Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q4 2011 Earnings Presentation
26 slides from Kemira Oyj's earnings presentation, Feb 8, 2012
Slide 1: Growth in water chemistry business in 2011
Growth in water chemistry business in 2011 Harri Kerminen, President & CEO February 8, 2012
Slide 2: Disclaimer
DISCLAIMER This 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 a
Slide 3: Agenda
AGENDA Year 2011 in brief Q4 2011 highlights Strategy implementation priorities Outlook 2012 3
Slide 4: Stable financial performance in 2011
Stable financial performance in 2011 Revenue was EUR 2,207.2 million (2,160.9) • Water business grew 6% • Currency exchange and divestments -3% EBIT was EUR 158.3 million (156.3) • Kemira managed to nearly compensate EUR 88 million higher variable costs • Currency exchange and divestments EUR -6 mil
Slide 5: Operational highlights in 2011
Operational highlights in 2011 Paper • Water business especially to Packaging & Board and Tissues developed well • Increased sales prices compensated higher raw material and energy costs Municipal & Industrial • Raw material cost position will improve through investments on industrial by- product ut
Slide 6: Kemira's segments financial performance in 2011
Kemira’s segments financial performance in 2011 Paper FY2011 FY2010 • Sales prices and volumes increased, divestments had a negative impact Revenue 973.3 984.3 • Higher variable costs were more than Operative EBIT 75.4 75.6 offset by higher sales prices and volumes Municipal & Industrial FY2011 FY20
Slide 7: 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 90% 1 750 78% 80% 1 700 72% 70% 1 650 58% 60% 1 600 52% 50% 1 550 40% 1 500 30% 1 450 20% 1 400 10% 1 350 0% 1 300 2008 2009 2
Slide 8: Pricing and raw material cost management has improved
Pricing and raw material cost management has improved In 2011, higher sales prices and volumes nearly compensated EUR 88 million higher variable costs MEUR 200 150 100 50 0 -50 Q4/2007 Q1/2008 Q2/2008 Q3/2008 Q4/2008 Q1/2009 Q2/2009 Q3/2009 Q4/2009 Q1/2010 Q2/2010 Q3/2010 Q4/2010 Q1/2011 Q2/2011 Q3/
Slide 9: 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 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 • Productivity
Slide 10: Strong balance sheet and cash flow supporting future growth
Strong balance sheet and cash flow supporting future growth M€ Sale of Tikkurila shares had EUR 97 million positive effect on cash flow Purchase of PVO power company shares had EUR -103 million impact on cash flow 10
Slide 11: Strengthened financial position enables improving dividend yield
Strengthened financial position enables improving dividend yield • Board of Directors proposes EUR 0.53 (0.48) dividend to shareholders at the AGM • Dividend amounts to EUR 81 million, 60% of the operative net profit EUR Yield -% 11
Slide 12: Highlights of Q4/2011
Highlights of Q4/2011 Water is the connection Kemifa
Slide 13: Q4 2011, Stable performance despite tough market conditions
Q4 2011, Stable performance despite tough market conditions Revenue was EUR 543.3 million (546.6) in Q4 2011 • Higher sales prices • Lower sales in Pulp customer segment • De-icing season was weak due to the mild weather conditions Operative EBIT EUR 34.3 million (40.2) • Sales prices more than comp
Slide 14: Kemira operative EBIT Q4 2011 vs Q4 2010
Kemira operative EBIT Q4 2011 vs Q4 2010 MEUR 12.0 -24.4 40.2 6.7 0.1 -0.3 34.3 14
Slide 15: Paper segment, cash flow increased 35% vs Q4 2010
Paper segment, cash flow increased 35% vs Q4 2010 Revenue decreased by 4% vs. Q4/2010 • Higher sales prices • Lower sales in Pulp customer segment • Maitland divestment in November Operative EBIT EUR 14.2 million (21.6) • Sales prices offset lower sales volumes • Higher energy and raw material price
Slide 16: Municipal & Industrial segment, stable revenue and strong cash flow
Municipal & Industrial segment, stable revenue and strong cash flow Revenue was EUR 166.6 million (167.5) • Higher sales prices • Lower sales volumes in municipal water treatment Operative EBIT EUR 9.0 million (12.2) • Sales price increases compensated the higher variable costs • Lower sales volumes
Slide 17: Oil & Mining segment, profitable growth continued
Oil & Mining segment, profitable growth continued Revenue increased 10% to EUR 80.0 million (72.6) • Higher sales volumes to downstream water treatment in oil & gas industries • Good growth in emerging markets in minerals and metals businesses Operative EBIT increased by 31% • Higher sales • Lower f
Slide 18: Other (ChemSolutions and Group expenses)
Other (ChemSolutions and Group expenses) ChemSolutions has an important role in Kemira’s business portfolio • Revenue EUR 184 million in 2011 • Very good EBIT-% and strong cash flow generator • Growth in emerging markets and new products • Assets at high utilization • Strong market position in each
Slide 19: Strategy implementation priorities
Strategy implementation priorities - Strengthening position in key water-intensive industries - Optimizing business portfolio value - Technology renewal - Growth in BRIC markets
Slide 20: Kemira has leading market positions in main target markets
Kemira has leading market positions in main target markets Oil & Mining: EUR 8 billion market • Role of water continuously rising • #1-4 market position* Sustainable extraction of natural resources Water and energy Efficient and efficiency Clean water – advanced processing cities, industries, of bio
Slide 21: 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 21
Slide 22: Kemira is market leader in municipal water treatment
Kemira is market leader* in municipal water treatment 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 22
Slide 23: Technology renewal – SWEET is the key enabler
Technology renewal – SWEET is the key enabler • New sales generated in 2011, examples: • Novel Antiscalants • Next generation Biocides • Desalination • More than 100 invention disclosures and 40 patent filings in 2011 • 1/3 of the Kemira patent portfolio has been renewed since 2008 • Strategic partn
Slide 24: Growth in BRIC markets (Brazil, Russia, India and China)
Growth in BRIC markets (Brazil, Russia, India and China) • 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 comp
Slide 25: Outlook in 2012
Outlook in 2012 Water is the connection Kemifa
Slide 26: Outlook in 2012
Outlook in 2012 • In the near term, uncertainty in Europe and a slowdown in global economic growth may affect the demand for our products in the customer industries. • In 2012, Kemira expects the revenue and operative EBIT to be slightly higher than in 2011. 26