016 2017 2018 Q1 2018 Q1 2019

213

CASH FLOW FROM OPERATIONS

CAPITAL EXPENDITURE EXCL. ACQUISITIONS

◼ Growth capex190

150

• Q1 cash flow supported by improved profitability

• Seasonality led to negative change in NWC as in previous years

• Kemira’s Pension Fund Neliapila returned excess capital of EUR 15 million to Group in Q1

• IFRS 16 impact EUR +7 million on cash flow from operations

• In Q1 the largest growth capex projects were on-going completion of Pulp & Paper AKD plant in China and expansion of CEOR polymers for Oil & Gas in Netherlands

• CAPEX excl. acquisitions estimated to be around EUR 180-220 million in 2019

23 28

ROCE improving, adoption of IFRS 16 increased reported net debt

9.9% 9.7% 9.8% 9.7%10.3%

2016 2017 2018 Q1 2018LTM

Q1 2019LTM

634694 741

842

Dec 31 2016

Dec 312017

Dec 312018

Mar 312019


NET DEBT (EUR million) AND LEVERAGE RATIO

OPERATIVE RETURN ON CAPITAL EMPLOYED

2.32.22.1

• 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 from the adoption of IFRS 16 as operating leases (EUR 129 million) are part of debt

– Excluding IFRS 16 impact, net debt would have been EUR 713 million and leverage ratio 2.1

– Improved cash flow reduced underlying debt level

• Average cost of net debt excluding leases is 2.0% and duration is 28 months

2.4

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

outlook

Operative

EBITDA

253 287 303 311 323 Increase

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

• IFRS 16 will affect primarily the accounting for Kemira Group’s operating leases

• 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 in

Q1 2019

Estimated impact

in FY 2019, around

Operative EBITDA 323.1 +7.7 +30

of which margin 12.5% +1.2 %-point +1 %-point

Impact on balance sheet

EUR million

(except ratio) Dec 31, 2018

Impact on

March 31, 2019

Net debt 741 +129

Gearing 62% +12 %-points

VARIABLE COST SPLIT 2018EUR 1.6 billion

TOP 10 RAW MATERIALSBY 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%of Kemira’s raw material spend

OD = Oil & gas derivative

* Mainly trading materials


EXPOSURE TO OIL RELATEDRAW 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

A P RIL 2019

Majority of contracts with fixed annual pricingPulp & Paper – Contract types and pricing terms on high level

• Length – Around 95% of contracts are 1-year or longer / only 5% are spot deals

• Pricing – Around 70% fixed / 30% formula or spot pricing

Industry & Water – Contract types and pricing terms

• Length – Around 60% of contracts are 1-yr or longer / 40% spot deals

• Pricing – Around 60% fixed / 40% formula or spot pricing, incl. Oil & Gas where contracts are either formula or spot based


Currencies

Currency exchange rates had around EUR +18 million impact on revenue andEUR +6 million impact on the operative EBITDA in Q1 2019 compared to Q1 2018.

Guidance: 10% change in our main foreign currencies would approximately haveEUR 15 million impact on operative EBITDA on an annualized basis.


◼ 43% EUR

◼ 7% Others

KEMIRA REVENUE DISTRIBUTION Q1 2019 KEMIRA COST DISTRIBUTION Q1 2019

◼ 2% SEK

◼ 3% CNY

◼ 4% CAD

◼ 37% USD

◼ 7% Others

◼ 5% CNY

◼ 4% CAD

◼ 6% SEK

◼ 29% USD

◼ 44% EUR◼ 2% BRL

◼ 2% GBP

◼ 3% GBP

◼ 2% PLN

• Bleaching chemicals – new chlorate plant in Brazil and new chlorate line in Finland

• Polymers – capacity additions in Italy, UK and Netherlands

• Sizing chemicals – capacity additions due to integration of acquisitions

60 59 53

58 65 53

95 66

44

2016 2017 2018


2018 CAPEX WAS LOWER DUE TO TIMING OF INVESTMENT PROJECTS

CAPEX guidance 180-220 MEUR in 2019

Expansion Improvement Maintenance

190

CAPITAL EXPENDITURE EXCLUDING

ACQUISITIONSEUR million and share of revenue

213

CAPEX FOCUS IN CORE PRODUCT GROUPS

SINCE 2016

CAPEX GUIDANCE

• In 2019, capital expenditure estimated to increase from 2018 and be approximately EUR 180-220 million, including

– Expansion of Oil & Gas CEOR polymers in Netherlands

– New capacity expansion in Oil & Gas polymers in the US

– Completion for the new Pulp & Paper AKD JV site in China

9.0%

7.6%

5.8%

150

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

of which margin 11.8% 12.1% 12.8% 12.5% 12.5%

Operative EBIT 158.3 163.1 170.1 170.3 173.8

of 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 summary2014 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

INV E S T OR P RE S E NT A T ION 31A P RIL 2019

EUR million Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 2018 2017

Revenue 647.8 661.8 669.6 647.6 613.7 2,592.8 2,486.0

Operative EBITDA 95.6 84.5 89.0 80.2 69.4 323.1 311.3

margin 14.8% 12.8% 13.3% 12.4% 11.3% 12.5% 12.5%

Operative EBIT 50.1 44.8 50.0 45.1 33.9 173.8 170.3

margin 7.7% 6.8% 7.5% 7.0% 5.5% 6.7% 6.9%

Net profit 29.3 26.5 22.1 23.0 28.8 95.2 85.2

Earnings per share, EUR 0.18 0.17 0.14 0.14 0.14 0.58 0.52

Cash flow from operations 65.2 88.2 64.2 23.4 34.5 210.2 205.1

Capex excl. acquisitions 28.3 53.2 34.3 39.8 23.2 150.4 190.1

Net debt 842 741 744 773 678 741 694

NWC ratio 10.6% 10.2% 9.8% 9.6% 9.5% 10.2% 9.4%

Operative ROCE (rolling 12 m) 10.3% 9.8% 9.8% 9.7% 9.7% 9.8% 9.7%

Personnel at period-end 4,973 4,915 4,798 4,858 4,740 4,915 4,732

2018 AND PRIOR FIGURES ARE PRE IFRS 16

Key figures


EUR million Q1 2019 Q1 2018 2018 2017

Net profit for the period 29 23 95 85

Total adjustments 79 42 220 204

Change in net working capital -30 -31 -51 -34

Finance expenses -7 -1 -30 -25

Income taxes paid -6 1 -24 -25

Net cash generated from operating activities 65 34 210 205

Purchases of subsidiaries and acquisit. 0 1 -43 0

Capital expenditure -28 -23 -150 -190

Proceeds from sale of assets 3 4 7 3

Change in long-term loan receivables 0 0 5 -5

Cash flow after investing activities 40 16 29 13

Cash flow


KEY FINANCIALS

Pulp & Paper


*12-month rolling average


Revenue 380.8 390.4 385.2 376.0 368.7 1,520.2 1,476.9


margin 13.3% 13.1% 13.6% 12.1 11.6% 12.6% 13.4%

Operative EBIT 20.6 24.1 26.6 22.0 18.9 91.6 104.8

margin 5.4% 6.2% 6.9% 5.9% 5.1% 6.0% 7.1%

Operative ROCE*, % 7.7% 7.8% 8.5% 8.3% 8.6% 7.8% 9.0%

Capital expenditure (excl. M&A) 17.3 28.8 20.7 21.4 14.2 85.1 138.3

Cash flow after investing

activities

25.1 -13.5 20.6 2.3 20.5 29.9 15.7

KEY FINANCIALS

Industry & Water


*12-month rolling average


Revenue 267.0 271.5 284.4 271.7 245.0 1,072.6 1,009.1


margin 16.8% 12.3% 12.9% 12.8% 10.9% 12.3% 11.3%

Operative EBIT 29.5 20.8 23.4 23.0 15.0 82.2 65.5

margin 11.0% 7.7% 8.2% 8.5% 6.1% 7.7% 6.5%

Operative ROCE*, % 15.4% 13.6% 12.5% 12.6% 11.8% 13.6% 11.0%

Capital expenditure (excl. M&A) 11.0 24.4 13.6 18.4 9.0 65.3 51.7

Cash flow after investing

activities

27.8 23.8 26.8 6.1 -4.0 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%


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 of growing demand



1,170

1,417 1,457 1,477 1 520

137

171195 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 opportunitiesNew pulp mill projects are driven byincreasing demand for board and tissue

• Food and liquid packaging board isgrowing particularly fast in Asia

• Pulp is produced close to fiber sources andthen 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 opportunities for Kemira to grow withthe market

In addition, a few large scale pulp millprojects expected in South America


Confirmed new capacity /

debottlenecking 2016-2020

Possible new mills 2020-2022

Äänekoski

Kuusankoski

Kuopio

Paltamo

Kemi

Östrand

Värobacka

Svetlogorsk

Steti

Viljandi/Tartto

Vologda

Bratsk ->

Uts-Ilimsk ->

Sveza

Bleaching investment – case Joutseno


• In Joutseno we doubled our chlorate capacity in Q4 2017

– Excellent timing, pulp production grew simultaneously in Finland

• Multiple pulp mills are located nearby with annual production of over 2Mt

• Part of chlorate production can be also exported in dry format to APAC

EUR 50 MILLION INVESTMENT IN 2017

Acquisition via JV in China

• Agreed to form joint venture with Tiancheng

• NewCo will produce mainly AKD wax and its key raw material fatty acid chloride (FACL)

– AKD is sizing chemical used in board and paper to createresistance against liquid absorption

– NewCo also plans to produce coagulants for water treatment

• Kemira strengthens its position and secures supply of key raw material for AKD wax

• Kemira will have 80% of NewCo

– Investment for 80% around EUR 55 million

• Ramp-up after completion investments

– Good contribution to P&L after ramp-up


AKD WAX SUPPLIED FROM YANZHOU, CHINA TO KEMIRA SITES GLOBALLY

We leverage acquisition synergieswith our global production


Telêmaco

Borba

Washougal

St. CatharinesHelsingborg

Joutseno

Nanjing

Hallam

Gunsan

Pasuruan

Wellgrow

Krems

TarragonaYanzhou

NewCo

Acquisition in China is excellentstrategic fitAcquired 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-PRODUCTSWHERE AKD WAXIS USED

Pulp & Paper


TECHNOLOGY AND MARKET LEADER

Value chain part covered by Kemira

RAW

MATERIALSINTERMEDIATES PRODUCTS APPLICATIONS

CUSTOMER

INDUSTRIESCUSTOMERS

Electricity

Sodium chloride(salt)

Crude tall oil

Cationic monomer

Acrylonitrile

Acrylic acid

Olefins

Fatty acids

Maleic anhydride

Sulfur

Tall oil rosin

AKD Wax

Isomerized olefinsAcrylamide

Sodium chlorate

Hydrogen peroxide

Polymers

Defoamers

Coagulants

Biocides

Sizing

Strength Additives

Surface additives

Colorants

Sulfuric acid

Pulping

Bleaching

Retention

Wet-end processcontrol

WQQM

Sizing

Strength

Surface treatment

Coloring

Pulp

Packagingand board

Printingand writing

Tissue

All the major global paper and pulp producers

MAIN COMPETITORS: Solenis, Nouryon, Ecolab, Kurita, SNF



Industry & Water -stronger platformfor 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 956906

1,009 1,073

116 116 107 114131

2014 2015 2016 2017 2018


◼ 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.

Kemira’ssix actions for cleaner waters

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 of 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.

A P RIL 11 , 2019 K E MIRA FOR W A T E R T RE A T ME NT 48

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 of the Directive already entered into force in 2001

A P RIL 11 , 2019 K E MIRA FOR W A T E R T RE A T ME NT 49

0

10

20

30

40

50

60

70

80

90

100

Austr

ia

Belg

ium

Bulg

aria

Cro

atia

Cypru

s

Cze

ch R

ep

ub

lic

Denm

ark

Esto

nia

Fin

land

Fra

nce

Germ

any

Gre

ece

Hung

ary

Ire

land

Italy

Latv

ia

Lithu

ania

Luxe

mb

ou

rg

Ma

lta

Neth

erla

nds

Pola

nd

Port

ug

al

Rom

ania

Slo

vakia

Slo

ven

ia

Spa

in

Sw

ede

n

United

Kin

gd

om

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


0

50

100

150

200

250

300

2013 2014 2015 2016 2017 2018

REVENUE IN OIL & GASEUR million

REVENUE SPLIT

◼ 15%Other

◼ 65%Shale fracking

◼ 20%Oil sands and

Chemical Enhanced

Oil Recovery Figures rounded to closest 5%

Oil

price

Organic growth

>30%

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 WELLAS IN NICHE APPLICATIONS IN OIL & GAS

MAIN COMPETITORS

Coagulants: mainly local small companies, Feralco, USALCO, Kronos, PVS,

Polymers: SNF, Solvay, Ecolab, SolenisValue 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


Appendix


SHAREHOLDERS ON MARCH 31, 2019

% OF SHARES

1. Oras Invest 18.2%

2. Solidium (owned by State of Finland) 14.9%

3. Varma Mutual Pension Insurance Company 3.4%

4. Ilmarinen Mutual Pension Insurance Comp. 2.5%

5. Kemira Oyj 1.7%

Total number of shares 155,342,557

Foreign ownership of shares 28.4%

Total number of shareholders 34,048

KEMIRA BOARD OF DIRECTORS


Kemira – largest shareholders andBoard 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


ANTTI SALMINEN

President

Industry & Water


PETRI CASTRÉN

CFO


MATTHEW PIXTON

CTO


ESA-MATTI PUPUTTI

EVP, Operational

Excellence


EEVA SALONEN

EVP, Human Resources


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.

4 R&D projects were started in Q1 and 3 of them are

designed to improve customer resource efficiency. One

project to improve resource efficiency was commercialized

during Q1. Other projects improve customer product quality.

Responsible

operations and supply

chain

Workplace safety

Achieve zero injuries on long term;

TRIF* 2.0 by end of 2020.

Q1 2019 was the best TRIF result for many years. 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.

Climate change

Kemira Carbon Index ≤ 80 by end of

2020 (2012 = 100). This KPI is reported

once a year.

Efforts to decrease carbon footprint continue mainly by

sourcing a higher share of electricity from low carbon

sources and through energy efficiency improvements.

Supplier Management

% of direct key suppliers screened

through sustainability assessments and

audits (cumulative %). The target

includes 5 sustainability audits for

highest risk** suppliers every year, and

cumulatively 25 by 2020.

Sustainability screening of key suppliers continues with an

additional 6 new suppliers screened during Q1. Another 14

have been invited to take an assessment and one audit is

in progress.

Corporate responsibility performance Q1 2019


49%

51%

Baseline average2016-2017

2018

10088 91 93

86 85 83 80

12 13 14 15 16 17 18 Target20

69% 71%

90%

11 11

25

0

10

20

30

40

50

0%

20%

40%

60%

80%

100%

Baseline 2018 Q1 2019 Target 2020

% of key suppliers # of audits (cumul.)

* TRIF = Number of Total Recordable Injury Frequency per million hours, Kemira + contractor, year-to-date

** Suppliers with lowest sustainability assessment score

7,2

3,43,9 3,5

2,3 2,0

15 16 17 18 Q1'19 Target2020

Priority KPI+target Performance CommentsProgress

People and

integrity

Employee engagement index based on

Voices@Kemira biennial survey

The index at or above the external

industry norm. The participation rate

target in Voices@Kemira is 75% or

above.

Action planning is ongoing at manager level. Company

wide strategy communication and engagement is ongoing.

Leadership development activities

provided, average

Two leadership development activities

per people manager position during

2016-2020, the cumulative target is 1,500

by 2020.

15 leadership activities in Q1. Leadership activities overall

1548 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.

Mandatory training on the Kemira Code of Conduct and

general awareness-building on GDPR was continued for

Kemira employees.

Corporate responsibility performance Q1 2019


58%67% 71%75%

85% 84%

2013 2015 2017 2018

Engagement Participation

494

1 036

1 533 1 500

2016 2017 2018 Target 2020

87%

84%

2018

Integrity Index Participation

Important information about financial figuresKemira provides certain financial performance measures (alternative performance measures) on 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 of individual figures may deviate slightly from the sum figure presented.

* Revenue growth in local currencies, excluding acquisitions and divestments


strong earnings improvement in q1...supplier sustainability evaluation • 90% of direct key...

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