Improving profitability in Municipal & Industrial - Kemira

Improving profitability in Municipal & IndustrialHannu VirolainenPresident, Municipal & Industrial

Municipal & Industrial segmentCustomersFinancialsMunicipal drinking and waste water treatment plants,industrial waste and process water plants2011 revenue EUR 665 millionMarket positionMarketsProduct range#1 in coagulants and#3 in flocculants worldwideKemira’s accessible market size is EUR 26 billion, of whichEUR 7.5 billion* is relevant for Kemira’s M&I segmentMain products coagulants and flocculants (polymers)Water linkReliable water treatment for municipalities and industries.Coping with challenges like water scarcity, cost andquality as well as stricter regulations for discharges.*Management estimateHannu Virolainen 2

Raw and waste water applications are the core forboth, municipal and industrial customer segments• Water treatment is a stable business with sustainable long-term outlook• General demand continues to grow as a result of basic need for watercombined with stricter regulations within the water sectorCustomer segments Key applications Product linesMunicipal ~60%Industrial ~40%Raw water treatment ~45%Waste water treatment ~45%Sludge treatment ~10%Coagulants ~60%Polymers ~40%Municipal & Industrial revenue EUR 665 million in 2011Hannu Virolainen3

Well positioned for conventional water treatmenttechnologies with basic chemicalsAccessible market by product line 2011 (B€)7.5B€ in totalMiscellaneouschemicals1.7Polymers2.6Market position #3Market share ~5%Currently limitedmarket shareAntiscalants,Biocides,Defoamers1.7Coagulants1.6Market position #1Market share ~26%Hannu VirolainenSource: Combines information from various sources: McIlvaine 2011, Frost & Sullivan 2011,PPG 2011, SRI 2010, Booz&Company, and management estimation.4

”Fit for Growth” driving profitability turnaround• “Fit for Growth” savings expected to exceed EUR 20 million for M&I• Consolidating coagulant manufacturing network; site / plant closuresin EMEA and NAFTA• Finalizing investments to increase coagulant manufacturing competitiveness• Simplifying structure in all areas including organization,customer base, product lines and SKUs*EUR million700600500400300200100010.9 %9.2 %7.1 %5.6 %FY 2009 FY 2010 FY 2011 YTD 201212%11%10%9%8%7%6%5%4%3%2%RevenueOperative EBIT*Stock-keeping unitHannu Virolainen5

Consolidate and invest to increase competitivenessDetailed plan to consolidate the manufacturing network:• Minimizing manufacturing and logistic cost through footprint optimization• Access to key raw materials and by-products determines feasible plant locations• Invest in selected sites to ensure long term competitiveness• Several sites under reviewEuropeM&I segment has 45 sitesGermanyCoagulantsSpainSouthAmericaAsiaIndiaNew production sitesunder constructionHannu Virolainen6

Increase efficiency by reducing complexity andfocus resources on key profit contributorsFocusresourcesStreamline, develop channel partnersor exit*) Stock-keeping unitHannu Virolainen 7

Growth driven by R&D in new water treatment technologies• Focus R&D efforts into product lines with high market growth – driven bynew water treatment technologies• Industrialization and sludge de-watering drive growth for Polymer products• Antiscalants, Biocides and Defoamers are the fastest growing product linesAccessible market by product line 2011-2020 (B€)20117.5bn€202010.0bn€MiscellaneousMiscellaneouschemicalschemicals1.7 Polymers2.2 Polymers2.63.4Antiscalants,Biocides,Defoamers1.7Coagulants1.6Antiscalants,Biocides,Defoamers2.2Coagulants1.9Hannu VirolainenSource: Combines information from various sources: McIlvaine 2011, Frost & Sullivan 2011,PPG 2011, SRI 2010, Booz&Company, and management estimation.8

Generating growth on stable core business, largecustomer base and R&DGeographical initiatives• Market entry to India coagulants• Localized product sourcing in China• Resourcing for growth especially in APACEUR millionExample: EMEA Industrial growth basedon R&D and application business*Product lines and applications• Reinforcing strong coagulant position through selected investments in maturemarkets, including finalization of green field investments in Germany and Spain• Polymer product line competitiveness and product development• Formulation and application capability development for new water treatmenttechnologies in China, MEA and NAFTAR&D programme• Projects for membrane technologies, desalination, water reuse and advancedwater treatment*2012 annualized H1 revenueHannu Virolainen 9

Improving fitness for growth• Growth to be achieved through strong market positionand existing R&D programs• In line with the average Kemira accessible marketgrowth of 3.3%• Cost savings from ”Fit for Growth” measures isexpected to exceed EUR 20 million in Municipal &Industrial by 2014Hannu Virolainen10

DISCLAIMERThis 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-lookingstatements 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 inthe future. Future results may vary from the results expressed in, or implied by, the forward-looking statements contained in this presentation, possibly to a materialdegree. All forward-looking statements made in this presentation are based on information presently available to management and Kemira Oyj assumes no obligationto update any forward-looking statements, unless obligated to do so under applicable law or regulation.11