Frost & Sullivan Lauds Kemira Chemicals for Strong Growth in the Mature North American Pulp and Paper Chemicals Market

Business Wire, July 14, 2008

PALO ALTO, Calif. -- Based on its recent analysis of the pulp and paper chemicals market, Frost & Sullivan recognizes Kemira Chemicals, Inc. with the 2008 North American Market Share Advancement of the Year Award for its outstanding ability to grow in a mature market.

Kemira's pulp and paper business unit is the world's leading supplier of pulp and paper chemicals, offering unique and customized solutions and products throughout the pulp and paper industry's value chain.

"The North American pulp and paper chemicals market is mature, and manufacturers are facing challenges of higher raw material and energy costs, and rising freight costs along with a decline in paper demand," says Frost & Sullivan Research Analyst Easwaran S.A. "In such a challenging environment, it requires a great effort for pulp and paper chemicals manufacturers to record strong double-digit sales growth."

Highly focused on growth, Kemira adopted several strategies that translated into outstanding sales. Kemira's Pulp and Paper business recorded global net sales of EUR 1,018.0 million in 2007, an increase of 2.5 percent from 2006. Kemira generated revenues of EUR 993.0 million in 2006, an increase of 39 percent from 2005. North America was the second largest market after Europe, with revenues of EUR 367 million in 2006, an increase of 51 percent from 2005.

This remarkable growth is attributed to the various mergers and acquisitions made by Kemira in 2005 and 2006, which have also made the company the second largest supplier of pulp and paper chemicals in the North American region. For instance, the acquisition of Lanxess Paper Chemicals in 2006 broadened Kemira's product portfolio to include colorants, fluorescent whitening agents, and sizing agents, also making it the largest supplier in the global market.

The acquisition of Bayer AG's agency business in 2006 improved Kemira's global sales and marketing network while gaining Finnish Chemicals in 2005 made Kemira the only supplier of full-range products to the pulp bleaching process.

"These acquisitions are also helping Kemira expand its global footprint to high-growth regions - South America for its pulp industry, China for its paper industry, and Japan," notes Easwaran. "Already, most of the global top ten pulp and paper producers are major customers of Kemira."

Kemira has started its full-fledged R&D center in Shanghai, China in the late autumn of 2007, which will further strengthen its market position in Asia. The company is building a chlorine dioxide (prime bleaching chemical) unit near Cellulosa Argentina pulp mills in Argentina, and production is expected to begin in 2008.

The effective focus on R&D is Kemira's key strength in supporting and maintaining a broad range of chemicals for the pulp and paper industry. In 2007, Kemira employed 730 professionals across its global R&D units. The total spending of the company in R&D was EUR 65.9 million (2.3% of revenue) in 2007. The company is looking to introduce more products in the future - across various segments in all business areas. In 2006, Kemira's new products accounted for 27 percent of its revenues.

"Strengthening internal synergies has been effective in helping Kemira achieve better profitability and stronger competitive advantage," adds Easwaran. "For example, Kemira's pulp and paper unit effectively coordinates with Kemira Water to offer customized solutions in order to provide an effective water treatment system for the pulp manufacturing."

Kemira's superior customer service policy too has been crucial in retaining existing customers and making new ones. The company offers complete solutions for its pulp and paper clients, paying close heed to their requirements and helping them reduce operational costs and increase profitability.

For its outstanding growth in a challenging market, Kemira is the worthy recipient of the 2008 Frost & Sullivan Market Share Advancement Award in the North American pulp and paper chemicals market.

Each year, Frost & Sullivan presents this Award to the company that has demonstrated excellence in increasing market share within its industry. The Award lauds strategic superiority in product innovation, marketing, and sales strategies that result in the largest gain in market share over the past year.

Frost & Sullivan Best Practices Awards recognize companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry.

About Kemira

Kemira will be a focused company, the best in water and fiber management chemistry.

In 2007, Kemira recorded revenue of approximately EUR 2.8 billion and had a staff of 10,000. Kemira operates in 40 countries.

Kemira Pulp&Paper

Leading global expert in pulp and paper chemistry, its energy and cost-efficient solutions spanning the pulp and paper industry's value chain from pulp to coating paper.