kemira q1 2013 result presentation

1

Kemira Interim report January-March 2013

Wolfgang Büchele, President and CEO | April 23, 2013

2

Improved profitability supported by organic growth

Revenue EUR 560.9 million (552.9 in Q1 2012), +1% • Organic revenue growth +3%, driven by increased sales volumes

Operative EBIT EUR 42.2 million (38.6), +9% • Operative EBIT margin 7.5% (7.0%)

• ”Fit for Growth” savings EUR 9 million

Operative earnings per share EUR 0.17 (0.19) • Excluding EUR 12 million negative impact of the lower income from the associated

companies, operative EPS would be 33% higher at EUR 0.25

Net working capital (ratio) of revenue reduced to 12.1% (12.8% in 2012)

With a net debt of EUR 357 million (532), the gearing fell to 30% (42% in

the end of December, 2012) • EUR 178 million proceeds received from the divestments of food and pharmaceuticals

businesses and Kemira’s shares in JV Sachtleben

Q1 2013 Interim report | Wolfgang Büchele | April 23, 2013 |

3

Revenue growth trend

-15%

-10%

-5%

0%

5%

10%

15%

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

2009 2010 2011 2012 2013

Organic growth Currency Acquisitions Divestments Total growth


4

Paper – sales volume growth in EMEA and APAC

Revenue increased by 5% to EUR 259

million (248)

• Increased sales volumes of polymers

and sizing in EMEA and APAC

• Currency exchange -1%

Operative EBIT increased 5%

to EUR 19.7 million (18.8)

• Organic revenue growth

• ”Fit for Growth”

• Higher raw material prices

• Operative EBIT margin was 7.6% (7.6%)

Cash flow was strong due to changes in

net working capital

EUR million Q1/13 Q1/12 % 2012

Revenue 259.1 247.9 5 1,005.6

Operative EBIT 19.7 18.8 5 75.3

Operative EBIT, % 7.6 7.6 - 7.5

Cash flow* 29.9 -0.9 - 8.1

*After investing activities, excluding interest and taxes


5

Municipal & Industrial – profitability improved

Revenue increased 2% to

EUR 165 million (161)

• Organic growth 4%, all regions, except NAFTA,

contributed to the growth

• Sales prices slightly lower than in Q1 2012

Operative EBIT increased 51% to

EUR 8.6 million (5.7)

• Organic growth

• ”Fit for Growth” savings

• Higher raw material prices

• Operative EBIT margin increased to 5.2% (3.5%)


Revenue 164.8 161.0 2 686.6



Cash flow* 0.0 6.8 - 39.2



6

Oil & Mining – Sales volumes grew in Oil & Gas in North America Revenue decreased 10% to

EUR 76 million (85)

• -4% impact related to exiting from low margin

products as communicated earlier (full impact of EUR

10 million will be realized by the end of 2013)

• Pressure on sales volumes due to market softness in

the mining industry globally

• Polymer sales volumes in Oil & Gas grew 8%

in North America

Operative EBIT decreased to


• Lower sales volumes and prices

• Higher propylene and ethylene based raw material

prices

• Operative EBIT margin was 6.7% (9.8%)


Revenue 76.3 85.1 -10 321.1

Operative EBIT 5.1 8.3 -39 25.9


Cash flow* -2.0 -18.7 - -5.3



7

ChemSolutions – operative EBIT margin improved to 14.5% (9.8%) Revenue increased 3% to

EUR 61 million (59)

• Organic growth 10%, sales volumes grew

in all the main product lines

• Divestment of food and pharmaceuticals

businesses had -7% impact

Operative EBIT increased 52% to


• Higher sales volumes

• Lower fixed costs


Revenue 60.7 58.9 3 227.6



Cash flow* 81.1 14.2 - 23.6



8

10% EBIT margin achieved in 2014 through ”Fit for Growth” restructuring

• ”Fit for Growth” cost savings impact was EUR 9 million in Q1 2013

(full run rate EUR 15 million per quarter)

• 85% of the cost savings measures related to ”Fit for Growth” under

implementation

EUR 60 million cost

savings

Restructuring charges

of EUR 85 million

1. Redundancies and leaner organization: EUR 30 million

2. Manufacturing network consolidation: EUR 21 million

3. Leaner operation: EUR 9 million

Reported between Q3 2012 – Q2 2013:

• EUR 45 million cash cost, mainly for severance payments,

EUR 43 million to date

• EUR 40 million, asset write-downs, EUR 30 million to date


9

From redesign

to expansion

10

Strategy sharpened in four key areas

4 3

2 1 We focus on

pulp & paper,

oil & gas, mining and

water treatment BUSINESS

INNOVATION GEOGRAPHY

GROWTH

We leverage mature

markets and expand

in selected emerging

markets

We target

above-the-market

growth

We invest in

innovation,

expertise

(knowledge) and

competencies

(behaviour)

From redesing to expansion | Wolfgang Büchele | April 23, 2013 |

Kemira: Where water

meets chemistry

Strategy: Kemira provides expertise and tailored

combinations of chemicals for water-intensive

industries. We innovate together with our customers

for sustainable solutions where water meets

chemistry.

We focus on pulp & paper, oil & gas, mining and water

treatment to best improve our customers’ water,

energy and raw material efficiency.

We drive to achieve above-the-market growth through

our competent people, high-performing organization,

product and service innovations, and a strengthened

presence in selected emerging markets.

Purpose: We enable our customers to improve their

water, energy and raw material efficiency

Vision: We provide the most valuable expertise and

chemicals for water-intensive industries

12

2013-2015

Focus

Kemira – From redesign to expansion

2017-2020

Expand

Become industry and technology leader in chosen target markets

2015-2017

Accelerate

Grow through new products & services and

expanding in emerging markets

Achieve a sustainable position

in all target markets

2012-2013

Redesign

Reach target profitability by

implementing “Fit for Growth”


13

New financial targets - outlook for 2013 unchanged

2013

Revenue (local currencies

and excl. divestments)

2014 2016

Operative EBIT

0%-5% growth vs 2012

increase >15% vs 2012

EBIT margin 10%

Revenue

EBITDA margin

Gearing

EUR 2.6 – 2.7 billion

15%

below 60%


14

1 | Focus on paper, oil & gas, mining and water treatment

Improving our

customers’ water,

energy and raw

material efficiency

Kemira in the value

chain of WQQM*

*Water Quality and Quantity Management


Expertise and tailored

combinations of

chemicals for water-

intensive industries

15

2 | Paper and Oil & Mining driving growth

Kemira’s relevant market (EUR 27 billion

in 2012) will grow to EUR 34 billion in

2020 (CAGR 3.3%)

Paper: Growing above market,

targeting wet-end chemistry

market leadership

O&M: Growing above market

M&I: Improving profitability,

maximizing cash

ChemSolutions: Maximizing cash

by a product driven business model

Source: Management estimation based on various sources

7,7 9,3

7,7 9,5

9,4

13,2

2,0

2,3

2012 2020 2012' 2020'

O&M Paper

2.4%

ChemSolutions M&I

4.3%

2.7%

1.8%


Business focus

16

Shifting focus to fast growing differentiated products

*) Mainly sodium percarbonate, colorants, acrylamide, inorganic salts and acids as well as caustic soda

Differentiated product lines Commodity product lines

%-of total

revenue

Polymers Sizing and

strength

Defoamers,

dispersants,

biocides and

other process

chemicals

Coagulants Bleaching

chemicals

Formic acid

and derivatives

Miscellaneous

commodity

products*

Paper 10% 20% 20% 5% 25% - 20%

M&I 20% - 5% 65% - - 10%

O&M 50% - 20% 5% - - 25%

Chem-

Solutions

- - - - - 80% 20%

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

*) Mainly sodium percarbonate, colorants, acrylamide, inorganic salts and acids as well as caustic soda


17

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

• Growth target substantially above the market

• Driven by innovation and expertise

• Higher margins due to higher value to the

customer

• Flexible manufacturing capabilities with

sufficient scale

• Higher barriers to entry (technology)

700

750

800

850

900

2010 2011 2012

Commodity products

• Targeting growth, but slightly lower than

the market

• Maximizing profitability and cash flow by

leveraging existing capacity

Revenue, EUR million

0

500

1000

1500

2010 2011 2012

EUR million

CAGR: +7%


18

Capital allocation focused on differentiated products and increased efficiency

• Payback time for new greenfield investments max. 7 years and max. 5 years for capacity additions for

existing products

• Focus on Paper in China

• Strengthening Oil & Mining market position in mature markets, South America, Middle East and Africa

6,0 % 5,0 %

2012 2016e

Capex split in average

2010-2012

Targeted capex split

2016

Capex-to-sales ratio

30 % 70 %

Commodity products

Differentiated products


65 % 35 %

19

3 | Leverage mature markets and expand selectively in emerging markets

Paper, M&I, O&M, ChemSolutions

O&M and Pulp

Paper (China and Indonesia)

Paper, O&M and M&I

O&M

(Middle East

and Africa)

• Innovation driven growth in mature markets

• Emerging market revenue expected to grow from 14% to 16% in 2016


20

Mature markets continue to stay important in all segments

1 253 1 233

2011 2012

EMEA (55% of total revenue) Revenue, EUR million

662 689

2011 2012

NAFTA (31% of total revenue) Revenue, EUR million

39% 40%

2011 2012

GM %

38% 40%

2011 2012

GM %


21

4 | Investing in innovation, technical expertise (knowledge) and competencies (behavior)

100 most innovative companies,

2011 by industry, %

7%

9%

11%

13%

14%

0% 5% 10% 15%

Telecommunicationequipment

Consumer products

Computer hardware

Chemicals

Semiconductors & electroniccomponents

Kemira innovation success stories

• Higher packaging quality with reduced raw

material consumption through Kemira’s

Fennobind and Fennobond

• Kemira’s friction reducers enable the

same amount of shale gas production with

less pumping horsepower involved

Source: Forbes

Aiming to become one of the most innovative companies in the world


22

Increasing R&D spend on differentiated products

• Targeting to double innovation driven

sales* from 5% in 2012 to ~10% of

total sales in 2016

• R&D expenses-to-sales for

differentiated products increasing to

over 4% (Kemira total 1.7% in 2012)

• 70% of the patent portfolio has

been renewed since 2008

*Sales from new products or existing products for new

applications launched within the previous 5 years


23

Delivering EUR 2.6 – 2.7 billion revenue with EBITDA margin of 15% in 2016

We will focus on

paper, oil & gas,

mining and water

treatment

We leverage mature

markets and expand

in selected emerging

markets

We target

above-the-market

growth

We invest in

innovation,

expertise and

competencies

4 3

2 1 BUSINESS


GROWTH


24

Petri Helsky, President | Paper segment

The market leader gets stronger

The market leader gets stronger | Petri Helsky | April 23, 2013 |

25

4 3

2 1

Targeting above-the-market growth in wet-end chemistry

The only global player

dedicated to pulp and

paper

Mature markets

remain important

– increasing focus on

China, Indonesia and

Brazil

Growing in packaging &

board and tissue – the most

attractive long-term

prospects

Improving customers’

raw material utilization,

end-product quality and

process efficiency

BUSINESS


GROWTH


26

Global leader in wet-end chemistry, with a strong position in pulp

#1 Paper & Pulp in EMEA

#2 Pulp in South America

#2 Paper in China

and Indonesia

#2 Paper & Pulp in NAFTA

• Innovation driven growth in mature markets (R&D hubs in EMEA and NA)

• Superior technical know how and local investments driving growth in China and

Indonesia (R&D hub in China)

• Strong position in pulp further supported by project specific investments

• Paper management relocating to Hong Kong as of September 1, 2013


27

1,5 1,7 1,9 2,0 2,1 2,2

0,9 1,0

1,1

1,8 2,0

2,3 1,5

1,6

1,8

2012 2016 2020 2012 2016 2020

Defoamers, biocides and other wet-end process chemicals

Demand for sizing and strength chemicals is growing fastest globally

Pulp and paper industry trends

increasing chemical demand:

• Increased use of recycled fibres

• Hardwood replacing softwood in virgin

pulp

• Lightweighting of packaging and

board grades

• Higher filler loads in graphic papers

• New digital printing methods

• Lower water / energy consumption

Market size, EUR billion (CAGR: 2.4%)

GAGR

Sizing and strength

Miscellaneous commodity chemicals

3.5%

2.0%

3.0%

1.3%

2.0%

Bleaching chemicals

Polymers


28

Differentiated products expected to grow substantially above the market

Differentiated products (sizing, strength and

wet-end process chemicals)

• Technology leader in sizing and strength

chemicals

• Backward integration in all relevant sizing

technologies (AKD, ASA, rosin)

• Broad know how and expertise in the application

of retention and water treatment chemicals

• Innovation partner for paper producers

Commodity products (mainly bleaching chemicals)

• Focus on key customers and pulp mills where

chemical supply is fully integrated

(Chemical island)

• Dedicated manufacturing facilities that operate at

capacity

380

410

440

470

500

2010 2011 2012


100

200

300

400

500

600

2010 2011 2012

Revenue*, EUR million

*) Including EUR -54 million impact of divestments

CAGR: +7%


29

Technology and market leader in paper wet-end chemistry

Electricity

Sodium chloride

(salt)

Crude tall oil

Cationic monomer

Acrylonitrile

Acrylic acid

Olefins

Fatty acids

Maleic anhydride

Sulfur

Tall oil rosin

AKD Wax

Isomerized olefins

Acrylamide

Sodium chlorate

Hydrogen

peroxide

Polymers

Defoamers

Coagulants

Biocides

Sizing

Strength Additives

Surface additives

Colorants

Sulfuric acid

Pulping

Bleaching

Retention

Wet-end process

control

WQQM

Sizing

Strength

Surface treatment

Coloring

Pulp

Packaging and

board

Printing and

writing

Tissue

All the major

global paper

and pulp

producers

Value chain part covered by Kemira

RAW

MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS

CUSTOMER

INDUSTRIES CUSTOMERS


30

Our innovations enable pulp & paper producers to improve operational efficiency and product quality

Targeting innovation driven sales of EUR 150

million in 2016

FennoBind (surface additive): Innovative alternative to

synthetic binders for cost savings, better printability and less

dependency on oil based chemistry

Fennoclean PFA: Chlorine and bromine free microbial

control program for tissue production

FennoBond: Reduced raw material spend by improving

performance of packaging material

…10,000

miles later

31

Targeting above-the-market growth in wet-end chemistry

The only global player

dedicated to pulp and

paper

Mature markets remain

important – increasing

focus on China,

Indonesia and Brazil

Growing in packaging &

board and tissue – the

most attractive long-term

prospects

Improving customers’

raw material utilization,

end-product quality and

process efficiency 4 3

2 1 BUSINESS


GROWTH


32

Randy Owens, President | Oil & Mining segment

A growing technology leader

A growing technology leader | Randy Owens | April 23, 2013 |

33

4 3

2 1

Targeting above-the-market growth

Extracting & Processing

Application knowledge

Declining reserves &

increasing water usage

Mature markets,

Middle East,

Africa and South America

Drilling, stimulation,

cementing (upstream)

Selected core ores

Organic growth supported

by selective M&A

investments

Shorten innovation cycle

to meet most urgent

customer challenges

Driving yield & process

efficiency

BUSINESS


GROWTH


34

Strong market growth across all product lines

• High oil price spurs demand for identifying

new sources

• Global growth of shale gas and wet shale

• Declining ore assays require improved

processing

• Increasing environmental pressure which

increases demand for waste water

treatment

3,1 3,6 4,3

2,0 2,4 2,9

4,3

5,1

6,1

2012 2016 2020 2012 2016 2020


Polymers Defoamers, biocides

and other process

chemicals

Miscellaneous

commodity

products


35

Application knowledge drives faster than market growth

• Proven track record of substantially

exceeding market growth

• Succesful transition from product

driven to applications driven

business model

• Innovation driving growth and

enabling entry to new applications • Fast entry into shale gas – leading

position in North America

• Expanding position in wet shale and

EOR

Differentiated product lines


150

170

190

210

230

250

2010 2011 2012

A growing technology leader | Randy Owens | April 23, 2013 | 35

CAGR: 9%

36

Focusing on the mature markets as well as fast growing Middle East, Africa and South America

EMEA EU, North Sea, Africa & Middle East Upstream and EOR* Copper, gold, nickel & iron ore

NAFTA US & Canada Upstream, EOR* and unconventional sources Iron ore & minerals

South America Brazil, Chile, Peru & Argentina Upstream, deep water and EOR* Iron ore, copper & gold

APAC Selective approach in China and Indonesia Upstream Copper & iron ore

Selected M&A to support growth


*Enhanced oil recovery

37

Acrylonitrile

Acrylic acid

Various monomers

Miscellaneous

specialty chemicals

and commodities

Acrylamide Polymers

Dispersants &

Antiscalants

Biocides

Emulsifiers

Defoamers

Coagulants

Formulations

Friction Reduction

Formation & Well

Scale Control

Asset integrity

Microbial Induced

Corrosion

Enhanced Oil

Recovery

Drilling muds

Concentrate

thickening

Mineral slurry

preservation

Mining processes

Scale Control

Pumpers

Oil & Gas operators

Service companies

Mine operators

Winning market share with competitive combination of innovation chemicals and application knowledge


RAW MATERIALS INTERMEDIATES APPLICATIONS CUSTOMERS PRODUCTS


38

KemGuard® Detectable Scale Inhibitor: Squeeze life optimization in North Sea operation providing: • cost reduction to operation

associated with re-squeezing • reduction of scale inhibitor required

KemFlow® Friction Reducer: Cost savings and reducing water use in hydraulic fracturing. • savings of EUR 1.2 million per well

in trucking & disposal costs • reduced the amount of fresh water

required at the site

KemPel™ Organic Binder: Lowers silica content in iron ore pellets • custom formulated to fit to

customer’s iron ore and pelletization process

• increased throughput achieved with lower silica and moisture in pellet

Targeting innovation driven sales of EUR 100 million in 2016

Stimulation & Production Tagged Antiscalants Biodegradable Antiscalants

Hydraulic fracturing High performance polymers for harsh conditions

Metals mining processing Polymers as pelletizing aids Polymers as rheology modifiers


39

Ongoing efficiency improvements safeguarding profitability

• Increasing plant utilization and timely

capacity expansion

• Increasing sales efficiency

(sales per person)

• Faster new product commercialization

• Simplify work processes and

organizational design

40

Capturing above-the-market growth as a growing technology leader

Extracting & Processing

Application knowledge

Declining reserves &

increasing water usage

Mature markets,

Middle East,

Africa and South America

Drilling, stimulation,

cementing (upstream)

Selected core ores

Organic growth supported

by selective M&A

investments

Shorten innovation cycle

to meet most urgent

customer challenges

Driving yield & process

efficiency


4 3

2 1 BUSINESS


GROWTH

41

Municipal & Industrial turnaround

Municipal & Industrial turnaround | Wolfgang Büchele | April 23, 2013 |

42

Continuous efficiency improvement in all segments is the key enabler for successful strategy implementation

Additional efficiency improvement measures

initiated to compensate for the cost inflation

• Municipal & Industrial turnaround (Wegener)

• Further optimization of production assets

(Löffelmann)

• Consolidation of European back-office functions

(Salminen, Löffelmann)

• Lean operation (Löffelmann)

– Stringent complexity reduction and adequate

management

10% EBIT margin

achieved through

”Fit for Growth”

EUR 60 million

savings

Kemira total fixed costs approximately 25% of revenue


43

Municipal & Industrial - improving profitability and maximizing cash

Broad and proven portfolio of

commodity products for basic

municipal and industrial water

treatment and sludge treatment

Ongoing structural profitability

improvement through

manufacturing footprint, customer

base and process optimization


44

Acrylonitrile Sulfuric acid Hydrochloric acid Aluminium hydrate Iron ore Pickling liquor Copperas

Acrylamide

Polymers (EPAM, DPAM) Al Coagulants Fe Coagulants Antiscalants Biocides Defoamers

Raw water treatment Wastewater treatment Sludge treatment Advanced water treatment

Direct sales Distributor/ reseller Service companies

Municipalities Private operators Industrial customers

Technology and market leader in raw and waste water as well as sludge treatment

• The only major supplier producing major water treatment chemicals, polymers and coagulants – thereby enabling

comprehensive application support

• Cost competitiveness through backward integration into virgin raw materials

• 60-70% of sourced raw materials are recycled utilizing waste streams from industrial producers, providing an

additional cost advantage

RAW

MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS

SALES

CHANNEL


CUSTOMER


45

Commodity product lines expected to grow, but slightly slower than the market

2,6 3,0 3,4

1,6 1,8 1,9

3,4 3,8

4,4

2012 2016 2020

9,2%

7,1% 6,2%

0

150

300

450

600

750

2010 2011 2012

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

• Legislation and regulatory enforcements determine required treated water and sludge quality standards

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


GAGR

Coagulants

Operative EBIT %

Antiscalants, biocides, defoamers, miscellaneous commodity chemicals

3.2%

2.8%

3.3%

M&I revenue and operative EBIT-% EUR million

Polymers

644

665 687


46

Q1 operative EBIT following typical seasonality pattern

During summer season coagulants demand is higher than during winter

Profitability turnaround aims to increase M&I cross-cycle operative EBIT-% to 10%

3,5%

6,9%

8,6%

3,6%

5,2%

Q112 Q212 Q312 Q412 Q113

M&I’s business seasonality (operative EBIT, %)

6,8%

5,3%

8,0%

5,0%

Q111 Q211 Q311 Q411


47

Additional cost savings measures have been initiated in line with M&I’s sharpened strategy

Targeted M&I operative EBIT-% with

“Fit for Growth”

Operative EBIT-% target for the M&I with

additional measures

9% Headcount reduction

Closure of 9 sites and 2 production plants,

1 site under review

Manufacturing cost and energy savings

Disposal of under performing businesses

(e.g India)

SKU reduction

>10% Enhanced customer-to-plant allocation

Fixed cost savings and continued site

network streamlining

Disposal of underperforming miscellaneous

product lines

R&D focus in–line with strategy

New service levels by customer segmentation

Sales to new applications (e.g membranes)

EUR 8 million of EUR 22 million

savings target achieved


48

2016

Revenue

EBITDA margin

Gearing

EUR 2.6 – 2.7 billion

15%

below 60%

Becoming industry and

technology leader in

chosen target markets in 2020

• Targeting above-the-market growth

• Maximizing cash flow generation with continuous

efficiency improvements

49

APPENDIX

Appendix | April 23, 2013 |

50

Good balance between sales and raw material prices

-150

-100

-50

0

50

100

150

200

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

2007 2008 2009 2010 2011 2012 2013

Brent oil, USD Sales price* Variable costs*

*) 12-month rolling change vs previous year, meur, excl. Tikkurila and Pigments

Kemira sales prices vs variable costs


51

Operative EBIT Q1 2013 vs Q1 2012

Q1 2012 Salesvolumes

Sales prices Variablecosts

Fixed costs Currencyimpact

Others, incl.acquisitions

anddivestments

Q1 2013

-6.1 6.2 -4.2 4.0 -1.0 4.7 42.2 38.6


52

”Fit for Growth” will improve EBIT by EUR 60 million in 2014

• Cost savings impact in operative

EBIT in Q1 2013 was EUR 9 million

– EUR 3 million impacted variable costs

– EUR 6 million impacted fixed costs

• Expected cost savings impact in

operative EBIT 2013 is EUR 50 million

• Expected cost savings impact in

operative EBIT 2014 EUR 60 million

”Fit for Growth” status Q1 2013, EUR million

50

60

10 9

0

10

20

30

40

50

60

70

Savings impact2012

Savings impact2013

Savings impact2014

Expected savings Realized savings


53

41

30

2 4 10

0

15

30

45

Severance payments andexternal services 2012

Asset write-downs 2012 Severance payments andexternal services 2013

Asset write-downs 2013

Realized restructuring charges Expected restructuring charges

”Fit for Growth” requires EUR 85 million in restructuring costs

• EUR 2 million booked in Q1 2013

– In 2012, restructuring charges amounted to EUR 71 million, of which EUR 41 million related to

severance payments and external services and EUR 30 million to asset write-downs

• Total non-recurring severance payments and external services

approximately EUR 45 million

• Total non-recurring asset write-downs approximately EUR 40 million

EUR million


54

Fixed costs are approximately 25% of revenues

• Fixed costs includes personnel

expenses, maintenance cost and leases

• Expected ”Fit for Growth” savings

EUR 50 million in 2013

• Efficiency improvements and operating

leverage compensating the annual cost

inflation of around 3%

• TOP 10* raw materials account for

45% of raw material spend

Kemira cost breakdown EUR million

0

250

500

750

1 000

1 250

1 500

1 750

2 000

2010 2011 2012

Raw materials Logistics Energy Fixed costs*) From 1 to 10: Acrylic Acid, Cationic monomer, Acrylonitrile, Fatty acid, Petroleum solvents, Propionic acid, Aluminium Hydrate, Sodium hydroxide, Sulphuric acid, Hydrochloric acid


55

Key ratios

• Net debt decreased due to EUR 178 million proceeds received from the divestments of food and

pharmaceuticals businesses and Kemira’s shares in JV Sachtleben

EUR million, except key ratios and personnel Mar, 31 2013 Dec, 31 2012

Capital employed* 1,596 1,673

ROCE, %* 2% 3%

Equity ratio, % at period-end 50% 51%

Gearing, % at period-end 30% 42%

Net debt 357 532

Number of personnel 4,662 4,857

*12-month rolling average (ROCE, % based on the reported EBIT)


56

Cash flow statement

EUR million Q1 2013 Q1 2012 FY 2012

Operative EBITDA 63.5 62.8 249.4

Change in net working capital -4.3 -42.6 -21.1

Cash flow from operations 40.3 10.4 176.3

Capital expenditure -29.0 -19.4 -134.1

Other investing activities 178.6 0.9 29.6

Cash flow after investing activities 189.9 -8.1 71.8


57

Creating shareholder value

• ”Fit for Growth” program

• New organization fosters growth in high margin businesses

• Strict cash flow management

• Leverage mature markets with existing strengths

• Well established position in US Oil and Gas markets, especially in shale gas

• Packaging and Board, as well as Tissue driving growth in Asia

• Excellent funding position

• Relevant financial assets

• M&A possible also short term, if profitability and synergy criteria are all met

• Strong focus on improving shareholder returns

• Stable dividend yield

Substantial earnings

improvement potential

Organic growth

Strong balance sheet


Where water meets chemistry™