Kemira Investor Presentation - Chemistry for a resource-efficient future INVESTOR PRESENTATION
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FEBRUARY 11, 2021 Kemira Investor Presentation Chemistry for a resource-efficient future INVESTOR PRESENTATION
INVESTOR PRESENTATION
Content
1. Kemira in brief
2. Investment highlights
3. Kemira as a sustainable investment
4. Pulp & Paper
5. Industry & Water
6. Recent progress
7. Appendix
FEBRUARY 11, 2021 INVESTOR PRESENTATION 2
INVESTOR PRESENTATION
Kemira in
brief
FEBRUARY 11, 2021 INVESTOR PRESENTATION 3
O UR PURPO SE
We enable our customers to improve their water, energy and raw material efficiency
G LO BAL T RENDS O UR CUST O M ERS O UR VISIO N
CHANGING DEMOGRAPHICS Pulp & Paper Our vision is to be the first
Higher use of water, energy, tissue & board
Water Treatment choice in chemistry for
Oil & Gas water intensive industries
GROWING ENVIRONMENTAL OUR STRATEGY
AWARENESS
New materials to enable circular economy Kemira is a great product company with chemistry
Material and resource efficiency and selling of chemicals at the core of our business.
OUR OFFERING We win with best suited products and tailored
We provide expertise, application know- services that improve our customers product quality,
how and chemicals that improve our process and resource efficiency.
customers‘ product quality, process and Our target is to grow above-the-market with an
resource efficiency. operative EBITDA margin of 15-18%.
O UR VALU ES
We drive performance and innovation. We are dedicated to customer success.
We care for people and the environment. We succeed together.
FEBRUARY 11, 2021 INVESTOR PRESENTATION 4
Kemira in brief
2020: REVENUE EUR 2,427 MILLION, OPERATIVE EBITDA EUR 435 MILLION,
OPERATIVE EBITDA MARGIN 17.9%, OPERATIVE ROCE 12.1%
SEGMENT SPLIT GEOGRAPHIES PRODUCTS
◼ 40% ◼ 60% 10% ◼ 20% Other:
APAC e.g. defoamers, ◼ 25% Bleaching
Industry & Water Pulp & Paper
35% 1. China dispersants, and pulping
#2 globally AMERICAS 2. South and biocides
1. USA Korea
2. Canada 3. Indonesia
◼ 15%
3. Brazil Sizing
#1 in and
55%
water strength
EMEA
treatment
1. Finland
in NA and
2. Sweden ◼ 20% ◼ 20%
Europe
3. UK Polymers Coagulants
#2 in friction reduction in North
American shale oil & gas Revenue by geographies and product category represent FY 2020.
CUSTOMERS EXAMPLES OF
Several thousand customers LARGEST CUSTOMERS
TOP 10 customers are ~25% of revenue Municipalities, e.g.
TOP 50 customers are ~50% of revenue Frankfurt, Berlin, New York,
Paris, Shanghai, Singapore
Note: Revenue by industry, product and geography rounded to the nearest 5%
FEBRUARY 11, 2021 INVESTOR PRESENTATION 5
Global reach – local excellence
63 MANUFACTURING SITES
KEMIRA HQ
Helsinki, Finland
R&D
Espoo, Finland
Regional HQ
Atlanta, USA
R&D Regional HQ
Atlanta, USA Shanghai, China
R&D
EMEA 54% Shanghai, China
EUR 1,305 MILLION
ASIA PACIFIC 11%
2,530 EUR 259 MILLION
AMERICAS 36%
EUR 862 MILLION 924
UNITS IN
40 COUNTRIES 1,467
SALES IN OVER
100+ COUNTRIES
Polymers and other process chemicals (24)
Bleaching and pulping (10)
Coagulants (29) Employees
R&D and technology centers
FEBRUARY 11, 2021 INVESTOR PRESENTATION 6
We have transformed the company several
times over the past 100 years
1950 1961 1972 1985-1992 1994 2008 2015
Development of Name changed The “Kemira” Expansion Kemira is listed on Water chemistry Acquisition of
first chemicals for to Rikkihappo Oy name adopted continues in the Helsinki stock established as the Akzo Nobel’s
paper applications (Sulfuric acid Ltd.) Europe e.g. exchange focus of strategy paper chemicals
Belgium and business
Spain
STATE- PUBLICLY TRADED
OWNED COMPANY
FERTILIZERS AS CONGLOMERATE WATER AS
CORE STRATEGY CORE STRATEGY
1920 1982 1989 2004 2009 2020
Establishment of First expansion Kemira expands GrowHow listed Tikkurila listed on Kemira centennial
the state-owned abroad to the UK to Asia through on the Helsinki the Helsinki Stock anniversary
sulphuric acid and joint venture in Stock Exchange Exchange
phosphorous Japan
fertilizer plants
FEBRUARY 11, 2021 INVESTOR PRESENTATION 7
Pulp & Paper – strong business with solid
track record
REVENUE AND OPERATIVE EBITDA REVENUE BY CUSTOMER REVENUE BY
EUR million TYPE AND MARKET GROWTH PRODUCT CATEGORY
1,520 1,523
1,457 1,477 1,458 ◼ 40% ◼ 40% ◼ 20% ◼ 5% Other ◼ 40%
1,417 Pulp Board & Printing & Bleaching
tissue writing papers ◼ 10% & pulping
260 Polymers
218
195 198 192 ◼ 20%
171 Defoamers,
dispersants,
biocides and
Market
1% 2% -1-2% other process
◼ 25%
growth* Sizing &
chemicals
2015 2016 2017 2018 2019 2020 strength
MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND CUSTOMER EXAMPLES
Solenis (paper)* #1 MARKET GROWTH BY REGION
◼ 15%
◼ 50% ◼ 35% APAC
Kemira (pulp and paper) m.s. ~16% #2 EMEA Americas
Nouryon (pulp) #3
Ecolab (paper) #4
Market
Kurita (paper) #5 1% 1% 2-3%
growth*
* Solenis-BASF combined entity
*chemical market growth in 2021-2026 Note: Revenue by industry, product and geography rounded to the nearest 5%
FEBRUARY 11, 2021 INVESTOR PRESENTATION 8
Industry & Water – strong positions in
chosen categories
REVENUE AND OPERATIVE EBITDA REVENUE BY APPLICATION REVENUE BY
EUR million TYPE AND MARKET GROWTH PRODUCT CATEGORY
1,136
956 1,009 1,073 970
906 ◼ 75% ◼ 15% ◼ 10% ◼ 15% ◼ 50%
Water treatment Oil & Gas Other Other Coagulants
175 products
192
131
such as
116 107 114 Municipal Industrial defoamers
and biocides
2015 2016 2017 2018 2019 2020
Market
2-3% 5-6% 2-3% ◼ 35%
growth* Polymers
2015-2016 figures are pro forma; combination of Municipal & Industrial
and Oil & Mining segments
MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND
MARKET GROWTH BY REGION CUSTOMER EXAMPLES
WATER TREATMENT OIL & GAS
Market share Market share ~25% in ◼ 55% ◼ 40% ◼ 5% MUNICIPAL INDUSTRIAL
~30% in coagulants and polymers used in shale EMEA Americas APAC customer examples customer examples
~20% in polymers oil & gas
Amsterdam Los Angeles
Barcelona Montreal
Main competitors in Main peers in polymers Frankfurt New York City
coagulants: (also in water treatment): Berlin Toronto
• Feralco (Europe) • SNF Oslo Melbourne
Market
• Kronos (Europe) • Solenis* growth* 3-4% 3-4% 5-6% Paris Shanghai
Stockholm Singapore
• Chemtrade (NA) • Solvay (only O&G)
• USAlco (NA)
* Solenis-BASF combined entity *chemical market growth in 2021-2026 Note: Revenue by industry, product and geography rounded to the nearest 5%
FEBRUARY 11, 2021 INVESTOR PRESENTATION 9
Kemira’s financial targets
FINANCIAL TARGETS AND HISTORICAL FIGURES
Targets 2018 2019 IFRS 16 impact in 2020 Financial target
2019
Revenue MEUR 2,593 MEUR 2,659 - MEUR 2,427 Above-market
Change +4% Change +3% Change -9% growth
Operative 12.5% 15.4% Around +1.3 %-point 17.9% 15-18%
EBITDA*
Gearing* 62% 66% Around +11 %-points 63% Below 75%
* Targets updated in February 2019 due to IFRS 16 accounting change. 2018 figures are PRE IFRS 16.
KEY FACTORS TO WATCH FOR
Factors 2020 comments
Sales price vs raw material price development Good management of fixed and variable costs, including
lower raw materials and electricity costs.
Organic growth through volume and sales price increases Group’s organic growth -4%, excl. Currencies and Oil &
Gas -2%.
Growth investments – Polymer capacity expansion in Netherlands (2019- Investments in China and the Netherlands contributed
2020), AKD sizing Joint Venture in China (2019-2020), Polymer capacity positively to EBITDA in 2020 (impact double-digit millions).
expansion in the US (2021), bleaching expansion in Uruguay (2022-2023)
FEBRUARY 11, 2021 INVESTOR PRESENTATION 10INVESTOR PRESENTATION
Investment
highlights
FEBRUARY 11, 2021 INVESTOR PRESENTATION 11Why invest in Kemira
Strong profitability improvement track record
1 Focus on profitable sustainable growth
Operative EBITDA margin improved to 17.9% and
Operative EBIT to 9.8% in 2020
Attractive dividend
2 Updated dividend policy: competitive and over-time increasing dividend
Dividend proposed to be increased to EUR 0.58 (0.56)
Sustainability at the core of strategy
3 Kemira will become the leading provider of sustainable chemical
solutions for water-intensive industries
FEBRUARY 11, 2021 INVESTOR PRESENTATION 12Strategy and Equity Story in summary
HOW KEMIRA CREATES VALUE
OUR MARKET BUILDING A GREAT EXECUTION – VALUE
FOCUS CHEMICALS COMPANY OVER VOLUME
Chemicals for Pulp & Paper, Great products: Improving product and market mix
Oil & Gas and Water Treatment 4 core areas are polymers, coagulants,
Focusing on capital efficiency
sizing and bleaching chemicals which meet
#1 or #2 in our core markets
our customers’ needs incl. resource efficiency Investing selectively in core
Market growth estimated to be 3-4% p.a. product areas with higher return
Great operations:
supported by higher use of fiber-based on capital employed
Deliver reliably with consistent quality
products, resource efficiency and regulation
Great people:
Deep application expertise
and innovation capability
FINANCIAL TARGETS
Above-market revenue growth • Operative EBITDA 15-18% • Gearing below 75%
FEBRUARY 11, 2021 INVESTOR PRESENTATION 13Global megatrends largely favor Kemira – sustainability
becoming a key driver for the long term
CHANGING GROWING
DEMOGRAPHICS ENVIRONMENTAL AWARENESS
Growing Changing More efficient use Focus on biobased Tightening Climate change
middle-class lifestyles with of scarce natural and recyclable environmental mitigation
and urbanization growth in e- resources materials for our regulation
commerce customers
Higher use of Higher use of Chemicals to support Alternatives to fossil fuel Increased need for water Increased need for water
water and tissue packaging and board circular economy needs based solutions treatment treatment
FEBRUARY 11, 2021 INVESTOR PRESENTATION 14Healthy market growth for Kemira’s
relevant markets
KEMIRA RELEVANT MARKET PULP & PAPER RELEVANT MARKET
EUR billion EUR billion
9 CAGR: 10
27 1-2%
CAGR:
22 3-4%
2019 2025
Pulp Printing & writing Board & tissue
INDUSTRY & WATER RELEVANT MARKET
EUR billion
18
13 CAGR:
5-6%
2019 2025 2019 2025
Americas EMEA APAC Water treatment Oil & Gas Other
Source: Management estimation based on various sources
FEBRUARY 11, 2021 INVESTOR PRESENTATION 15Good profitability improvement track record
REVENUE OPERATIVE EBITDA
EUR million Revenue OPERATIVE EBITDA MARGIN
declined due EUR million
to COVID-19
pandemic
+4.5% 500 20
2,593 2,659
435
2,486 2,427 410
2,373 2,363 +7.2%
400 17.9%
2,137
311 323 15
303 15.4%
300 287
253
12.8% 12.5% 12.5%
200 11.8% 12.1%
10
100
0 5
2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020
PRE IFRS 16
FEBRUARY 11, 2021 INVESTOR PRESENTATION 16Strengthening the foundation and
improving profitability
Organic growth / expansion of site Acquisition Operational efficiencies Closure of site / divestment
Start-up of Ortigueira Chevron CEOR deal & Ramp-up of of new AKD
Botlek expansion Start-up of new AKD wax site
sodium chlorate site (BR) wax site (CN)
(CN)
Bradford polymer Start-up of Joutseno chlorate Polymer investment decision, Ramp-up of of Botlek
expansion (UK) expansion (FI) Mobile (US) polymer facility (NL)
Joint Venture – Dry polymers Eastover Bleaching
San Giorgio polymer Major oil sands tailings water AKD wax manufacturing
(SK) extension start-up (US)
expansion (IT) treatment deal (CA) JV deal closed (CN)
2020
Operative 2019 Operative
EBITDA 2018 EBITDA
2015: 12.1% Move from ‘Value over volume’ 2020: 17.9%
2017
to ‘Active price management’
2016 ‘Value over volume’ initiated Chlorate and peroxide
Two segment expansion on-going in Fray
Transportation agreement with structure operational Odyssey go-live in Europe Cost savings in Pulp & Paper Bentos (UY)
Odyssey Goole coagulant expansion (UK)
Closing of ECOX detergent
Odyssey go-live on-going
Botlek modernization (NL) production (SWE)
in North America Divestment of coagulant
Raw material flexibility:
asset (IT)
BOOST operational - Coagulants to Magnetite
excellence program launch - Bradford AN purification
Divestment of Kemira Operon
Closures of Ottawa (CA) and (water treatment facility
Zaramillo (ES), coagulants operations, FI)
FEBRUARY 11, 2021 INVESTOR PRESENTATION 17The dividend policy has been updated
KEMIRA’S NEW DIVIDEND POLICY
Competitive and over-time increasing dividend
No fixed payout ratio
We have a solid dividend track record
◼ Dividend per share Dividend yield
0.56 0.58*
0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53
0.48
5.8%
5.4% 5.4%
4.5% 4.9% 4.6%
4.1% 4.4% 4.4% 4.2% 4.5%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
*BoD prosposal to the AGM 2021 to be paid in two installments in May and November.
FEBRUARY 11, 2021 INVESTOR PRESENTATION 18We invest in core products globally
KEY INVESTMENT FOCUS ON CORE PRODUCT
GROUPS SINCE 2016
PRODUCTS
• Bleaching chemicals
◼ 20% Other: ◼ 25% Bleaching
• New chlorate plant in Brazil e.g. defoamers, and pulping
• New chlorate line in the U.S. dispersants,
• New chlorate line and peroxide capacity in Finland and biocides
• Freed peroxide capacity from ECOX closure in Sweden
• Chlorate and peroxide expansion in Uruguay (2022-2023)
• Polymer capacity additions Revenue
• Italy EUR 2,427
• UK ◼ 15%
• Aberdeen, USA Sizing* million
• Netherlands and (2020)
• South Korea (start 2021) strength
• Mobile, USA (start 2021)
• Sizing chemicals – capacity additions due to integration of
acquisitions (Akzo Nobel and China AKD wax) ◼ 20% ◼ 20%
Coagulants
• Coagulants Polymers
• Goole, UK (start 2022)
*Sizing = Resistance against water absorption
Note: Revenue by product rounded to the nearest 5%.
FEBRUARY 11, 2021 INVESTOR PRESENTATION 19We continued to invest in product
development in 2020
Innovation
We innovate together with our customers to
improve water, energy and raw material
efficiency. Research and development
expenses totaled EUR 29 million euros in
2020, representing around 1.2% of the
revenue.
Achievements in 2020
• New product launches: 7
• New patent filings: 37
• Patent families: 367
• Patents: 1,726
FEBRUARY 11, 2021 INVESTOR PRESENTATION 20INVESTOR PRESENTATION
Kemira as a
sustainable
investment
FEBRUARY 11, 2021 INVESTOR PRESENTATION 21We have a strong commitment
to sustainability
FIVE THEMES AS SUSTAINABILITY FOCUS AREAS
SAFETY
Safe production and use of our products throughout their
lifecycle, strong safety culture
Chemical
PEOPLE sector
Strong company culture, diversity and commitment average Chemical
to people sector
average
WATER We help ensure safe clean water for people and nature
Solutions to provide safe clean water with water-related risks
managed effectively
CIRCULARITY We are making the circular bioeconomy
a reality
Chemical
Improve customer resource efficiency; increase biobased sector
and recycled raw material use average
CLIMATE Kemira will help build a carbon neutral society
Chemical
Ambition to be carbon neutral by 2045, and -30% CO2 Chemical sector
emissions by 2030 (Scope 1 and Scope 2 emissions) sector average
average
*) includes people, operations (environment) and chemical safety
FEBRUARY 11, 2021 INVESTOR PRESENTATION 22Sustainability targets renewed in February
2021
SAFETY PEOPLE WATER CIRCULARITY CLIMATE
High safety Foster strong Ensure water- Improve customer Reduce costs with
performance company culture related risks are resource efficiency renewables and
fundamental to and commitment to managed effectively Increase biobased energy efficiency
business people and recycled raw Low carbon product
material use offering
NEW KPIS
TRIF 1.5 by 2025 Reach top 10% Continuously Reduce waste Scope
and 1.1 by 2030 cross industry norm improve freshwater intensity by 15% 1&2 emissions -30%
for Diversity & use intensity by 2030 by 2030
Inclusion by 2025
Biobased products
>500 million EUR
revenue by 2030
FEBRUARY 11, 2021 INVESTOR PRESENTATION 2352% of revenue generated from products
that improve customer resource-efficiency
PULP & PAPER INDUSTRY & WATER
Kemira’s chemicals improve the
manufacturing process and enable
better resource-efficiency. WATER TREATMENT OIL & GAS
For example Municipal and industrial Shale:
Our chemistry is helping to improve water treatment:
Our chemicals reduce friction and
recycled fiber quality and content, chemical water treatment provides improve energy efficiency of shale
energy and water efficiency in the most compact plant and producers
paper mills smallest possible environmental
Oil sands tailings:
Case: footprint
Wastewater treatment of oil sands
Lightweight packaging: with our Case:
tailings ponds
strength chemicals, our customers Sludge de-watering: with our
can make their packaging lighter CEOR:
chemicals, our customers are able
yet stronger. Lighter weight results to reduce the water content in Our chemicals reduce friction and
in lower logistics cost and thus sludge. As a result, demand for enable a better yield from existing
environmental footprint. logistics is lower resulting in better wells
environmental footprint
FEBRUARY 11, 2021 INVESTOR PRESENTATION 24SUSTAINABILITY WILL BE
A KEY DRIVER FOR FUTURE GROWTH
Customer behavior TO SUPPORT OUR CUSTOMERS IN
THE SHIFT TOWARDS HIGHER SUSTAINABILITY,
is changing with an WE WILL:
Address growing recyclability and
increased focus on biodegradability demand for products
sustainability Gradually transform our product
portfolio to more biobased
Pulp & Paper
Reduce the use of fossil-fuel based carbon
Customers desire for biodegradable and recyclable
products - growing need for biobased chemicals
as raw material
TO INCREASE THE SUSTAINABILITY
Customer product portfolio will evolve when going
OF OUR OPERATIONS,
further into the bioeconomy – totally new uses for fiber
WE WILL:
Industry & Water
Increase the share of recycled
Overall sustainability focus driven by consumers material in our products
Growing market for circular products with high share
of recycled content
FEBRUARY 11, 2021 INVESTOR PRESENTATION 25W E WA N T TO E N S U R E P R O F I TA B L E
GROWTH BY BECOMING THE LEADING
P R O V I D E R O F S U S TA I N A B L E C H E M I C A L
S O L U T I O N S F O R WAT E R - I N T E N S I V E
INDUSTRIES
CURRENT REVENUE TARGET REVENUE IN 2030
~100 MEUR >500 MEUR
FROM BIOBASED FROM BIOBASED
PRODUCTS PRODUCTS
CURRENT SHARE TARGET SHARE IN 2030
12% 40%
OF RENEWABLE CARBON OF OF RENEWABLE CARBON OF
ALL CARBON CONTAINING ALL CARBON CONTAINING
RAW MATERIALS RAW MATERIALS
FEBRUARY 11, 2021 INVESTOR PRESENTATION 26What will the sustainability focus mean for our
businesses?
Pulp & Paper Industry & Water
• Increase focus on circularity as customers • Increase focus and investments on water
are demanding recyclability and treatment
biodegradability
• In Oil & Gas, direct focus to growing and less
• Focus investments in sustainable pulp, volatile CEOR and oil sands tailings
packaging and tissue applications. Limit businesses
investments in declining printing & writing
applications. • Explore new markets for water treatment,
particularly in APAC
• Explore new competencies, e.g. barrier
solutions to capture market growth • Explore new competencies and product lines
opportunities within water treatment
FEBRUARY 11, 2021 INVESTOR PRESENTATION 27We will increase focus on water treatment to
further improve sustainability of I&W portfolio
24% WE WILL CREATE AN ACTION PLAN TO
FURTHER IMPROVE THE SUSTAINABILITY
of current raw materials PROFILE OF THE I&W PORTFOLIO
from recycled sources
Further improve the circularity of our business
by increasing share of recycled materials
Start building a biobased polymer portfolio
Already Increase segment focus on water treatment
applications and capabilities
up to 80% Increase Oil & Gas focus on growing and
less volatile businesses, i.e. CEOR and
of raw materials from
Oil Sands tailings. Expected recovery in shale
recycled sources in
provides near-term growth opportunities.
coagulants
FEBRUARY 11, 2021 INVESTOR PRESENTATION 28Corporate sustainability performance Q4 2020 1/2
Priority KPI+Target Performance Comments Progress
Three new R&D projects were started in Q4 2020 and all
53%
52% of them are planned to improve customer phase
51%
Product sustainability resource efficiency. During year 2020 we started totally 12
AHEAD OF
At least 50% of Kemira’s revenue 49%
new R&D projects out of which 10 are planned to improve
TARGET
Sustainable products generated through products improving resource efficiency. At the same time we have
customers’ resource efficiency. Baseline 2018 2019 2020 commercialized 7 R&D projects and all of them are
and solutions average
improving resource efficiency at customer phase.
2016-2017
Workplace safety After good safety performance in H1 2020, the second half
Achieve zero injuries on long term; 3,9
was not satisfactory and we totalled one incident more
3,5
TRIF* 1.9 by end of 2021. than in 2019. As a result, we were not on target for our
2,1 2,2 1,9 YTD safety goal (TRIF 2.2 vs. 2.0). BEHIND
TARGET
We continue to work with behavioral safety to continuously
2017 2018 2019 2020 Target
2021
improve our safety performance.
Climate change 2020 shows a 4.8% reduction in actual
100 98,6 95,2
Reduce combined Scope 1 and Scope 2 annualized emissions compared to our baseline of 2018.
70
Responsible greenhouse gas emissions by 30% by This is a significant improvement, as the modelling when
ON
2030, compared to the 2018 baseline setting Kemira’s 2030 target expected a 4% increase for
operations and supply TARGET
(0.93m t CO2eq). Ambition to be carbon 2020, before declining.
chain neutral by 2045 2018 2019 2020 Target 2030
Supplier Management Supplier sustainability assessments continued as
Share of direct key suppliers screened planned. During 2020 we completed 60 new supplier
100% 90% 50
through sustainability assessments and 69% 74% 75% assessments with an average score of 52/100. An
80% 40
audits (cumulative %). The target 60% 30
additional 10 suppliers have been invited to take an IN
includes five sustainability audits for the 40% 16 17
20 assessment. Supplier assessments and audits are part of PROGRESS
11
highest-risk** suppliers every year, and 20% 10 sourcing processes and Sourcing function target setting
cumulatively 25 audits by 2020. 0% 0 and are monitored on monthly basis. In 2020, supplier
Baseline 2019 2020 Target
2018 2021 assessment target was met but we were not able to
% of key suppliers # of audits (cumul.)
conduct targeted number of audits mainly due to covid-19
FEBRUARY 11, 2021 INVESTOR PRESENTATION
and related restrictions. 29
* TRIF = Number of Total Recordable Injury Frequency per million hours, Kemira + contractor, year-to-date
** Suppliers with lowest sustainability assessment scoreCorporate sustainability performance Q4 2020 2/2
Progress
Priority KPI+target Performance Comments
Employee engagement index based on In Q4, we completed the MyVoice 2020. Based on
81 81
bi-annual MyVoice survey the MyVoice our employee engagement score had
Keep the index at or above the external increased to 81, which is six above the external
industry norm. 75 manufacturing benchmark of 75. The participation rate was
ON
81%, increasing by 14% points since 2019. During 2020,
TARGET
we continued our continuous feedback and listening model
Engagement Participation
for prioritized areas with our new, agile methods
2020 Target
of engagement measurement, benchmarking
and taking action.
People and
integrity Leadership development activities 1 533
1 839
1 500
During 2020, we experimented with more digital
provided, average learning and this continued in Q4. Examples includes
1 036
Two leadership development activities development for leaders in manufacturing, commercial and AHEAD OF
494
per people manager position during functions. We also ran two Talent Journey programs TARGET
2016–2020. The cumulative target is virtually for our nominated Talents.
1,500 by 2020. 2016 2017 2018 2019 Target 2020
Integrity index Integrity has been measured in the MyVoice Pulse
KPI to measure compliance with the 81% survey 2020 using a new method (it is called ‘Speak My
Kemira Code of Conduct. The target is to 80%
Mind’, which is one single item Index). Therefore, it is not ON
maintain the Integrity Index level above directly comparable to the previous 2018 results. In 2020 TARGET
industry benchmark of 77%. 2020 the Integrity Index score is 80 points, 10 points
Integrity Index Participation above manufacturing benchmark
FEBRUARY 11, 2021 INVESTOR PRESENTATION 30INVESTOR PRESENTATION
Pulp &
Paper
Driving growth as
market leader
FEBRUARY 11, 2021 INVESTOR PRESENTATION 31Pulp & Paper chemicals market estimated
to grow 1-2%
REVENUE AND OPERATIVE EBITDA • Pulp & Paper chemicals market drivers
EUR million
1,477
1,520 1,523 – Hardwood and softwood pulp demand increasing
1,457 1,458
1,417 driven by growth of packaging needs (e-commerce,
non-plastic solutions), growing tissue demand and
260 lack of recycled fiber
218
171
195 198 192 – Demand increase continues for packaging, driven
by online shopping, last-mile delivery, product
safety and non-plastic solutions
2015 2016 2017 2018 2019 2020
REVENUE BY CUSTOMER TYPE – Growth in tissue demand driven by increasing
◼ 20% wealth in emerging countries
Printing &
◼ 40% writing papers – Ongoing digitalization of media drives decline of
◼ 40% Board & tissue graphic paper demand
Pulp
• Growth areas, pulp and board & tissue,
represent over 80% of our Pulp & Paper
Market
1% 2% -1-2%
revenue
growth
– Ongoing capacity additions suit well for the need of
growing demand
FEBRUARY 11, 2021 INVESTOR PRESENTATION 32Markets impacted by COVID-19 in the short
term, long-term drivers remain solid
SHORT TERM IMPACT LONG TERM IMPACT EXPECTED CAGR
OF COVID-19 OF COVID-19 2020-2026*
Graphic Paper Demand declined, particularly advertising-driven paper Structural decline and digitalization likely to
consumption and office paper demand accelerate
-2-3%
Printing & Writing demand expected to decline by up Some recovery on print advertisement and office
to 20% in 2020 paper possible after situation normalizes
Tissue High demand in H1/2020 Resilient demand
Increased demand for more high-quality virgin fiber Megatrends (growing middle-class, growing +2-3%
based (at-home) tissue and hygiene products GDP of emerging countries) remain intact
Packaging Strong demand for online and packaged daily E-commerce growth to accelerate
consumer goods.
Other megatrends (plastics replacement, +2-3%
Higher consumer demand will only partly offset the growing urban middle class) remain unchanged
falling demand for industrial and B2B-transport
packaging
Pulp Pulp demand solid Demand supported by packaging and tissue
Wastepaper collection and sorting interrupted demand
+1-2%
Efficient pulp mills coming online forcing
high cost and old pulp mills out of market
Sources: RISI, Hawkins Wright, Pöyry, management estimation
*End market
FEBRUARY 11, 2021 INVESTOR PRESENTATION 33From our existing markets, we see growth
opportunities in Asia-Pacific and in Pulp
AS I A - PA C I F I C PULP
• Customer demand to shift increasingly to • Growth in pulp expected to be driven by
Asia-Pacific with most of new board and paper increasing need for packaging and tissue
production capacity expected in the region • Demand to shift more towards market pulp
• Big customers expected to capture larger and recycled pulp
share of the region’s market; emerging • New investments expected to concentrate in
sustainability focus of consumers to benefit Northern Europe and South America
larger suppliers
• Fragmented chemical market with many small
and local producers provides opportunities for
further consolidation
KEMIRA POSITION KEMIRA POSITION
Focused on larger and financially healthy producers Well-positioned to capture selected growth opportunities in Northern
Customer market consolidation could create opportunities for Europe and South America through existing strong
Kemira to differentiate with full product portfolio offering customer relationships
FEBRUARY 11, 2021 INVESTOR PRESENTATION 34New AKD wax investment in China fully
operational
• Construction started in 2017, manufacturing facility fully
operational with positive EBITDA contribution in 2020
• Produces mainly AKD wax and its key raw material fatty acid
chloride (FACL)
– AKD is sizing chemical used in board and paper to
create resistance against liquid absorption
– Plans to produce coagulants for water treatment
• Kemira strengthens its position and secures supply of
key raw material for AKD wax
JOINT-VENTURE
ACQUIRED ASSET FULFILLS OUR KEY CRITERIA FOR ACQUISITIONS:
Tiancheng with Kemira
GROWTH – End-products in growing markets APAC – Enables profitable growth in APAC holding 80% investment
SUPPLY – Backward integr. & self-sufficiency (FACL) SUSTAINABILITY – FACL from renewable material of around EUR 70
LOCATION – Close to our existing production PROFITABILITY – Accretive after ramp-up million
FEBRUARY 11, 2021 INVESTOR PRESENTATION 35Upcoming investments will further
strengthen our long-term performance
B L E A C H I N G E X P A N S I O N I N U R U G U AY SOUTH KOREA
• Multi-year agreement with UPM-Kymmene • Joint Venture with Yongsan Chemicals,
includes bleaching capacity to existing Fray Kemira minority shareholder
Bentos mill as well as new 2.1 million ton pulp • Polymer investment in a growing market;
mill in Paso de los Toros. efficiency improvement from backward-
• Expansion of both sodium chlorate and integration
hydrogen peroxide at the existing Fray Bentos • Premium dry polymer products: paper and
chemical island site packaging mills in APAC and water treatment
• The extension will support long-term growth in facilities as end customers
bleaching, one of Kemira’s strategic focus • Will support strengthening competitive
areas position in APAC
• Financial contribution expected as of 2023, • Scheduled opening in H1 2021, ramp-up by
investments to take place in 2021-2022 the end of 2021.
INVESTMENT AROUND USD 30 MILLION EQUITY INVESTMENT AROUND EUR 5 MILLION
FEBRUARY 11, 2021 INVESTOR PRESENTATION 36We are looking to transform our portfolio
more towards biobased products
C U S T O M E R S S E E K I N G A D D E D VA L U E WE WILL BECOME THE LEADING
F R O M S U S TA I N A B I L I T Y A N D P R O V I D E R O F S U S TA I N A B L E
B I O M AT E R I A L S C H E M I C A L S O L U T I O N S F O R W AT E R -
• Maximizing biocontent in end-products to INTENSIVE INDUSTRIES
differentiate from plastic applications -> • Kemira’s aim is to improve customer resource
recyclability of products key efficiency, particularly in pulp and packaging
• Pulp & Paper companies making increasing • 12% of all carbon containing raw materials
investments to renew and broaden wood- used in Kemira is already renewable
based end-product portfolio • Ambition to create a green portfolio in the long
• Many Pulp & Paper customers announcing term
ambitious sustainability targets related to CO2 • Key product lines strength, sizing and barriers
emission reduction and more efficient water as well as retention chemicals
usage • Kemira’s current biobased solutions: e.g.
sizing agents, such as Sunflower ASA and
AKD wax, and rosin
FEBRUARY 11, 2021 INVESTOR PRESENTATION 37Our focus is to maintain profitability while
increasing focus on growth
PRIORITIZED GROWTH
ACTIONS
FURTHER PROFITABILITY
• Shift current portfolio more
IMPROVEMENT towards packaging and tissue
ON-GOING
• Continuous performance and
• Disciplined price and cost • Capture growth in Asia-Pacific
cost-structure enhancement,
management particularly in Process & • In Pulp applications, seize growth
• Increase share of customer wallet Functional chemicals opportunities in Europe and
South America.
• Continued complexity reduction • Restructuring of Pulp & Paper
Americas organization • Focus on growing biobased
• Capitalize on new facilities in market organically or through
China and the U.S. and upcoming M&A, particularly in barriers
investment in South Korea
PROFITABILITY & CASH FLOW GROWTH
FEBRUARY 11, 2021 INVESTOR PRESENTATION 38INVESTOR PRESENTATION
Industry &
Water
Stronger platform
for profitable growth
FEBRUARY 11, 2021 INVESTOR PRESENTATION 39Industry & Water relevant chemicals market
estimated to grow 3-4%
REVENUE AND OPERATIVE EBITDA • Demand for water treatment chemicals expected
EUR million 1,136
1,009 1,073 to increase due to
956 906 970
– Higher demand for water driven by industrial growth
192 175 and population growth
116 107 114
131 – More stringent discharge limits for waste water
– Better dewatering of sludge
2015 2016 2017 2018 2019 2020
2015-2016 figures are pro forma; combination of Municipal & Industrial and
– Phosphorus recovery
Oil & Mining segments
– Water reuse
REVENUE BY APPLICATION
◼ 15%
◼ 10% • Higher demand for Oil & Gas solutions expected
Other
◼ 75% Oil & Gas
– Shale friction reducer market expected to grow due
Water treatment
to higher energy demand and increasing number of
wells fracked
– Oil sands operators face regulatory requirements for
Market
growth
2-3% 5-6% 2-3% their tailings treatment
– Chemical Enhanced Oil Recovery lucrative in certain
fields due to better yield from existing reservoirs
FEBRUARY 11, 2021 INVESTOR PRESENTATION 40COVID-19 impact clear on shale, but remaining I&W
business areas continue to be resilient short and long-term
SHORT TERM IMPACT LONG TERM IMPACT EXPECTED CAGR
OF COVID-19 OF COVID-19 2020-2026*
Municipal Marginal drop in volumes due to lower activity mainly Expected to grow with around GDP
Water in the hospitality industry 3-4%
No changes to previous views
Treatment
Industrial Temporarily lower industrial activity has decreased Expected to recover with economy and continue to
Water chemical demand by 5-10% grow with around GDP 3-4%
Treatment No changes to previous views
Oil Sands Volumes lower than expected for Kemira’s end No impact on the long-term tailings treatment
Tailings market, expected to recover in 2021 demand 8-9%
Treatment
Chemically No impact on active projects and projects in planning No impact expected
Enhanced phase
• Projects long-term in nature, project breaks ~15%
Oil Recovery
(cEOR) are expensive
Shale Sharp drop in fracking activity leading to -70% of Industry expected to recover gradually by 2025
Oil & Gas Friction Reducer demand for 2020 compared to 2019
Shale role in future global oil supply to be confirmed 15-20%
Market bottom in Q2 followed by modest sequential
pick-up during Q3
*Kemira estimates
FEBRUARY 11, 2021 INVESTOR PRESENTATION 41APAC, CEOR and oil sands tailings provide
strong growth opportunities
GROWING NEED FOR POLYMERS
WATER TREATMENT IN APAC OIL SANDS TAILINGS CEOR
• Largest and fastest growing • Market growth driven by regulatory • Exploration and drilling of new
water treatment market liability to treat tailings from oil oil wells increasingly expensive;
• Expected market CAGR ~5%. sands in Canada ensuring most efficient use of
until 2030 • Market expected to grow current wells
• Fragmented market; many local significantly into 2030s with tailings • Market expected to grow clearly
players with local manufacturing remediation demand expected to until 2030, more moderate
continue for at least the next 50 growth until 2050
years
KEMIRA POSITION KEMIRA POSITION KEMIRA POSITION
Mainly export business, Strong relationship with Serving customer in the North Sea,
focus on premium segment all oil sands operators several other customer pilots ongoing
FEBRUARY 11, 2021 INVESTOR PRESENTATION 42Kemira’s
six actions
1. The requirements of the Urban Wastewater
Treatment Directive (UWWTD) must be
implemented fully and equally in all member
states.
for cleaner 2.
3.
Emission limit values (especially phosphorus) in
water discharges should be tightened.
Digitalization can improve both the quality
waters 4.
of monitoring and the cost efficiency of water
treatment.
Emerging pollutants need to be included
IN EMEA 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.
FEBRUARY 11, 2021 INVESTOR PRESENTATION 43Regulation continues to support growth in
European water treatment market
Regulation under update Comments & Implications
Urban • Basis for wastewater treatment business in Europe
Wastewater • Target to better enforce existing legislation in all countries
Treatment
Directive • Other potential improvement areas: energy efficiency and micropollutants control
(UWWT)* • Revised directive will increase use of coagulants and polymers in non-compliant countries
• New regulation expected to be fully operational in late 2025
Water • Regulation evaluated to be fit for purpose and won’t be opened for changes
Framework
Directive (WFD)
Drinking Water • Only minor changes with small impact:
Directive (DWD) – New tighter limits for Lead and Chromium in drinking water
• New regulation is expected to be fully operational in 2025
Water Reuse • New EU wide regulation (no additional national implementation required) defining minimum quality standards for water reuse
regulation in agriculture
• The regulation does not incentivize increased water reuse, however clear quality standards are hoped to boost water reuse
Estimated to increase water treatment chemical demand by ~40 MEUR / p.a. in the long term
* most relevant for Kemira
FEBRUARY 11, 2021 INVESTOR PRESENTATION 44Oil & Gas expected to grow in the long-term
REVENUE IN OIL & GAS Long-term market growth opportunities with
EUR million Kemira’s selective market diversification
350
300
250
Kemira’s offering
200
150 • Process efficiencies: polymers that reduce
100
50
energy consumption by 60% in shale oil fields
0
2013 2014 2015 2016 2017 2018 2019 2020 • Cost reduction: higher concentrated liquids that
make offshore oil recovery more cost effective
(CEOR)
REVENUE SPLIT 2020
• Addressing environmental regulations: tailings
◼ 15% ◼ 40% treatment in oil sands
Other Shale fracking
New innovative technologies driving
◼ 45% expansion
Oil sands and
Chemical Enhanced
Oil Recovery Figures rounded to closest 5%
FEBRUARY 11, 2021 INVESTOR PRESENTATION 45We have diversified our Oil & Gas business
since the last oil downturn
Revenue split 2020 Revenue split 2015
◼ 15%
Other ◼ 35%
Other
◼ 45% ◼ 40% ◼ 5% ◼ 60%
Oil sands Shale fracking Oil sands Shale fracking
and and
Chemical Chemical
Enhanced Oil Enhanced Oil
Recovery Recovery
2020 UPDATE
• Action taken to optimize current Oil & Gas
organization to the prevailing market situation.
Orgnization ready when demand picks up.
• Sequential recovery in shale market continued
towards year-end
FEBRUARY 11, 2021 INVESTOR PRESENTATION 46Our polymer investment in the Netherlands
serves growing CEOR market
• Capacity addition announced in October
2017, facility fully operational with positive
EBITDA contribution as of Q1 2020
• Manufacturing facility serves offshore CEOR
• Investment includes capacity addition as well
as improves backward integration
• Multi-year extension to current contract with
Ithaca Energy announced in September 2020.
The extension will ensure good utilization of
the facility going forward.
Investment around EUR 30 million,
EBITDA contribution high single-digit millions (annualized)
FEBRUARY 11, 2021 INVESTOR PRESENTATION 47Water treatment customers focus
increasingly on sustainability
• Consumers increasingly aware of
sustainability issues
• Water treatment customers increasingly
focused on reducing CO2 footprint
• Kemira survey shows customers are willing to
pay a premium for biobased products
• Micropollutant removal and disinfection
leading themes currently in sustainable water
management
Growing market for sustainable and circular products.
Also biobased products growing in importance.
FEBRUARY 11, 2021 INVESTOR PRESENTATION 48Our focus is to maintain profitability while
increasing focus on growth
PRIORITIZED GROWTH
ACTIONS
FURTHER PROFITABILITY
• Increase focus on sustainable
IMPROVEMENT water treatment business and
ON-GOING look for growth, particularly in
Oil & Gas profitability
• Disciplined price and cost APAC
• Cost structure already
management
streamlined; ready for growth • In Oil & Gas, focus on growing
• Continued complexity reduction when shale demand picks up CEOR and oil sands tailings
• Capitalize on new polymer asset APAC profitability applications
in the Netherlands and upcoming
• Organization reorganized, focus • Consider M&A opportunities in
polymer investment in Mobile, new water treatment capabilities
on growth to improve scale
USA, including backward- and strengthening regional
integration efficiencies footprint
PROFITABILITY & CASH FLOW GROWTH
FEBRUARY 11, 2021 INVESTOR PRESENTATION 49INVESTOR PRESENTATION
Latest
news and
financials
FEBRUARY 11, 2021 INVESTOR PRESENTATION 50Highlights in 2020
• Strong performance in 2020: improved profitability,
good operational performance, improved customer
satisfaction and employee engagement.
• Challenging market environment due to COVID-19
pandemic and related economic slowdown
• Revenue development excluding Oil & Gas and
currencies -2% illustrating resilience of business model.
Strong profitability: operative EBITDA margin improved to
17.9%.
• Financial target for operative EBITDA margin updated to
15-18% (previously 15-17%). Also dividend policy
updated: aim to distribute competitive and over-time
increasing dividend.
• New manufacturing facilities in China and the
Netherlands facilitate growth; existing facility expansion in
Uruguay to support future growth in Pulp & Paper
FEBRUARY 11, 2021 INVESTOR PRESENTATION 51Financial highlights of 2020
Q4 Q4 Δ% FY FY Δ%
Organic revenue growth improved towards year- EUR million
(except ratios) 2020 2019 2020 2019
end
• COVID-19 related economic slowdown impacted Revenue 605.6 657.7 -8% 2,427.2 2,658.8 -9%
volumes, particularly in printing and writing and
shale Operative EBITDA 107.9 90.1 +20% 435.1 410.0 +6%
• Organic revenue growth excluding Oil & Gas stable of which margin 17.8% 13.7% - 17.9% 15.4% -
in Q4 2020, -2% in 2020
Strong margin development continued in Q4 2020 Operative EBIT 57.0 42.4 +34% 237.7 224.0 +6%
• EBITDA supported by lower variable costs, of which margin 9.4% 6.4% - 9.8% 8.4% -
including raw materials and efficiencies from new
investments in China and the Netherlands Net profit 23.8 8.6 177% 138.0 116.5 +18%
• Good fixed cost management EPS diluted, EUR 0.14 0.05 214% 0.86 0.72 +19%
Earnings per share EUR 0.86
Cash flow from
Strong cash flow from operating activities operating activities
146.4 142.5 +3% 374.7 386.2 -3%
Dividend proposal of EUR 0.58 per share
Dividend per share,
proposal by the BoD, 0.58 0.56 +4%
EUR*
*Board of Director’s proposal to the AGM 2021
FEBRUARY 11, 2021 INVESTOR PRESENTATION 52Pulp & Paper: clear profitability
improvement in 2020
Market environment in 2020
REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y)
• Pulp, board and tissue demand remained resilient; EUR million
demand in printing and writing chemicals declined. 385 390 386
376 381 383 378
Improvement in market demand in Q4. 369 373 370
357 352
+7%
Organic growth improved towards year-end +5% +6%
+4%
• Economic slowdown impacted volumes, particularly +0%
-3% -3% -3% -1% 0%
-4% -5%
in printing & writing products where revenue
declined by 9% in 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
• Sales volumes increased in Q4 2020, sequential 2018 2019 2020
improvement in all customer segments
OPERATIVE EBITDA AND OPERATIVE EBITDA-%
Strong operative EBITDA margin in 2020 EUR million 18.4% 18.6% 18,6%
16.0% 15.9%
• Profitability improvement in APAC 13.6% 13.1% 13.3% 14.4% 13.6%
65.5 68,9
11.6% 12.1% 61.3 60.2
65.6
• 2020 margin improvement result of good cost 52.3 51.2 50.7 53.7 52.6
42.7 45.4
management and contribution from recent
investments
Organizational restructuring in the Americas during
Q4 2020 Q1 Q2 Q3 Q4 Q1* Q2* Q3* Q4* Q1* Q2* Q3* Q4*
FEBRUARY 11, 2021 INVESTOR PRESENTATION 2018 2019 2020 53
* Includes IFRS16 impactIndustry & Water: relative profitability
improved despite lower sales volumes
Market environment in 2020 REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y)
EUR million
• Municipal water treatment market grew slightly 290 307
272 284 271 272
despite COVID-19; industrial water treatment market 245
267 264 244 236
226
declined due to lower industrial activity +14%
+11% +11%
+5% +6%
• Modest sequential recovery in shale demand +2% +4%
-1% -1%
continued in Q4 2020
-22% -18% -10%
Organic growth
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
• Organic revenue growth excluding Oil & Gas 0% in
2018 2019 2020
Q4 2020, -2% in 2020. Revenue in municipal water
treatment increased in 2020. OPERATIVE EBITDA AND OPERATIVE EBITDA-%
EUR million
• Shale revenue continued to recover sequentially in
Q4 2020 18.3% 17.7% 19.5% 16,6%
16.8% 18.1% 18.5%
Strong operative EBITDA margin in 2020 12.8% 12.9% 12.3% 13.8%
10.9% 52.4 56.8
45.0 48.2 40.0 47.6
34.8 36.7 33.3 37.5 39,0
• Profitability supported by lower variable costs and 26.6
good fixed cost management. Positive contribution
from polymer expansion in the Netherlands. Q1 Q2 Q3 Q4 Q1* Q2* Q3* Q4* Q1* Q2* Q3* Q4*
2018 2019 2020
FEBRUARY 11, 2021 INVESTOR PRESENTATION 54
* Includes IFRS16 impactOil & Gas: sequential shale market recovery
continued in Q4 2020
Market environment in 2020
• Shale: shale market bottomed in Q2 2020. Sequential
market recovery continued in Q4 2020; typically Q4
seasonally slower quarter REVENUE DEVELOPMENT
EUR million
• In oil sands tailings, Kemira’s end market demand in 2020
clearly lower than expected. CEOR* end market solid.
73 77 87
Kemira performance in 2020 57 57 56
66 62 66
46 52
45 41 38
• Oil & Gas revenue declined by 46% in 2020 38
27
• Q4: Kemira shale revenue continued to recover
sequentially, but remained at a low level compared to Q4
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019
2017 2018 2019 2020
• Multi-year contract extension signed with Ithaca for CEOR
2021 expectation
• Shale and oil sands tailings demand expected to recover
gradually, CEOR to remain solid
*CEOR, chemical enhanced oil recovery
FEBRUARY 11, 2021 INVESTOR PRESENTATION 55Strong results in customer satisfaction and
employee engagement
Strong customer satisfaction – positive Employee engagement continued to
feedback on Kemira’s actions during improve – clearly above industrial
COVID-19 benchmark
NET PROMOTER SCORE*
EMPLOYEE ENGAGEMENT
47***
36**
81
33
28 30
6 PTS ABOVE MANUFACTURING
INDUSTRY BENCHMARK
2016 2017 2018 2019 2020
* Promoter customers (very loyal) – Detractor customers (unhappy),
Scale: 0-19 Satisfactory, 20-39 Good, 40+ Excellent.
** New rolling process implemented in 2019
***Average NPS score in 2020, data in 2020 limited due to a 6-month break in interviews
following COVID-19
FEBRUARY 11, 2021 INVESTOR PRESENTATION 56W E WA N T TO E N S U R E P R O F I TA B L E
GROWTH BY BECOMING THE LEADING
P R O V I D E R O F S U S TA I N A B L E C H E M I C A L
S O L U T I O N S F O R WAT E R - I N T E N S I V E
INDUSTRIES
CURRENT REVENUE TARGET REVENUE IN 2030
~100 MEUR >500 MEUR
FROM BIOBASED FROM BIOBASED
PRODUCTS PRODUCTS
CURRENT SHARE TARGET SHARE IN 2030
12% 40%
OF RENEWABLE CARBON OF OF RENEWABLE CARBON OF
ALL CARBON CONTAINING ALL CARBON CONTAINING
RAW MATERIALS RAW MATERIALS
FEBRUARY 11, 2021 INVESTOR PRESENTATION 57Partnerships announced in December are
important steps in our biobased strategy
DUPONT DANIMER SCIENTIFIC
• Exclusive partnership to develop enzymatic • Exclusive partnership to develop
biomaterial platform technology developed by biodegradable coating for Kemira applications
DuPont Nutrition & Biosciences (now part of in paper and board
IFF) for Kemira applications
• Danimer’s plant seed-based PHA will be used
• Partnership will leverage DuPont’s platform to develop biobased alternatives to
that utilizes plant-based sugars as raw polyethylene coating
materials. Kemira will bring application
development expertise. • NEXT STEPS: Aim to manufacture coatings
for limited commercial applications in 2021
• NEXT STEPS: In 2021 partners will work on before exploring broader production options
joint application development before doing
pilot scale sales in 2022-2023.
FEBRUARY 11, 2021 INVESTOR PRESENTATION 58Sustainability targets renewed
SAFETY PEOPLE WATER CIRCULARITY CLIMATE
High safety Foster strong Ensure water- Improve customer Reduce costs with
performance company culture related risks are resource efficiency renewables and
fundamental to and commitment to managed effectively Increase biobased energy efficiency
business people and recycled raw Low carbon product
material use offering
NEW KPIS
TRIF 1.5 by 2025 Reach top 10% Continuously Reduce waste Scope
and 1.1 by 2030 cross industry norm improve freshwater intensity by 15% 1&2 emissions -30%
for Diversity & use intensity by 2030 by 2030
Inclusion by 2025
Biobased products
>500 million EUR
revenue by 2030
FEBRUARY 11, 2021 INVESTOR PRESENTATION 59Key operative focus areas in 2021
• Continue to mitigate impact of COVID-19 to
ensure our own and our customers’ business
continuity. Retain people and operational safety
as top priority.
• Increased focus on profitable growth; maintain
focus on strict cost management
• Biobased strategy: continue partnership
development and R&D focus to commercialize
new biobased products enabling recyclability
• Operational agility: ensure good capacity
utilization and capacity can be ramped up
quickly when market demand recovers
• Construction of polymer capacity in the U.S. and
South Korea as well as expansion of bleaching
capacity in Uruguay
FEBRUARY 11, 2021 INVESTOR PRESENTATION 60PETRI CASTRÉN, CFO
FEBRUARY 11, 2021
Financials
Q4 2020
FEBRUARY 11, 2021 INVESTOR PRESENTATION 61Strong profitability despite clearly lower volumes
Q4/2020
REVENUE AND ORGANIC GROWTH (Y-ON-Y) Organic revenue growth -4% in Q4 2020, -7%
EUR million in 2020
658
• Q4 2020 revenue declined due to lower sales volumes and
-2% -2% -4% 0%
606 prices. Revenue declined particularly in shale and printing
and writing
• Organic revenue growth trend improved towards year-end
Operative EBITDA margin improved to 17.8%
in Q4 2020, 17.9% in 2020
• Operative EBITDA improved despite lower revenue.
Q4 2019 Sales volumes Sales prices Currency Acquisitions & Q4 2020
impact divestments
Favorable variable cost development and good fixed cost
management. Efficiencies from investments in China and
the Netherlands contributed positively to EBITDA.
OPERATIVE EBITDA BRIDGE
EUR million 108
6 -4 4
90
-4 29
-14
Q4 2019 Sales volumes Sales prices Variable costs Fixed costs Curency impact Other Q4 2020
FEBRUARY 11, 2021 INVESTOR PRESENTATION 62Items affecting comparability
• Q4 2020:
Items affecting comparability, Q4 2020 Q4 2019 FY 2020 FY 2019
• EUR 14 million related to liabilities EUR million
in a small, to-be-closed energy
company in Finland owned via Within EBITDA -16.7 -20.5 -21.8 -27.7
Pohjolan Voima
Pulp & Paper -16.8 -20.8 -20.0 -25.8
• Restructuring costs in Pulp &
Industry & Water 0.1 0.3 -1.8 -1.8
Paper of around EUR 4 million
due to organizational changes in Within depreciation, amortization
the Americas 0.0 0.0 0.0 -1.9
and impairment
• Q1-Q3 2020: Pulp & Paper 0.0 0.0 0.0 0.0
• Restructuring costs in Oil & Gas Industry & Water 0.0 0.0 0.0 -1.9
of around EUR 2 million
Total items affecting
• Increased environmental -16.7 -20.5 -21.8 -29.6
comparability in EBIT
provisions due to clean-up of old
manufacturing site in Finland
FEBRUARY 11, 2021 INVESTOR PRESENTATION 63Impact from variable costs continued to be
positive
SALES PRICE VS VARIABLE COST TREND SALES PRICES AND VARIABLE COSTS
(ROLLING 12-MONTH CHANGE Y-O-Y) (CHANGE Y-O-Y)
EUR million EUR million
180
47
42
37
120 34
32
26 38 28 28 28
36 25
60 16 13 29 24 16 15
9 13 23 11 8 23
5 4 19
11 14
0 11
-9 3
-18 -3 -10 0 -4 -2 -2
-5
0
-4 -4
-60 -10
-23 -13 -13 -14
-16 -14
-18 -20 -20
-23 -23 -25
-120 -26 -16 -29
-32
-180 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Net impact on EBITDA (sales prices-variable costs)
Brent oil, USD Sales prices* Variable costs* Sales prices
Variable costs
* 12-month rolling change vs previous year in EUR million
FEBRUARY 11, 2021 INVESTOR PRESENTATION 64Strong cash flow
ALL KEY FIGURES IN EUR MILLION
CASH FLOW FROM OPERATIONS
386 375
• Q4 cash flow from operations strong at EUR 146.4
million. January-December 2019 period included EUR
143
146 15 million return of excess capital from Kemira’s
Q4 205 210 supplementary Pension Fund in Finland.
Q3 71 88 121 117
Q2 93 64 57
• Net working capital improved from Q3 2020 mainly due
61
29 35 23 65
to lower inventory levels and higher payables. NWC
Q1 12 50
was EUR 197 million end of December 2020 (EUR 211
2017* 2018* 2019 2020
*Pre-IFRS16 figures
million at end of 2019).
CAPITAL EXPENDITURE EXCL. ACQUISITIONS
190 201 196 • Capex estimated to be around EUR 200 million in 2021:
150
66 98 98 78 – Expansion of manufacturing facility in Uruguay to cater for
44 UPM’s upcoming pulp mill
65 44
53 39
– Mobile polymer plant to start production in H2 2021
59 53 65 65 73
2017 2018 2019 2020
Expansion Improvement Maintenance
FEBRUARY 11, 2021 INVESTOR PRESENTATION 65Gearing below financial target range
DEVELOPMENT OF OPERATIVE ROCE, %
12.1%
9.7% 9.8%
11.2% • Operative ROCE improved to 12.1% driven by
improvement in Pulp & Paper
• Pulp & Paper operative ROCE 11.1% (2019: 7.7 %)
• Industry & Water operative ROCE 13.9% (2019:
2017* 2018* 2019 2020 17.6%)
*Pre-IFRS16 figures
NET DEBT (EUR million) AND LEVERAGE RATIO*
811
759
• Gearing 63% - below financial target range of below
694** 741**
638** 75%
• Average interest rate of net debt excluding leases is
2.2 2.3 2.0 1.7 1.9% and duration is 20 months
• With pre-IFRS 16 net debt figures:
Dec 31 Dec 31 Dec 31 Dec 31 – gearing 53%
2017 2018 2019 2020
– leverage ratio 1.6
* Leverage ratio = Net debt / last 12 months operative EBITDA
** pre-IFRS 16 figures
FEBRUARY 11, 2021 INVESTOR PRESENTATION 66Financial targets and dividend policy
updated in November
UPDATED FINANCIAL TARGETS
• Above-the-market growth (unchanged)
• Operative EBITDA margin of 15-18%
(previously 15-17%)
• Gearing below 75% (unchanged)
UPDATED DIVIDEND POLICY
Kemira’s dividend policy aims at paying a
competitive and over time increasing dividend.
(previously: stable and competitive dividend)
FEBRUARY 11, 2021 INVESTOR PRESENTATION 67Dividend proposed to be increased to
EUR 0.58 per share
• Dividend proposed to be increased due to
strong profitability and cash flow in 2020 ◼ Dividend per share Dividend yield
• Board of Directors’ proposes to the AGM a
0.58*
dividend of EUR 0.58 per share, totaling 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53
0.56
EUR 89 million. The dividend is proposed 0.48
to be paid in two installments, in April and 5.8%
in November. 4.1%
4.5% 4.4%
5.4%
4.9%
4.4% 4.6%
5.4%
4.2% 4.5%
• No Board of Directors discretion over
second dividend installment
• Kemira has paid a dividend every year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Kemira’s dividend yield calculated using the share price at year-end
since listing of shares in 1994
*Board of Director’s proposal to the AGM 2021
FEBRUARY 11, 2021 INVESTOR PRESENTATION 68You can also read
