creating value where water meets chemistry · 2017-12-19 · kemira credit investor presentation...
TRANSCRIPT
Creating valuewhere watermeets chemistry
Kemira credit investor presentation
Petri Castrén | May, 2015
Disclaimer
2
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.
It is expected that each potential investor is acting for its own account, and it will make its own independent decisions to enter into any transaction and as to
whether any transaction is appropriate or proper for it based upon its own judgment. The potential investor shall make its own evaluations, calculations,
appraisal of the financial structure and financial outcome, credit analysis or any other evaluation (inter alia tax consideration) and the party shall make its
own independent assessment of the terms and conditions of any proposed transaction. It is not relying on any communication (written or oral), information or
explanation of Danske Bank, SEB and/or Kemira as an advice or as a recommendation to enter into any transaction. No communication (written or oral)
received from any of Danske Bank, SEB and Kemira shall be deemed to be an assurance or guarantee as to the expected results of any transaction.
The information may not be used or reproduced, in whole or in part, for any other purpose, nor be furnished nor distributed to any persons other than those
to whom copies of this information package have been delivered by any of Danske Bank, SEB and Kemira.
Further, the distribution of any information in this presentation, and the offer, sale and delivery of the securities described herein in certain jurisdictions may
be restricted by law. There shall be no sale of these securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to
qualification under the securities laws of such state or jurisdiction. By electing to view this presentation, you represent and agree that you are not resident in
the United States nor a US Person, as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), nor acting on behalf
of a US Person and, to the extent you purchase the securities described in this presentation, you will be doing so pursuant to Regulation S under the
Securities Act.
December 19, 2017Kemira credit investor presentation 2015
Presenting Kemira
Our business
Our strategic
focus
Review of
financials
1
2
3Key debt
metrics4Potential bond
transaction5
Appendix
6
1. Our business
Focus
• Pulp & Paper
• Oil & Gas
• Mining
• Water treatment
Revenue
EUR 2.14 billion (2014)
Employees
4,250 (2014)
Revenue split by
customer benefit
Product quality or product yield
optimization 50%
Process and energy
efficiency 20%
Water quality and regulatory
compliance in raw water and
wastewater treatment 30%
We help customers create more value by applyingour expertise where water meets chemistryKemira is a global chemicals company serving customers in water-intensive industries
5
Kemira shares are listed on the NASDAQ OMX Helsinki stock exchange.
December 19, 2017Kemira credit investor presentation 2015
Business units in 40 countries and sales in more than100 reach our customers around the world
R&D and technology centersEmployees
O&M management
Houston, USA
Paper & M&I EMEA
management
Frankfurt, Germany
KEMIRA HQ
Helsinki, Finland
EUROPE, MIDDLE EAST
AND AFRICA 55%
EUR 1,170 million
2,410
1,480
ASIA PACIFIC 6%
EUR 120 million
350
Paper management
Hong Kong
Regional HQ
Atlanta, USA
Regional HQ
Shanghai, China
AMERICAS 39%
EUR 850 million
6December 19, 2017Kemira credit investor presentation 2015
Key figures
EUR million (except ratios) 2014 2013 2012 2011 2010
Revenue 2,137 2,229 2,241 2,207 2,161
EBITDA, excluding non-recurring items 253 252 249 253 259
% of revenue 11.8 11.3 11.1 11.5 12.0
Gearing, % at period-end 42 41 42 38 39
Personnel at period-end 4,248 4,453 4,857 5,006 4,977
7December 19, 2017Kemira credit investor presentation 2015
Our business is organized into customer-based segments
20 %
25 %
55 %
SALES BY SEGMENT (2014)
PAPER
OIL & MINING
MUNICIPAL & INDUSTRIAL
8
19 %
27 %
54 %
OPERATIVE EBITDA BY SEGMENT (2014)
December 19, 2017Kemira credit investor presentation 2015
9
Kemira Management Board
Jari Rosendal
President & CEO
Petri Castrén
CFO
Mats Rönnbäck
Paper
(Interim)
Antti Salminen
Municipal &
Industrial
Tarjei Johansen
Oil & Mining
Heidi Fagerholm
CTO
Eeva Salonen
HR
Michael Löffelmann
Projects &
Manufacturing
Technology
Esa-Matti Puputti
Operational
Excellence
(as of May 18, 2015)
A leading global pulp and paper chemical supplier
35%
20%
45%
PAPER,
Revenue 2014: EUR 1,170 million
Operative EBITDA: EUR 137 million, 11.7% margin
Expertise We have unique expertise in applying chemicals and
supporting pulp & paper producers to innovate and constantly
improve their operational efficiency and end-product quality.
Offering We develop and commercialize new products to fulfil
customer needs and to ensure a leading portfolio for the pulp and
paper industry.
10
Market position:
#1 in EMEA
#2 in Americas and APAC
Packaging,
board and
tissue grades
Paper grades
Chemical,
mechanical and
recycled pulp
December 19, 2017Kemira credit investor presentation 2015
Growing chemical supplier to Oil & Gas and Miningindustries
OIL & MINING,
Revenue 2014: EUR 382 million
Operative EBITDA: EUR 48 million, 12.7% margin
Expertise We provide a unique combination of innovative
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.
Market position:
#2 in emulsion and dry polyacrylamides
Oil & Gas and
process additives applications
Minerals & Metals
applications
11
20%
80%
December 19, 2017Kemira credit investor presentation 2015
Oil & Mining is a growing partner to the oil, gas and mining
industry
• Business is driven by cyclical oil, gas
and metals prices
• Less than 50% of Oil & Mining
revenue is related to shale operations
• Kemira is the world’s second largest
dry and emulsion polyacrylamide
producer
• Market leader in friction reducers in
the US for shale fracking
• Polymer technology is a growing
trend in the shale operations
15% 75%
10% 0%
Kemira’s revenue split in oil and gas applications
Market leader in raw and wastewater treatment chemicals
MUNICIPAL & INDUSTRIAL,
Revenue 2014: EUR 565 million
Operative EBITDA: EUR 68 million, 12.1% margin
Expertise We enable our customers to improve their water
treatment efficiency by providing value adding support and
high performing chemicals.
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:
In water treatment chemicals
#1 in EMEA (67% of M&I revenue)
#1 in North America (28% of M&I revenue)
15%
65%
20%
Other
Coagulants
Polymers
13December 19, 2017Kemira credit investor presentation 2015
Re-entry into emerging markets once legislation
comes into force
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.
Investing in growthKemira’s organic growth was 3% in 2014 (Paper 6%, Oil & Mining 15%)
15
Telemaco Borba (BR)
process chemical expansion
Sodium Chlorate
to Klabin (BR)
Tarragona (ES)
coagulant site
Oulu (FI) pulp
chemicals expansionDry and emulsion
polyacrylamide
expansion (US)BASF AKD
emulsion
acquisition
FennoBond capacity
expansion (IT)
*) Transaction expected to close in Q2 2015
5/146/14
2014
Q4/14
1/14
Nanjing (CN)
process
chemical site
Announced investments in 2014
7/14
AkzoNobel paper
chemical acquisition*
Pulp chemical
deliveries to
Montes del Plata (UY)
December 19, 2017Kemira credit investor presentation 2015
Shifting focus to fast growing differentiated products
16
Differentiated product line drivers:
Application sales
Production optimization
Capacity expansion
Commodity product line drivers:
Capacity increases driving bleaching and pulping
Market share driving coagulants
The share of differentiated products revenue increased to 49% (48% at the end of 2014)
in Q1 2015, mainly due to increased sales volumes of sizing and strength chemicals in Paper
Differentiated product lines Commodity product lines
%-of total revenue
in Q1 2015
Polymers Sizing and
strength
Defoamers,
dispersants,
biocides and other
process chemicals
Coagulants Bleaching&
Pulping
chemicals
Miscellaneous
commodity
products
Paper 11% 24% 14% 4% 37% 10%
Oil & Mining 58% - 25% 3% 7% 7%
Municipal & Industrial 22% - 3% 65% 3% 7%
Kemira 22% 14% 13% 20% 23% 8%
December 19, 2017Kemira credit investor presentation 2015
Leverage mature markets and expand in selected emerging markets
Paper, O&M and M&I
O&M and Pulp & Paper
Paper, O&M and M&I
O&M (Middle East and Africa)
Paper (China, Indonesia and
South Korea)
• Innovation driven growth in mature markets
• Emerging market revenue expected to grow from 14% to 16% in 2016
17December 19, 2017Kemira credit investor presentation 2015
The AkzoNobel paper chemical acquisition will strengthen us especially in the growing Asian paper marketsStrategic rationale
• Consolidating capacity
• Strengthening market position
in all regions, especially in
APAC
• Gaining new competencies
and technologies
Expected revenues of more than
EUR 200 million on an annualized
basis (at closing)
Closing expected in Q2 2015
Transaction is expected to result in
EUR 15 million annual net synergies
Transaction price EUR 153 million
HowardMoses Lake
Chattanooga
KristinehamnOulu
Jundiai
Mannheim
Ambes
EstellaSoave
Pasuruan
Gunsan
Suzhou
Wellgrow
Hallam
Mount
Maunganui
Production sites
Contract manufacturing
18December 19, 2017Kemira credit investor presentation 2015
Tight integration philosophy
• Immediate establishment of Kemira business processes, including IT systems (e.g SAP)
• Common business model
• Dedicated integration team
• Bolt-on acquisition
• Strengthening our market position in
Continental Europe through customer
contracts
• Did not include sites, equipment or
personnel
• Full integration of
• Sales, distribution, invoicing and
other business processes into
SAP
• Customer deliveries through
Kemira’s own manufacturing
network 6 months after closing
Kemira
integration
3F polymers BASF
AKD
emulsion
business
• Acquisition of a leading backward
integrated polymer producer
• Full integration of
• Manufacturing sites to Kemira network
• Approximately 150 employees
• Sales, distribution, invoicing and other
business processes into SAP
• Over 100% of expected synergies
already realized
• Acquired business reached nearly 10% growth
rate even during integration period
19December 19, 2017Kemira credit investor presentation 2015
CAPEX expected to increase due to ongoing investment projects in Paper
• Greenfield sodium chlorate project in Brazil in
2014-2016
• Integration of AkzoNobel paper chemical
acquisition will require between EUR 20-30
million capex between 2015-2016
• Careful review of polymer capacity expansion
in oil & gas
Capital expenditure, EUR million
57%48%
57%
43%52%
43%
2012 2013 2014
Sodium chlorate project in Brazil
Expansion
Maintenance and improvement
134 135136
20December 19, 2017Kemira credit investor presentation 2015
Innovating together with our customers’ to improve water, energy and raw material efficiency
We are attentive to the current and long-
term needs of our customers
• 250 R&D experts create new innovations in R&D
centers in Finland, China and the USA
• 300 patent families and 1,300 patents
• R&D spend approximately EUR 30 million / year
Achievements in 2014:• New product launches: 8
• Invention notifications: 107
• Patents: 44
• Publications: 111
INNOVATION
INNOVATION REVENUE
TARGET IS 10% (2014: 8%)
OF TOTAL REVENUE BY 2016
Paper and Oil & Mining exceeded market growth, profitability improved in Municipal & Industrial
12.1%
10.4%
2013 2014
Operative EBITDA margin
2013 2014
Revenue,
EUR million312
2013 2014
Revenue,
EUR million 1,113
382
1,170
Paper
#1
Oil & Mining
#2*
Municipal
& Industrial
#1
• Leverage strong market position
• Execute investment projects successfully
• Commercialize new products
• Continue to evaluate bolt-on acquisitions
• Invest in innovation and people
and polymer technologies
• Strengthen & expand customer relationships
• Make selective acquisitions to broaden
technological and business capabilities
• Leverage strong market position
• Maintain aggressive cost controls
*In emulsion and dry polyacrylamides
+5%
+23%
22December 19, 2017Kemira credit investor presentation 2015
3. Review of financials
Key figures and ratios
EUR million (except ratios) 2014 2013 2012 2011 2010
Revenue 2,137 2,229 2,241 2,207 2,161
EBITDA, excluding non-recurring items 253 252 249 253 259
of which margin 11.8 11.3 11.1 11.5 12.0
Share of profit or loss of associates 0 -1 11 31 9
Financing income and expenses 31 39 16 21 27
Capital expenditure, including M&A 145 198 134 201 107
Cash flow after capital expenditure 75 196 72 115 169
Cash flow return on capital invested (CFROI), % 4 10 8 8 6
Equity ratio, % 51 51 51 51 54
Gearing, % at period-end 42 41 42 38 39
Net debt 486 456 532 516 536
24December 19, 2017Kemira credit investor presentation 2015
EUR million (except ratios) Q1 2015 Q1 2014 % 2014
Revenue 553 530 4 2,137
Operative EBITDA 66.4 57.5 15 252.9
of which margin 12.0 10.9 - 11.8
Operative EBIT 39.1 36.3 8 158.3
of which margin 7.1 6.9 - 7.4
Share of profit or loss of associates 0.2 0.0 - 0.2
Financing income and expense -7.5 -5.3 42 -30.7
Earnings per share, EUR 0.16 0.28 -43 0.59
Capital expenditure, excluding M&A 27.0 25.6 5 136
Cash flow from the operating activities 42.4 13.1 - 74.2
Key figures and ratios
Kemira Investor Presentation (updated on April 24, 2015) 25
9,3%
9,7%
10,2%
10,9% 10,8% 10,8%
10,7%
11,1%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014
Kemira operative ROCE trend
Kemira operative ROCE*
*Rolling 12 months
26
EUR million, expect ratios 2014* 2013*
Revenue 2,136.7 2,229.1
Goodwill 476.7 520.8
Other intangible assets 75.6 63.5
Property, plant and
equipment664.3 656.8
Net Working Capital ratio 9.9% 10.9%
Operative EBIT 158.3 164.2
December 19, 2017Kemira credit investor presentation 2015
Stable cash flow generationForeign currency hedging settlements impacted cash flow in 2014
27
133
178 176
200
74
167
115
196 196
75
2010 2011 2012 2013 2014
Net cash generated from operating activities Cash flow after investments
December 19, 2017Kemira credit investor presentation 2015
EUR million
2015 outlook
Revenue
2017 target
Operative EBITDA
Operative EBITDA margin
Gearing
EUR 2.7 billion
15%
2015 outlook and mid-term financial targets
2014
EUR 253 million
11.8%
42%
EUR 2.1 billion
<60%
28
Increase
At the same level or increase
In 2015, Kemira will focus on profitable growth organically and inorganically. Kemira expects its
revenue in 2015 to increase compared to 2014 and operative EBITDA in 2015 to be approximately
at the same level or increase compared to 2014. The outlook excludes the impact of AkzoNobel
paper chemical business (acquisition expected to close in the second quarter of 2015). At closing,
AkzoNobel paper chemical business is expected to add revenue of more than EUR 200 million on
an annualized basis.
December 19, 2017Kemira credit investor presentation 2015
4. Key debt metrics
Profitability and strong balance sheet have been the main focus in the strategy implementation
30
536 562
2,1 2,02,1
1,81,9
2,1
2010 2011 2012 2013 2014 Q1 2015
Net debt,
EUR million
Net debt/
operative
EBITDA
December 19, 2017Kemira credit investor presentation 2015
Kemira’s aim mid term is to remain below gearing of 60%
31
39% 38%42% 41% 42%
49%
20%
30%
40%
50%
60%
2010 2011 2012 2013 2014 Q1 2015
December 19, 2017Kemira credit investor presentation 2015
46%
29%
10%
3%
12%
Debt portfolio EUR 687 million at the end of Q1 2015
Loans from banks
and financial
institutions
EUR 315 million
Bond
EUR 200 million
Commercial papers
EUR 70 million
Pension loans
EUR 23 millionOther
EUR 79 million
32
Gross debt EUR 649 million on the 30th of June 2014
33
225
36
68
82
210
66
0
50
100
150
200
250
2015 2016 2017 2018 2019 2020
EUR million
Maturity profileGross debt EUR 687 million, March 31, 2015
Kemira Investor Presentation (updated on April 24, 2015)
*) Rolling 12-month
126
687
1,156
Assets Liabilities Equity
-300
-200
-100
0
2015 2016 2017 2018 2019 2020
Solid financial position with diversified debt portfolio
December 19, 2017Kemira Interim Report Q1 2015 34
Debt maturity profile, end of March, 2015 EUR million
Cash and cash
equivalents
Gearing (Net debt/equity) increased
to 49% (42% at the end 2014) due to
dividend payment, equals net debt/operative
EBITDA* ratio of 2.1
Transaction price of the pending AkzoNobel
paper chemicals business acquisition is
approximately EUR 153 million
EUR 400+100 million undrawn committed
facilities
Capital structure, end of March, 2015 EUR million
Net debt,
562 million
5. Potential bond transaction
Potential bond transaction
36
Indicative terms and conditions
Issuer: Kemira Oyj
Status: Senior unsecured
Amount: EUR [100] million
Maturity: [ ] May 2022
Coupon: [ ]
Documentation: Stand-alone, Finnish law
Covenants/Terms: Change of Control, Cross Default, Negative Pledge
Issuer call option Par call 3 months prior to the Redemption Date
Clearing: Euroclear Finland (Infinity)
Listing: Nasdaq OMX, Helsinki
Denominations: EUR 100,000 + 1,000
Bookrunners: Danske Bank and SEB
Kemira Oyj is contemplating a senior
unsecured bond issue to extend debt maturity
profile and to further diversify the funding
sources
The company is conducting a road show to
present and discuss the potential transaction
with fixed income investors
Investor meetings in the Nordic countries will
be held during May 4 – 6
The timing of the potential transaction will be
thereafter, subject to market conditions
The transaction size is expected at EUR 100
million and the maturity under discussion is 7
years
December 19, 2017Kemira credit investor presentation 2015
6. Appendix
Kemira’s manufacturing footprint globally (59 sites)
Coagulants (30)
Bleaching and pulping (9)
Polymers and
other process chemicals (20)
38
South America
APAC
EMEA North America
December 19, 2017Kemira credit investor presentation 2015
30%
35%
15%
20%
Oil price and its derivatives impacting logistics and raw material related costs
Logistics
Other raw
materials and
trading goods(caustic soda, fatty
acid, aluminium
hydrate, hydrochloric
and sulphuric acid)
Oil direct + indirect (Acrylonitrile, acrylic acid,
Alpha Olefins,
Sodium Chloride)
Kemira variable cost structure in 2014
Electricity used in
production and
as a raw material
39December 19, 2017Kemira credit investor presentation 2015
The impacts of the declined oil price most evident in Oil & Mining and Municipal & Industrial segments
-20
0
20
40
60
80
100
120
140
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2011 2012 2013 2014 2015
Brent oil, USD Sales price* Variable costs*
*) 12-month rolling change vs previous year
Kemira Investor Presentation (updated on April 24, 2015) 40
30%
35%
15%
20%
Logistics
Other raw materials
and trading goods
(caustic soda, fatty
acid, aluminium
hydrate, hydrochloric
and sulphuric acid)
Oil direct + indirect
(Acrylonitrile,
acrylic acid,
Alpha Olefins,
Sodium Chloride)
Kemira variable cost structure
Electricity used
in production
and as a raw
material
Variable cost vs sales price trend
Well balanced revenue and cost structure
41
EUR
43%
USD
35%
CAD 5%
SEK 3%
CNY 3%
Others 11%
Kemira revenue distribution 2014 Kemira cost distribution 2014
EUR
48%
USD
34%
CAD 2%
SEK 4%
CNY 4%
10% appreciation of our main foreign currencies against EUR would approximately
have EUR 15 million impact on operative EBITDA
Others 8%
December 19, 2017Kemira credit investor presentation 2015
PaperJanuary-March 2015
EUR million Q1/2015 Q1/2014 % 2014 2013 %
Revenue 314.6 280.4 12 1,170.0 1,112.8 5
Operative EBITDA 36.1 33.1 9 137.2 131.1 5
of which margin 11.5 11.8 - 11.7 11.8 -
Operative EBIT 20.7 21.9 -5 85.8 85.9 0
of which margin 6.6 7.8 - 7.3 7.7 -
Capital expenditure 17.7 12.3 44 83.0 75.5 10
Cash flow 9.6 -2.1 - -10.1 58.2 -
42Kemira Investor Presentation (updated on April 24, 2015)
Long-term commitment to the pulp and paper industry
2004
Ciba #1
AkzoNobel #2
BASF #3
Hercules #4
Kemira #5Nalco #6
2015
Kemira* (pulp and paper) #1BASF (paper) #2
AkzoNobel (pulp) #3
Solenis (paper) #4
Ecolab (paper) #5
*Including AkzoNobel paper chemicals acquisition
Kemira pulp and paper revenues have more than
doubled since 2004
Growth in pulp and paper chemicals is driven by higher volumes of packaging board and tissue grades
Main growth drivers:
• Growing packaging board and tissue
markets, especially in APAC
• Growing pulp production in South
America and Northern Europe
• Increasing demand for paper chemicals
for paper and board lightweighting and
higher use of recycled fibres
2.9 3.0 3.1
2.9 3.0 3.2
2.22.5
2.9
2014 2016 2020
APAC
CAGR
EMEA
Americas
0.7%
1.9%
4.6%
Pulp and paper chemical relevant market growth estimate,
EUR billion (CAGR: 2.4%)
Source: Management estimation based on various sources
44December 19, 2017Kemira credit investor presentation 2015
The paper industry benefits from our leading portfolio and unique expertise of the whole pulp & paper process
PAPER
INDUSTRIES
Packaging and board
Tissue
Printing and writing
Pulp
PRODUCTSSodium chlorate, Hydrogen
peroxide, Polymers, Defoamers,
Coagulants, Biocides, Sizing
additives, Strength additives,
Surface additives,
Colorants,Sulfuric acid
APPLICATIONS
Pulping, Bleaching, Retention,
Water quality management,
Sizing, Strength, Surface
treatment, Coloring, Deposit
control, Microbiological growth
control
VALUE
• Improving process efficiency
and quality
• Committed partner
• Innovating for customer
needs
• Unique expertise covering
the whole process from
pulping to coating
ADVANTAGE
• Application knowhow
• Complete portfolio
• Backward integration
45December 19, 2017Kemira credit investor presentation 2015
Oil & MiningJanuary-March 2015
EUR million Q1/2015 Q1/2015 % 2014 2013 %
Revenue 93.9 92.0 2 382.2 311.5 23
Operative EBITDA 11.1 10.7 4 48.4 32.7 48
of which margin 11.8 11.6 - 12.7 10.5 -
Operative EBIT 5.8 6.3 -8 29.9 17.4 72
of which margin 6.2 6.8 - 7.8 5.6 -
Capital expenditure 4.5 4.4 2 26.3 69.8 -62
Cash flow 5.1 10.9 - 20.6 -60.0 -
46Kemira Investor Presentation (updated on April 24, 2015)
Growth driven by strong demand for oil and gas
• Global growth, especially in NA shale
and in the Middle East
• Increased activity in Chemical Enhanced
Oil Recovery (CEOR) and oil sands
• Entering into Production Chemicals
• Need for improved processing for
declining ore grades 5.1 5.6 6.3
3.33.8
4.5
2014 2016 2020 CAGR
3.6%
4.8%
Our growth drivers: Oil, gas and mining chemical market growth estimate,
EUR billion (CAGR: 4%)
EMEA
Americas
Source: Management estimation based on various sources
47December 19, 2017Kemira credit investor presentation 2015
Uncertainty around US shale operations expected to continue
US shale business represents less than
50% of Oil & Mining segment revenues
Currently favorable U.S. dollar rate
Increased sales and marketing as well as
R&D focus in brownfield CEOR
applications
December 19, 2017Kemira Interim Report Q1 2015 48
20
40
60
80
100
120
140
160
Jan Apr Jul Oct Jan Apr Jul Oct Jan
2013 2014 2015
Horizontal rig count and oil price (WTI) index
Horizontal rig
count in US
Oil price (WTI)
Strengthening market position across all product linesOIL & MINING
Oil & Gas Upstream
EOR
Stimulation
Production
Drilling & cementing
Oil sands
Mining
Iron ore
Copper
Gold
PRODUCTS
Polymers, Dispersants & Antiscalants, Biocides, Emulsifiers, Defoamers, Coagulants
OIL & GAS APPLICATIONS
Friction reduction, Scale control,
Microbial control, Drilling mud rheology
control, Oil-based mud emulsification,
EOR polymer flooding, Conformance
control & Profile modification, SAGD
water clarifiction and oil separation
MINING APPLICATIONS
Concentrate and tailings thickening,
Rheology modification, Mineral slurry
preservation, Scale control, Metal
contaminant removal
VALUE
Improved:
• Process efficiency
• Yield
• Cost-efficiency
• Water efficiency
• Energy efficiency
• Compliance with environmental
regulation
ADVANTAGE
• Innovative chemicals &
application knowledge
• Global polymer supply –
Kemira is 2nd largest
manufacturer of
polyacrylamides in the world
49December 19, 2017Kemira credit investor presentation 2015
Municipal & IndustrialJanuary-March 2015
EUR million Q1/2015 Q1/2014 % 2014 2013 %
Revenue 144.5 137.7 5 564.7 659.4 -14
Operative EBITDA 19.2 14.5 32 68.1 68.3 0
of which margin 13.3 10.5 - 12.1 10.4 -
Operative EBIT 12.6 8.8 43 43.3 45.8 -6
of which margin 8.7 6.4 - 7.7 6.9 -
Capital expenditure 4.7 8.3 -43 35.2 46.9 -25
Cash flow 8.2 -3.1 - 34.3 37.9 -10
50Kemira Investor Presentation (updated on April 24, 2015)
1.3 1.4 1.5
0.6 0.60.7
0.5 0,5
0,7
2014 2016 2020
Regulation is driving the Municipal & Industrial market
Key market characteristics
• Mature market in Europe
and North America
• Regulatory driven
• Price and cost sensitive
• Local business
• Public and private customer base
(60%/40%)
Relevant Municipal and Industrial market*
and growth estimate, EUR billion (CAGR: 2.6%)
CAGR
1.9%
2.4%
4.4%APAC
EMEA
North
America
Source: Management estimation based on various sources
* Coagulants and Polymers in EMEA, Coagulants in North
America and Polymers in APAC
51December 19, 2017Kemira credit investor presentation 2015
• Leveraging leading market position
• Developing new solutions for raw and
waste water management
• Focusing on cash flow maximization
12.1%
10.4%
2013 2014
565
659
Municipal & Industrial segment delivering strong cashflow after restructuring and profitability improvement
2013 2014
65%
20%
15%
Other
Coagulants
Polymers
Operative EBITDA marginRevenue, EUR million
52
Unique capabilities in water treatment chemicalsMUNICIPAL & INDUSTRIAL
53
INDUSTRIES
Municipalities
Private operators
Industrial customers
PRODUCTS
Polymers (EPAM, DPAM,
Polyamines, PolyDADMACs,
Resin Amines), Al Coagulants,
Fe Coagulants, Antiscalants,
Defoamers
APPLICATIONS
Raw water treatment, Waste
water treatment, Sludge
treatment, Membrane care,
Biogas yield enhancement,
Disinfection of water streams
VALUEImproved:
• Water treatment process
efficiency
• Regulatory compliance
ADVANTAGE• Reliability, speed and logistics
flexibility
• Deep application knowledge and
comprehensive portfolio
• In mature markets, the only
company that manufactures and
supplies a comprehensive range
of water treatment chemicals
December 19, 2017Kemira credit investor presentation 2015
Kemira’s largest shareholders (March 31, 2015)
54Kemira Investor Presentation (updated on April 24, 2015)
Shareholders % of shares
Oras Invest Oy 18.2%
Solidium Oy 16.7%
Varma Mutual Pension Insurance Company 5.3%
Ilmarinen Mutual Pension Insurance Company 3.1%
Kemira Oyj 2.1%
Free float 54.6%
Foreign shareholders share of free float 33%
Households share of free float 30%
Other share of free float 37%
Index
8%
Value
17%
Shareholder Structure
55
51%
7%2%
39%
36%
8%
Institutional investors by investment style, 2015
GARP
30%
Other
14%
Growth
30%
33%9%
55%
3%
22%
Kemira Investor Presentation (updated on April 24, 2015)
Hedge Fund
1 %
Shareholder structure (institutional investors)
Geographical Distribution (%)
56Kemira Investor Presentation (updated on April 24, 2015)
UK
9%
Germany
8%
USA
17%
Finland
40%
Canada
7%
Rest of the world
3%
Sweden
5%
Norway
5%
France
4%
Switzerland
2%