Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q2 2012 Earnings Presentation
34 slides from Kemira Oyj's earnings presentation, Jul 26, 2012
Slide 1: Kemira January-June 2012
Kemira January-June 2012 Wolfgang Büchele, President & CEO July 26, 2012
Slide 2: Agenda
AGENDA Executive overview Outlook 2012 Interim report Q2 2012 2
Slide 3: Sales volumes and prices improved from Q1, fixed cost pressure continued
Sales volumes and prices improved from Q1, fixed cost pressure continued Revenue EUR 562.3 million (548.8 in Q2 2011), +2% - Currency exchange supported the growth Operative EBIT EUR 35.7 million (37.3), -4% - Operative EBIT margin 6.3% (6.8%) Earnings per share was EUR 0.20 (0.20) Evaluation proces
Slide 4: Kemira's water quality and quantity management business
Kemira’s water quality and quantity management business • WQQM revenue 78% of the total revenue YTD 2012 WQQM business: - 100% of M&I and O&M segment revenues - ~75% of Paper segment revenues Non-WQQM related business: - ~25% Paper segment revenues (e.g. certain bleaching chemicals) - ChemSolutions
Slide 5: Kemira is positioned well to address key global challenges
Kemira is positioned well to address key global challenges Growing concern Water scarcity Growing demand about the coupled with for energy, metals environment increasing and minerals usage Water quality and quantity management opportunities for Kemira Improved Efficiency in Renewable environmental i
Slide 6: Major water treatment innovations implemented and under development
Major water treatment innovations implemented and under development Desalination yield increase Microbe, Energy from scaling and sludge corrosion (e.g. biogas) control Water treatment innovations Membrane bioreactor Advanced process water reuse efficiency 6
Slide 7: Kemira is well established to grow through major oil, gas and mining innovations
Kemira is well established to grow through major oil, gas and mining innovations Kemira’s innovation focus is on advanced polymer technologies for: - Extraction from unconventional resources (e.g. shale, deep sea, oil sands) - Process yield improvement, energy reduction and water use efficiency (e.g
Slide 8: Three strategic priorities to achieve profitable growth
Three strategic priorities to achieve profitable growth Improve efficiency Simplicity Substantially grow and strengthen EBIT >10% position in the emerging markets Growth Further sharpen the strategy – above strengthen focus on WQQM* market average *Water quality and quantity management 8
Slide 9: Restructuring program "Fit for Growth" launched
Restructuring program “Fit for Growth” launched to return to growth and to improve the profitability • Reducing internal complexity by simplifying the organization structure in order to foster accelerated growth, innovation and application focus • Improving internal efficiency by reducing organizati
Slide 10: New organization structure to foster accelerated growth
New organization structure to foster accelerated growth • Four segments (the unit ”Other” will be abolished as of January 1, 2013) • New organization is supposed to be operational as of October 1, 2012 • External reporting in line with the new organization starts as of Jan 1, 2013 - Restated figures
Slide 11: New organization will accelerate the growth especially in the emerging markets
New organization will accelerate the growth especially in the emerging markets • Closer to the customer through regional focus: - Regional BU’s / BM’s within the segments, fully responsible and accountable for their business based on P&L responsibility • Application development and business developm
Slide 12: Profitability has developed in the wrong direction
Profitability has developed in the wrong direction • EUR 60 million cost savings targeted with the restructuring program ”Fit for Growth” • Possible reduction of up to 600 employees, of which approximately 250 in Finland • Restructuring charges affecting EBIT are estimated to be around EUR 85 millio
Slide 13: Fit for Growth – lean manufacturing network is essential
Fit for Growth – lean manufacturing network is essential • Provide value to the customer through a clearly defined value creation process • Avoid unnecessary additional resources, bureaucracy and time spent inefficiently • Respond to customer requirements with tailored offerings, high quality, value
Slide 14: Executive overview / Outlook 2012 / Interim report Q2 2012
Executive overview Outlook 2012 Interim report Q2 2012 14
Slide 15: Looking ahead to the second half of 2012
Looking ahead to the second half of 2012 Outlook for 2012 (unchanged from the Q1 Interim Report): • Kemira expects the revenue to be approximately at the same level as in 2011. -H1 2012 revenue: EUR 1,115 million (1,106), +1% • Operative EBIT is expected to be approximately at the same level as in 2
Slide 16: Kemira Capital Markets Day 2012
Kemira Capital Markets Day 2012 Tuesday 18 September 2012 in London, UK AGENDA 12.00 Lunch and registration 12.30-15.30 Presentations by the Kemira management 16.00-17.30 Small group meetings with Kemira management Three strategic priorities to achieve profitable growth Improve efficiency Simplicity
Slide 17: Executive overview / Outlook 2012 / Interim report Q2 2012
Executive overview Outlook 2012 Interim report Q2 2012 17
Slide 18: Kemira financial highlights – Q2 2012
Kemira financial highlights – Q2 2012 • Operative EBIT margin 6.3% (6.8%) impacted by higher variable and fixed costs • Cash flow affected negatively by higher capex and too high NWC • A total of EUR 40 million dividends and paid-in-capital received from Pohjolan Voima and JV Sachtleben • Sale of Ti
Slide 19: Kemira Group revenue growth trend
Kemira Group revenue growth trend Q2/12 vs Q2/11: • Pricing was favourable, but volumes declined slightly in each segment - Volumes increased vs. Q1-12; especially in M&I and Paper • Reported revenue growth supported by favorable currency exchange (+3%) • Maitland divestment had a negative impact on
Slide 20: Good balance between sales and raw material prices
Good balance between sales and raw material prices Kemira’s largest product categories and most important raw materials: Polymers - petrochemical derivatives like acrylonitrile, acrylic acid and cationic monomer Electrolysis products - electricity Coagulants - hydrochloric acid, sulfuric acid and al
Slide 21: Kemira operative EBIT Q2 2012 vs Q2 2011
Kemira operative EBIT Q2 2012 vs Q2 2011 21
Slide 22: Kemira key figures
Kemira key figures • Key ratios at a reasonably good level • Net debt increase due to derived from dividend paid, higher capex and too high NWC • Headcount increase mainly in the APAC region EUR million, except key ratios and personnel June, 30 Dec, 31 2012 2011 Capital employed* 1,722.4 1,705.0 ROC
Slide 23: Kemira cash flow statement
Kemira cash flow statement • Cash flow 41 MEUR lower than in Q2 2011 • NWC increase coming from inventories and trade receivables • Investments mainly focused on emerging markets in China • Sale of Tikkurila shares had EUR 97 million positive impact in Q2 2011 EUR million Q2 2012 Q2 2011 EBITDA 57.6
Slide 24: Paper segment - stable revenue and operative EBIT
Paper segment - stable revenue and operative EBIT Revenue increased by 3% vs. Q2/2011 • Higher sales prices • Some sales volume recovery Operative EBIT EUR 20.3 million (20.0) • Higher sales prices offset lower sales volumes • Higher variable and fixed costs • Margin 8.1% (8.3%) (EUR million) Q2/12
Slide 25: Pulp and paper chemicals will stay in the core of Kemira's business
Pulp and paper chemicals will stay in the core of Kemira’s business *excluding divestments 25
Slide 26: Municipal & Industrial segment - profitability improved
Municipal & Industrial segment - profitability improved Revenue increased 4% to EUR 173.7 million (166.6) • Higher sales prices • Sales volumes were close to the level of Q2 2011 Operative EBIT EUR 12.7 million (10.9) • Sales prices could offset higher variable and fixed costs • Operative EBIT margi
Slide 27: M&I, cost efficiency and optimizing the manufacturing network
M&I, cost efficiency and optimizing the manufacturing network • Stable topline growth despite the difficult financial situation in some core regions • Continuous focus on cost efficiency • Nearly 50 coagulant manufacturing sites 27
Slide 28: Oil & Mining segment, stable revenue, profitability improved
Oil & Mining segment, stable revenue, profitability improved Revenue remained stable at EUR 84.5 million (84.8) • -6% impact related to some exited low margin products • +6% currency exchange • Low natural gas price in North America and market softness slowed down demand for some of our key products
Slide 29: Oil & Mining – delivering profitable growth
Oil & Mining – delivering 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 11 million exited sales in January-June 2012 • Continued investments to increase capacity a
Slide 30: 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, Chemicals & Pharma, De-icers) • Revenue EUR 44.2 million (43.7) in Q2 2012 • Operative EBIT-% decreased to 0.7% (8.7%) in
Slide 31: ChemSolutions – new segment in 2013
ChemSolutions – new segment in 2013 • Stable sales volumes in Food & Feed and Chemicals & Pharma • De-icers for airport runways is seasonal business • 2011 and H1 2012 operative EBIT margin affected by higher raw material prices 31
Slide 32: Kemira in a process of evaluating strategic options for the JV Sachtleben
Kemira in a process of evaluating strategic options for the JV Sachtleben • Kemira (39% ownership in the JV) and the majority owner Rockwood have retained the investment bank Lazard as their financial advisor to advise on strategic options, including a potential sale or listing of their Joint Ventur
Slide 33: Appendix
APPENDIX 33
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