Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — FY2002 Earnings Presentation
45 slides from Kemira Oyj's earnings presentation, Feb 11, 2003
Slide 1: Kemira Result 2002
Kemira Result 2002 11 February 2003 Welcome!
Slide 2: Growth Strategy
Growth Strategy World-scale leaders Leading in Europe High with a strong Baltic Pulp & rim base Paper Paints and Kemwater Chemicals Coatings Growth ambitions World-scale performers Industrial GrowHow Chemicals Low Average High Competitiveness 2
Slide 3: Growth Strategy – Dimensions of Growth
Growth Strategy Dimensions of Growth Serving Global Leveraging the Growth Customers Potential in Europe Leading Innnovations in Demanding Technologies 3
Slide 4: Growth Strategy – Innovation and New Technologies
Growth Strategy – Innovation and New Technologies Competence Centres – core technology Operative and long- platforms enhancing synergies range R & D focusing into businesses Water Quality Wood Fibre Line Management Formic acid derivatives as Recycling biologically benign Nutrients, Chemicals, Fibre
Slide 5: Pulp & Paper Chemicals – Growth through Partnerships
Pulp & Paper Chemicals – Growth through Partnerships Global number 6 as paper chemical Mergers & acquisitions supplier 1000 Acquistions Net sales € mill. Complete solutions from pulping to 800 paper 600 Strong synergies between 400 geographical areas 200 Application development driven by 0 customer
Slide 6: Pulp and Paper Chemicals Industry
Pulp and Paper Chemicals Industry Global market for pulp and paper chemicals est. 13.5 B€ Bleaching chemicals 3.0 B€ Major suppliers chloride dioxide, oxygen, ozone, peroxide, Hercules 900 M$ dithionite BASF 780 M€ Process chemicals 2.8 Eka Chemicals 750 M€ alum, retention, deposit control, ONDEO Na
Slide 7: Kemwater – Growth Potential in Chemical Water Purification
Kemwater – Growth Potential in Chemical Water Purification World leader in coagulants 400 Mergers & acquisitions Acquisition based growth and Net sales, € mill. 300 stable profitability 200 Local/regional business based on low cost raw material 100 sourcing and logistics 0 Differentiated products/se
Slide 8: Kemwater Strategy
Kemwater Strategy Geographical expansion in Americas/Asia Mergers & Market restructuring acquisitions Product Cost and service efficiency differentiation Recycled raw materials Sludge management Production technology Service concepts Overall manufacturing structure Complete water sol
Slide 9: Coagulant Consumption
Coagulant Consumption Pohjakartta /Geodata Oy, lupa N:o 1164 /2000 18 kg / person 5.5 kg / person 2.5 kg / person 5 kg / person 1.5 kg / person Total market 10 million tonnes € 1.5 billion 9
Slide 10: Paints and Coatings – Growth Based on Strong Baltic Rim Presence
Paints and Coatings – Growth Based on Strong Baltic Rim Presence Decorative paints ~70 % Mergers & Coatings ~30 % of sales 1000 acquisitions Net sales, € mill. (coatings: metal and coil coating, wood 800 finishes) 600 Biggest decorative paint company 400 in Nordic countries 200 Target to become a le
Slide 11: Paint Consumption in Europe
Paint Consumption in Europe Population, Million People Pohjakartta /Geodata Oy, lupa N:o 1164 /2000 <20 l / person <10 l / person 59 5 145 64 < 5 l / person 7 26 5 10 17 Western European 83 39 market € 16 billion 16 48 60 11 22 31 16 15 58 8 67 50 11 Source: Industry sources 11
Slide 12: Industrial Chemicals – Growth through Innovation and Excellent Business Practices
Industrial Chemicals – Growth through Innovation and Excellent Business Practices Benefits from Kemira’s 800 Mergers & acquisitions Net sales, € mill. synergistic competencies 600 Platform for organic growth 400 with high profitability and 200 strong cash-flow Differentiation into specialty 0
Slide 13: Industrial Chemicals Market Segments
Industrial Chemicals Market Segments Business Service offer Market segment Position unit Calcium Dust binding Road maintenance Leading in De-icing Europe Chloride Drilling fluids Oil fields De-humidifiers Different industrial areas Chemidet Bleaching agents Detergent industry Among top three percarb
Slide 14: GrowHow – the Partner in Food Chain
GrowHow – the Partner in Food Chain Balanced portfolio with differentiated products All crop nutrients and 1500 integrated services Net sales, € mill. 1200 Animal nutrients 900 Process chemicals 600 Specialty products 300 Excellence in all 0 operations Net sales 2002 Organic growth Sales by area 200
Slide 15: World Grain Stocks Drive Fertilizer Demand
World Grain Stocks Drive Fertilizer Demand World wheat stocks vs. price Long term fertilizer 39 demand growth 180 37 World population 160 continues to grow 35 140 Decreasing arable 33 USD/t 120 land/capita % 31 100 Dietary changes 29 80 Fertilizer demand and 27 60 prices historically 25 40 correlate
Slide 16: Highlights 2002
Highlights 2002 Sales € 2 612 million, growth 6% Operating income € 45 million (€ 144 million), € 123 million excluding € 78 million impairment loss in GrowHow EPS € 0.07 (€ 0.58), € 0.61 excluding impairment loss Equity / share € 8.94 (€ 9.35 end 2001) Cash flow from operations / share € 2.45 (€ 1.
Slide 17: Kemira Group 2002
Kemira Group 2002 100 2002 80 2001 € million Chemicals 60 39 % GrowHow 43 % 40 20 0 GrowHow*) Other Chemicals Coatings Paints & 2% Paints & Coatings 16 % Net sales 2002: € 2 612 m Operating income 2002: € 123 m*) *) excluding € 78 m impairment loss 17
Slide 18: Capital Expenditure – Source of Growth
Capital Expenditure – Source of Growth Other Acquisitions 2% Specialty paper chemicals company GrowHow (Vinings) in North America 29 % Kynoch Feeds feed phosphate company in South Africa Akzo Nobel Coatings´ Nordic general industrial liquid coatings activities Organic growth Pulp & Paper Chemicals:
Slide 19: Chemicals
Chemicals Net sales Operating income Net sales % 1 000 120 14 100 12 800 10 80 € million 600 € million 8 60 400 6 40 4 200 20 2 0 0 0 97 98 99 00 01 02 97 98 99 00 01 02 Q1 Q2 Q3 Q4 19
Slide 20: Chemicals
Chemicals Pulp & Industrial Pulp & Paper Chemicals Paper Industrial Chemicals Chemicals 36% Chemicals 38 % 47% 44 % Kemwater Kemwater 18 % 17% Net sales 2001: € 901 m Net sales 2002: € 1 058 m 20
Slide 21: Pulp & Paper Chemicals
Pulp & Paper Chemicals Sales 41% over 2001, Sulphur operating income better than chemicals Bleaching previous year chemicals Strong growth in specialty paper chemicals due to North American acquisition; integration proceeding well Pulp and paper production still on a low level Bleaching chemicals su
Slide 22: Kemwater
Kemwater Sales growth 7% over 2001 Operating income close to previous year Strongest growth in Central and Southern Europe New joint venture Akvab in Sweden for complete bio-chemical solutions in water treatment Kemwater (Yixing) Co. Ltd in China entirely to Kemira´s ownership St. Petersburg project
Slide 23: Industrial Chemicals
Industrial Chemicals Sales up by 1%, operating income below previous year TiO2 volumes up by 3%, prices down by Fine 10%; end year 2001-2002 prices on par Chemicals TiO2 suffered from strike and maintenance/ expansion shutdown; Chemidet capacity increase gives possibility for additional sales of € 2
Slide 24: Paints and Coatings
Paints and Coatings Net sales Operating income 500 50 % 14 400 40 10 30 300 € million € million 20 6 200 10 2 0 100 -2 -10 0 -20 -6 97 98 99 00 01 02 97 98 99 00 01 02 Q1 Q2 Q3 Q4 24
Slide 25: Paints and Coatings
Paints and Coatings Deco 71% of sales Sales 3% over 2001 Sales developing favourably in main markets Synergies of integration of Alcro-Beckers showing in operating income Restructuring of operations continued Coatings 29% of sales Sales 3% below 2001 Sales decreased in the Netherlands and U.K. Growt
Slide 26: GrowHow
GrowHow Net sales Operating income *) % 100 1 200 80 10 1 000 60 € million 800 € million 40 6 600 400 20 2 200 0 0 -20 -2 97 98 99 00 01 02 97 98 99 00 01 02 Q1 Q2 Q3 Q4 *) excluding € 78 m impairment loss in 2002 26
Slide 27: GrowHow
GrowHow Food Chain Food Chain Partner Partner 26% 28% Agro Agro Nitrogen Nitrogen 38 % 42 % Specialty Specialty Crop Care Crop Care 11% 15% Intermediates Intermediates Animal 11% Animal 12% Nutrition Nutrition 7% 10% Net sales 2001: € 1 158 m Net sales 2002: € 1 165 m 27
Slide 28: GrowHow
GrowHow Specialty fertilizer volumes up by 10%, especially in Baltics and overseas exports, prices down by 5%, partly offset by low ammonia prices Nitrogen fertilizer prices down by more than 10%, volumes up by 8% Nitric acid plant relocation completed in Tertre, Belgium Potassium nitrate and feed p
Slide 29: Kemira Group
Kemira Group Net sales Operating income *) 2800 200 % 9 180 2400 160 7 2000 140 5 € million 1600 120 € million 3 100 1200 80 1 800 60 -1 40 400 20 -3 0 0 -5 97 98 99 00 01 02 97 98 99 00 01 02 Q1 Q2 Q3 Q4 *) excluding € 78 m impairment loss in 2002 29
Slide 30: Net Debt and Gearing
Net Debt 1 050 100 900 80 750 Gearing % 60 € million 600 450 40 300 20 150 0 0 97 98 99 00 01 02 30
Slide 31: Net Financing Expenses
Net Financing Expenses 60 7 50 6 Average interest rate 5 40 € million 4 30 3 20 2 10 1 0 0 97 98 99 00 01 02 Q1 Q2 Q3 Q4 Average interest rate 31
Slide 32: Cash Flow
Cash Flow 550 450 350 € million 250 150 50 -50 -150 97 98 99 00 01 02 Cash flow from operations Cash flow after investments and disposals 32
Slide 33: Net Income and CFROI
Net Income and CFROI 120 16 14 100 12 80 10 € million CFROI % 60 8 6 40 4 20 2 0 0 97 98 99 00 01 02 Net income and EPS excluding non-recurring items EPS 0.81 0.61 0.53 0.73 0.58 0.61 CFPS 2.00 0.96 1.41 1.69 1.03 2.45 33
Slide 34: Valuation / Ownership
Valuation / Ownership Market capitalisation / equity Ownership 31 January 2003 1500 Finnish instit. Public 1200 28.9 % 6.8 % 900 € million Kemira 3.4 % 600 Int. instit. 4.7 % 300 Finnish State 0 95 96 97 98 99 00 01 02 56.2 % Equity / share € 8.94 State’s minimum ownership 15% Option programme
Slide 35: Outlook for the Year 2003
Outlook for the Year 2003 Pulp & Paper Chemicals Continue to be influenced by weak demand U.S. acquisition provides further opportunities Despite the challenging industry outlook, operating income is expected to improve Kemwater Developing favourably, profitability is expected to continue on a good
Slide 36: Outlook for the Year 2003
Outlook for the Year 2003 Paints and Coatings Demand for paints remains good Synergies from combining Alcro-Beckers and Tikkurila continue to improve the result Operating income is expected to be higher than last year due to synergies and growing demand in Russia and Baltics Industrial Chemicals Out
Slide 37: Outlook for the Year 2003
Outlook for the Year 2003 GrowHow Uncertainty due to high energy and freight costs World grain stocks on exceptionally low level, prices increasing Restructuring of European fertilizer industry likely to continue New fertilizer season started with lower prices Operating income expected to be somewha
Slide 38: New Visual Identity
New Visual Identity New logotype New reporting structure in 2003 Pulp & Paper Chemicals Kemwater Paints and Coatings Industrial Chemicals GrowHow 38
Slide 39: Change of the Visual Identity
CHANGE OF THE VISUAL IDENTITY
Slide 40: New Visual Identity
NEW VISUAL IDENTITY KEMIRA TO BUILD NEW VISUAL IDENTITY new logo will be used by Kemira Group together with Pulp&Paper Chemicals, Kemwater and Industrial Chemicals AGRO CHANGES ITS NAME TO KEMIRA GROWHOW GrowHow to build a visual identity of its own PAINTS AND COATINGS TO CONTINUE WITH CURRENT VISUA
Slide 41: Objectives for the Change
OBJECTIVES FOR THE CHANGE RECOGNITION AMONG CUSTOMERS better recognition among customers visual identity built to serve different customer segments INCREASE IN EFFICIENCY use of current logotypes and symbols will be discontinued graphic guidelines will be part of new electronic material bank 41
Slide 42: Current Visual Identity
CURRENT VISUAL IDENTITY Formics™ 42
Slide 43: Objectives for 2004
OBJECTIVES FOR 2004 Kemira EZutow partnership « knowledge « solutions Beckers Y _ <&) TIKKURILA (AN — Kemira 43
Slide 44: Change of Visual Identity
CHANGE OF VISUAL IDENTITY CHANGE PERIOD STARTS 11th FEBRUARY 2003 simultaneous launch for Kemira and Kemira GrowHow introduction covering the whole Kemira Group CHANGE PERIOD UNTIL END OF 2003 pragmatic and practical way of changing the logotype new logo taken gradually in use as new material ordere
Slide 45: Kemira Result 2002 – Thank you
Kemira Result 2002 11 February 2003 Thank you