Kemira Continues Strong Growth Lasse Kurkilahti, President

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Kemira Continues Strong GrowthLasse
Kurkilahti, President CEOJune 2006
Investor Relations Päivi Antola, tel. [phone]
21140
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Contents

• Strategy
• Strategies of the Business Areas
• Q1 Group Highlights

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• Strategy

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Business Areas
Pulp Paper Chemicals
Performance Chemicals
Paints Coatings
Water Treatment Chemicals
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Revenue 2005, Pro Forma EUR 2.5 Billion
Including Lanxess paper chemicals, Kraski Teks,
Finnish Chemicals and Verdugt for the whole year
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Goal

• A global group of leading chemicals businesses
  with unique positions and high mutual synergy
• Great profitability, continuous improvement
• Continuous growth organic and through MA
• Participative, entrepreneurial company culture
• ? More ambition, more dynamics

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Kemira - 1 in the World
Management estimates
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Building Blocks

• Divestments
• - Biolchim (2006)
• - Coil coating (2005)
• - UK industrial coatings business (2004)
• - GrowHow (2004)
• - Fine Chemicals (2004)
• - Calcium Chloride business (2004)
• - Ecocat (2004)
• - Kemira Engineering (2004)
• - Polargas (2003)

Acquisitions Pulp Paper Chemicals Lanxess
paper chemicals (2006) Finnish Chemicals
(2005) E.QU.I.P (2004) Rhodia (2003)
Vulcan (2003) Kemwater Eaglebrook (2004)
Zlotniki (2004) Belinka (2004) Kemiron
(2003) Performance Chemicals IFAC (2006)
Verdugt (2005) Paints Coatings Kraski Teks
(2006) Kolorit paints (2004)
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Opportunities for Improved Profitability

• Streamlining the production network
• Professional attitude towards customers and
  suppliers
• Economies of scale, utilizing the leading
  position
• Internal synergies to use
• New Sales Ratio up
• Idle / low productive capital out
• ? World class internal efficiency

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Opportunities for Growth

• Organic growth
• Extended sales
• New products
• Opportunity 5 / year
• Mergers and acquisitions

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Opportunities within the Business Areas

• Pulp Paper Chemicals
• Implementing consolidation in selected areas
• Efficiency programs
• Global market EUR 20 billion, growth 700 MEUR/a
• Performance Chemicals
• Applications
• Customer orientation
• Global niche market EUR 1.4 billion, growth 100
  MEUR/a

• Kemwater
• Implement coagulant strategy with more speed
• Widen the product portfolio
• Global target market EUR 8 billion, growth 600
  MEUR/a
• Paints Coatings
• Eastern Europe
• Geographical target market EUR 4 billion, growth
  250 MEUR/a

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MA Activities Continue

• Strategic fit
• Must increase EPS from year one
• Significant synergies
• Long-term gearing below 100
• Financed with
• Cash / debt
• Share issues
• Divestment of non-core businesses

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Research Development
RD expenditure breakdown in 2005

• Total spend 2.2 of revenue
• Varies between BAs and SBUs
• New sales ratio 20
• RD personnel 650
• Co-operation with universities and research
  institutes

Customer-oriented product development and
service 39
Business-specific research projects 37
Group-wide research projects 24
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New Sales Ratio
? New ? NA ? Old
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Financial Benchmarks

• Earnings / share
• Continuous improvement
• Growth organic and through MA
• Cash flow after capital expenditure (excl.
  acquisitions)
• Positive
• Return on capital employed
• gt 20 Great
• 15 - 20 Good
• 10 - 15 Acceptable
• lt 10 Not acceptable
• ? Basis for incentive systems

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Shareholder Value
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Kemira from Good to Great
Operational Efficiency Strategy
Culture
Brand
We have a strong, participative and
entrepreneurial culture. We create it through
an open dialogue.
We are regarded as the leading expert in
chemical solutions. The strong brand
increases our competitiveness.
All our actions lead towards World Class
Operational Efficiency. Our strategy is unique,
sharp and clear. Our work is based on our
strategy every day.
Everyone can influence their work and get
rewarded for good performance. People enjoy
their work at Kemira.

• Brand Promises
• Reliable
• Cooperative
• Responsible
• Proactive

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• Strategies of the Business Areas

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Pulp Paper Chemicals

• No 1 pulp paper chemicals supplier in the world
• Revenue 2005, pro forma 1,050 MEUR (incl.
  Lanxess paper chemicals Finnish Chemicals for
  the whole year)
• Good market position
• Globally No 1
• Europe No 2
• North America No 2
• Nordic No 1

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Kemiras Pulp and Paper Chemicals Offering
Paper making
Coating
Pulping Bleaching
Hydrogen Peroxide Sodium Chlorate
Chlorine Dioxide Sodium Borohydride
Caustic Sulphur Products Peracetic
Acid Bleaching Additives Defoamers
Deposit Control Water Treatment
Retention Deposit Control
Defoamers Water Treatment Deinking
Sizing Wet Dry Strength Optical
Brighteners Colourants
Calcium Sulphate Titanium Dioxide
Dispersing Agents Deposit Control
Bleaching Chemicals Specialty Chemicals Pigments
Additives
Lanxess contribution Complementing /
Strengthening
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Pulp and Paper Chemicals Market is Growing
Total Market EUR 20 billion

BleachingGrowth 2/a
CoatingGrowth 4/a
EUR 5.5 billion
EUR 7.7 billion

• Kemiras share
• Bleaching 8
• Specialty 8
• Coating lt1

EUR 6.8 billion
Specialty ChemicalsGrowth 5/a
Management estimates
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Fragmented Market Giving Opportunities for Growth
Company

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Pulp Paper Chemicals
Revenue
EBIT ROCE
MEUR


MEUR
The figures are not fully comparable.
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Kemwater

• The leading global supplier of coagulation
  chemicals to municipal waterworks solutions for
  industrial waste water and sludge treatment
• Revenue 2005 353 MEUR
• Leading market position
• (coagulants)
• Global No 1
• North America No 1
• Europe No 1
• Nordic No 1

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Coagulant Consumption
Scandinavia 18 kg/p
Russia 1,5 kg/p
North America 5 kg/p
Europe 5,3kg/p
Asia 1,4 kg/p
Mid East 0,7 kg/p
Central America 1,5 kg/p
Africa 0,6 kg/p
South America 1,5 kg/p
Australia1,4 kg/p
Kilos/Person
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Differentiation Drivers / Total Business Potential

• RD focus (Disinfection, Odourand toxic
  removal)
• Polymers/specialities

• SNF
• Buchman
• Cytec
• Degussa

Marketing leverage
EUR 2 billionGrowth rate 5/a

• Sludge management (organic)

Coagulants(organic/acquisitions)
Package deals
EUR 2 billionGrowth rate 8/a
Raw materials/metals Package deals
EUR 2 billionGrowth rate 4/a

• Industrial outsourcing (organic/acquisitions)

• Ondeo
• Veolia
• Remondis

EUR 2 billionGrowth rate 15/a
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Main Coagulant Players
Europe
North America
(Management estimates)
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Kemwater
MEUR
Revenue

EBIT ROCE
MEUR

Q4/04 excluding extra write-downs and costs of 11
MEUR.
The figures are not fully comparable.
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Performance Chemicals

• Leading position in growing specialty chemicals
  markets
• Revenue 2005 408 MEUR
• Good market position
• TiO2 Pigments Leading producer of TiO2 for
  printing inks
• ChemSolutions No 1 globally in selected customer
  segments
• Chemidet No 3 globally

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Global Market Potential
Kemiras position
Market size
Growth/a

• TiO2 Pigments 7,000 MEUR GDP 7
• TiO2 pigments for printing ink 200 MEUR 2-5 1
• FDC (Food, Drugs, Cosmetics,
• UV-Titan) 200 MEUR 2-10 2-3
• ChemSolutions
• Organic Salts 150 MEUR 2-3 1
• Organic Derivatives 20 MEUR 3-10 1
• Acidifiers Preservatives 150 MEUR 5-10 1
• Formic Acid 250 MEUR 3-4 2
• Chemidet
• Detergent bleaching solutions 300 MEUR 0-10 3
• (sodium percarbonate)

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ChemSolutionsSegments and Market Positions
Management estimates
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Performance Chemicals
Revenue
EBIT ROCE
MEUR
MEUR

Net sales
Continuing operations
The figures are not fully comparable.
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Paints Coatings

• Leading player in North and East Europe with
  strong local brands (Tikkurila, Alcro, Beckers,
  Vivacolor, Teks, etc.)
• Revenue 2005 458 MEUR
• Leading market positions
• in decorative paints
• Finland No 1
• Sweden No 1
• Baltic No 1
• Poland No 3
• Russia No 1

and industrial paints
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Paint Consumption andPaints Coatings
Production Sites
5

• 20 lt liters/person
• 10 lt liters/person
• 5 lt liters/person
• Production site

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Growing Decorative Paint Market in Russia
Brands by price segment
Tikkurila, Akzo Nobel, Caparol, ICI
Top
Düfa, Finncolor
Yaroslavskie Kraski, Empils, Teks, Cherkessk,
Zagorsky, Pigment, Odilak, Kotovsky, Raduga
Medium
Low
Source Management estimates

• Significant growth potential in Russia
• Population of 145 million people
• Decorative paint consumption lt 4 litres per
  capita (over 15 litres in Scandinavia)
• Total size of the Russian paint market
  approximately 450 million litres

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Paints Coatings Market Position in Decorative
Paints
Management estimates
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Paints Coatings
Revenue
EBIT ROCE
MEUR
MEUR

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• Q1 Group Highlights

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Strong Growth Continues

• Revenue up 37
• Organic growth 11
• Acquisitions 26 / EUR 105 million
• Finnish Chemicals
• Verdugt
• Kraski Teks
• EPS up 40
• Continuous improvement of performance and
  efficiency
• Increases in raw material and energy prices were
  for a large part passed on into selling prices

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Growth Boosted by Acquisitions
Organic growth
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Revenue up 37
MEUR
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Revenue Development 2002-2006
Q1/2006 552.9 MEUR, 37 (Q1/2005 403.7 MEUR)
MEUR
Continuing operations
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EBIT up 50
MEUR
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EBIT Development 2002-2006
MEUR
Continuing operations. Excluding a write-down of
78 MEUR in Q4/02
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EPS by QuarterROCE

EUR
Continuing operations excluding a non-recurring
charge of 44.2 MEUR in Q4/04. Q4/02 exludes a
write-down of 78 MEUR.
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Shareholders 28 April 2006
(29 April 2005)
Minimum state ownership 15
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Outlook for 2006 Kemira Group

• Kemira Groups growth is expected to continue
  strongly during Q2
• Organic growth
• Acquisitions of Lanxess and Kraski Teks
• Raw material and energy prices are projected to
  remain high, putting pressure on business
  profitability
• Kemiras revenue, EBIT and EPS for 2006 are
  expected to increase from 2005 levels

All forward-looking statements in this report are
based on the managements present expectations
and beliefs about future events, and the actual
results may differ materially from the
expectations and beliefs contained in the
forward-looking statements.
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