Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q1 2012 Earnings Presentation
34 slides from Kemira Oyj's earnings presentation, Apr 24, 2012
Slide 1: Kemira January-March 2012
Kemira January-March 2012 Wolfgang Büchele, President & CEO April 24, 2012
Slide 2: Agenda
AGENDA Executive overview Interim report Q1 2012 Outlook 2012 2
Slide 3: Kemira strengthens focus on water quality and quantity management
Kemira strengthens focus on water quality and quantity management Unique strategy in the chemical industry Kemira employees have determined vision who the company wants to be Three strategic priorities: Improve the efficiency Substantially strengthen the position in the emerging markets Further
Slide 4: Efficiency improvement is vital
Efficiency improvement is vital • Accelerated mode to reach EBIT 10% financial target • Reduced business complexity • Profitable growth 4
Slide 5: Substantially strengthen the position in emerging markets
Substantially strengthen the position in emerging markets Kemira 2011 Water Chemicals markets 2015 6% 7% 33% APAC, 37% APAC, 6% 37% SA, 7% SA, 7% 57% 30% NA, 23% NAFTA, 30% EMEA, 57% 23% EMEA, 33% 7% Kemira revenue: EUR 2,207 million Total value: EUR 28 billion Source: McIlvaine 2010 5
Slide 6: Substantially strengthen the position in emerging markets
Substantially strengthen the position in emerging markets • Expanding water technology knowledge and adding resources • Two new manufacturing plants to China and India during 2012 • R&D center in Brazil opened in 2011 • Kemira Water School in Asia and South America to build key water-application com
Slide 7: Kemira has leading market positions in main target markets
Kemira has leading market positions in main target markets Competitive advantages: • Profound understanding of water intensive processes • Knowhow to minimize the use of water, energy and other resources in our customers’ production processes EUR 8 billion market Sustainable extraction of natural re
Slide 8: Paper - biomass based packaging is a growing trend
Paper - biomass based packaging is a growing trend • Strength chemicals improve quality and characteristics of biomass based products • Enables use of lower grade, or multiple times recycled, fibres as raw material • Paper segments repositioning has started Paper segment revenue* split and operative
Slide 9: Oil & Mining – fast and profitable growth
Oil & Mining – fast and profitable growth • Revenue growth in new water applications - In 2011 revenue growth was 17% excluding exited sales • Portfolio rebalancing by exiting low-margin product sales - EUR 6 million exited sales in Q1 2012 • Continued investments to increase capacity and add resour
Slide 10: Municipal & Industrial – focus on cost efficiency
Municipal & Industrial – focus on cost efficiency • Stable topline growth • Variable costs have increased since Q2 2010 • Fixed costs increased by EUR 4 million in Q1 2012 vs Q1 2011 EUR million 10
Slide 11: Kemira is market leader in municipal water treatment
Kemira is market leader* in municipal water treatment • Focus on optimizing the manufacturing network Europe North America Germany Spain South America Asia India Coagulant prod. facility Exited sites 2006-2011 Planned new production *Market share based on Kemira management estimate 11
Slide 12: ChemSolutions – valuable business
ChemSolutions – valuable business • Stable sales volumes in Food & Feed and Chemical & Pharma • De-icers for airport runways is seasonal business • 2011 and Q1 2012 operative EBIT margin affected by higher raw material prices ChemSolutions revenue split and operative EBIT, % EUR million 12
Slide 13: Interim report Q1 2012
Executive overview Interim report Q1 2012 Outlook 2012 13
Slide 14: Q1 2012, stable revenue, higher fixed costs
Q1 2012, stable revenue, higher fixed costs Revenue EUR 552.9 million (556.8) Operative EBIT EUR 38.2 million (44.9) • Higher maintenance and other fixed costs • Operative EBIT margin 6.9% (8.1%) Finance expenses EUR 10.3 million (3.8) • Changes in fair values of electricity derivatives had EUR 4.6
Slide 15: Kemira Group revenue growth trend
Kemira Group revenue growth trend Q1/12 vs Q1/11: • -1% volume + price • +1% currency exchange • -1% divestments Growth, % Volume and price Currency Acquisitions Divestments 15
Slide 16: Pricing and raw material cost management has improved
Pricing and raw material cost management has improved MEUR *12-month rolling change vs previous year Excl. Tikkurila and Pigments 16
Slide 17: Kemira operative EBIT Q1 2012 vs Q1 2011
Kemira operative EBIT Q1 2012 vs Q1 2011 Higher sales prices offset lower sales volumes and higher variable costs Higher maintenance and EUR million 10.9 -10.4 other fixed costs 44.9 -6.0 0.5 -1.7 38.2 17
Slide 18: Kemira EPS EUR 0.19 (0.24)
Kemira EPS EUR 0.19 (0.24)* EUR JV Sachtleben Decreased 0.24 -0.06 profits 0.02 -0.04 0.03 0.19 Fair value of changes in open derivatives and currency exchange *Earnings per share = Net profit attributable to the equity holders of the parent / 152 029 897 shares 18
Slide 19: Paper segment, continuous improvement
Paper segment, continuous improvement Revenue decreased by 3% vs. Q1/2011 • Higher sales prices • Lower sales in Pulp customer segment • Maitland divestment in November 2011, negative impact EUR 4 million Operative EBIT EUR 21.0 million (22.7) • Higher sales prices offset lower sales volumes • Highe
Slide 20: Municipal & Industrial segment, revenue growth could not offset higher costs
Municipal & Industrial segment, revenue growth could not offset higher costs Revenue increased 2% to EUR 161.0 million (157.8) • Higher sales prices offset lower sales volumes Operative EBIT EUR 6.1 million (11.6) • Higher maintenance and other fixed costs • Operative EBIT margin 3.8% (7.4%) (EUR mi
Slide 21: Oil & Mining segment, profitable growth continued
Oil & Mining segment, profitable growth continued Revenue increased 2% to EUR 85.1 million (83.7) • +8% increase, excluding the impact related to some exited low margin products • Favorable pricing • Higher sales volumes to water treatment in oil & gas industries Operative EBIT increased close to 30
Slide 22: Other (ChemSolutions and Group expenses)
Other (ChemSolutions and Group expenses) ChemSolutions has an important role in Kemira’s business portfolio • Strong market position in each of its three businesses (Food & Feed, Chemical & Pharma, De-icers) • Revenue EUR 49.2 million (49.5) in Q1 2012 • Operative EBIT-% decreased to 11.6% (16.8%) i
Slide 23: Kemira key figures
Kemira key figures EUR million, except key ratios and personnel Mar, 31 Dec, 31 2012 2011 Capital employed* 1,717.0 1,705.0 ROCE, %* 10.7% 11.1% Equity ratio, % at period-end 52% 51% Gearing, % at period-end 45% 38% Net debt 593.5 515.8 Personnel 5,051 5,006 • Net debt increased due to dividend paym
Slide 24: Kemira cash flow statement
Kemira cash flow statement EUR million Q1 2012 Q1 2011 EBITDA 61.8 68.4 Change in net working capital -42.6 -23.3 Cash flow from operations 10.4 34.0 Capital expenditure (net) -18.5 -13.3 Cash flow after investing activities -8.1 20.7 • Lower EBITDA • Higher inventories and lower payables • Increase
Slide 25: Outlook 2012
Executive overview Interim report Q1 2012 Outlook 2012 25
Slide 26: Outlook in 2012
Outlook in 2012 • In 2012, Kemira expects the revenue and operative EBIT to be approximately at the same level than in 2011. • Outlook assumes that no major macroeconomic disruption and/or further substantial increase in oil price would occur. 26
Slide 27: Appendix
APPENDIX 27
Slide 28: Four years of water strategy implementation
Four years of water strategy implementation Oras Invest became the biggest owner in 2007 2007 New water chemistry strategy Restructuring started in Kemira Customer focused organisation established 2008 • New segment Oil & Mining New management JV Sachtleben in titanium dioxide business 2009 EUR 200
Slide 29: Water strategy generating growth
Water strategy generating growth • Water business 78% of the total revenue in 2011 • Average annual growth has been 9% since 2008 Share of total revenue* Water business MEUR 78% 72% 58% 52% *FY08, FY09 and FY10 including Tikkurila and Pigments 29
Slide 30: Kemira's mid-term target is to reach 10% EBIT margin
Kemira’s mid-term target is to reach 10% EBIT margin Drivers to improve the profitability: • New revenue through SWEET* and localized presence in emerging markets • Advanced sales pricing and better raw material cost management • Energy efficiency, EUR 10 million savings targeted for 2012 • 200 proj
Slide 31: Optimized manufacturing network to serve customer industries
Optimized manufacturing network to serve customer industries Kemira has 74 sites in total 25 closed sites between 2006-2011 Polymers Common process chemicals and Paper wet-end chemicals Bleaching Planned new production Exited sites 2006-2011 31
Slide 32: Cost efficiency through by-product raw materials
Cost efficiency through by-product raw materials In Europe share of by-product materials is 60% after ongoing investments • Cost efficiency • Entry barrier to competition Other recovery Savings in waste handling and regeneration Industrial producer Spent acid as e.g. Steel by-product Coagulant marke
Slide 33: Profitable growth through new products and applications
Profitable growth through new products and applications New sales over EUR 40 million in 2011 One of Kemira’s most important differentiation factors SWEET is the enabler • More than 100 invention disclosures and 40 patent filings in 2011 • 1/3 of the Kemira patent portfolio has been renewed since 20
Slide 34: Strengthened financial position enables improving dividend yield
Strengthened financial position enables improving dividend yield EUR Yield-% *In addition in March, 86% of Tikkurila shares were distributed as dividend to Kemira shareholders (Tikkurila market capitalization was EUR 600 million after its listing) 34