Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q3 2007 Earnings Presentation
38 slides from Kemira Oyj's earnings presentation, Oct 31, 2007
Slide 1: Interim Report January-September 2007
Interim Report January-September 2007 Lasse Kurkilahti, President & CEO IR: Andreas Langhoff, tel +358 10 862 1140 October 31, 2007 1
Slide 2: Contents
Contents Appointment in Kemira Management Kemira Group – Q3 Highlights Business Areas – Q3 Highlights Outlook 2
Slide 3: Harri Kerminen – new President and CEO of Kemira
Harri Kerminen – new President and CEO of Kemira Harri Kerminen has been appointed President and CEO of Kemira as of 1.1.2008 with a 5-year contract until 2013 Lasse Kurkilahti will work as a Senior Advisor during Q1 / 2008 Sparring partner to Chairman of the Board, Pekka Paasikivi and CEO H
Slide 4: Harri Kerminen - new President and CEO of Kemira
Harri Kerminen - new President and CEO of Kemira Harri Kerminen b. 1951, M.Sc. (Eng.), MBA CEO of Kemira Group as of January 1, 2008 President of BA Kemira Pulp&Paper since 2006 President of BA Performance Chemicals 2000-2006 Vice President HR of Kemira Chemicals Oy 1996–2000 Manager o
Slide 5: Improved performance in Q3 2007
Improved performance in Q3 2007 Revenue EUR 729.5 (652.6) million, +12% Organic growth in local currencies +1% Operating profit*, EUR 65.8 (59.0) million, +12% Operating profit-%*, 9.0% (9.0%) Earnings per share EUR 0.43 (0.37), +16% * Excluding non-recurring items 5
Slide 6: Key Figures for Q3 and Q1-Q3
Key Figures for Q3 and Q1-Q3 (MEUR) Q3/07 Q3/06 Ch-% Q1-Q3/07 Q1-Q3/06 Ch-% Revenue 729.5 652.6 +12 2,155.8 1,853.0 +16 Operating profit 79.5 75.1 +6 186.0 172.1 +8 Operating profit, % 10.9 11.5 8.6 9.3 Operating profit, excl. non- 65.8 59.0 +12 170.5 141.9 +20 recurring items Operating profit, %, e
Slide 7: Revenue up 12% in Q3
Revenue up 12% in Q3 MEUR 800 83 750 -6 -12 729 700 17 3 650 653 -9 600 647 550 553 500 450 400 2006 Price Volume Currency Acquisitions Divestments Other 2007 7
Slide 8: Revenue Development and Capital turnover 2003-2007
Revenue Development and Capital turnover 2003-2007 Q3/07: 729.5 MEUR, +12% (Q3/06: 652.6 MEUR) MEUR 3000 2 2400 1,5 1800 1 1200 0,5 600 0 0 04* 03 05 06 07 Q1 Q2 Q3 Q4 Capital turnover *Continuing operations 8
Slide 9: Operating profit up 6% in Q3
Operating profit up 6% in Q3 Operating profit, excluding non-recurring items, EUR 66 (59) million, +12% MEUR 100 17 -1 -2 -9 -4 5 -1 -2 2 80 75 80 60 40 20 0 s s e 07 06 s s t e er y en m n st ic st m nc th 20 20 tio Pr ite co co lu m re O Vo i st is ur g le d e in u xe b C iv cq ria rr Fi D cu A
Slide 10: Operating profit by Quarter
Operating profit by Quarter Q3/07: 79.5 MEUR, +6% (Q3/06: 75.1 MEUR) MEUR 12 200 10 150 8 6% 100 4 50 2 0 0 04* 06** 03 05 07 EBIT % * 2004 Continuing operations ** Q4/06 restated 10
Slide 11: EPS by Quarter
EPS by Quarter EUR % 1 14 0,9 12 0,8 0,7 10 0,6 8 0,5 6 0,4 0,3 4 0,2 2 0,1 0 0 06** 04* 03 05 07 * Continuing operations excluding a non-recurring ROCE, 12-month rolling average charge of 44.2 MEUR in Q4/04. ** Q4/06 restated 11
Slide 12: Balance Sheet
Balance Sheet 30 Sep 07 30 Sep 06 Change Net debt (MEUR) 998.9 712.6 40% Equity (MEUR) 1,134.6 1,086.5 4% Equity ratio, % 39 42 Gearing, % 88 66 Capital employed (MEUR) 2,018.6 1,832.8 10% Personnel 10,048 9,119 10% 12
Slide 13: Cash Flows
Cash Flows MEUR Q1-Q3/07 Q1-Q3/06 Funds from operations 212.8 153.5 Change in net working capital -98.9 -45.4 Cash flows from operations 113.9 108.1 Acquisitions -47.2 -108.1 CapEx excl. acquisitions -178.7 -96.8 Sale of assets -11.4* 64.2 Cash flows from investing activities -237.3 -140.7 Free cash
Slide 14: CapEx excluding Acquisitions
CapEx exluding Acquisitions CapEx in Q1-Q3/07: 178.7 MEUR (96.8) Investment in chemical plant in Uruguay 32.9 MEUR Investment in paint factory in Sweden 11.7 MEUR Group IT investment 15.9 MEUR Environmental investment in Pori 11.2 MEUR Depreciation in Q1-Q3/07: 99.5 MEUR (89.9) Maintenance I
Slide 15: Personnel
Personnel Personnel 30 September 2007: 10,048 (30 September 2006: 9,119) Asia Other 6% 5% Russia Pulp&Paper Americas (8 %) (3 %) 17 % 23 % 16 % (16 %) (25 %) (15 %) Eastern Europe Coatings 11 % 39 % (12 %) (39 %) Water 22 % (17 %) Europe Specialty 10 % 62 % (11 %) (66 %) 15
Slide 16: Shareholders October 16, 2007
Shareholders October 16, 2007 (September 30, 2006) Oras Invest group International 17.1% (0) Institutions 21.5% (18.6) Finnish State 16.5% (48.7) Other Finnish Institutions Varma 18.5% (17.9) Pension Households Insurance 8.4% (8.5) 9.6% (1.7) Ilmarinen Kemira Pension 3.1% (3.2) Insurance 5.3% (1.4
Slide 17: Business Areas
Business Areas Kemifa
Slide 18: Non-recurring items
Non-recurring items MEUR Q3/07 Q3/06 Q1-Q3/07 Q1-Q3/06 2006 Kemira Pulp&Paper 1.2 3.0 2.5 10.6 11.0 Kemira Water - - - 0.3 -0.2 Kemira Specialty 1.3 - 1.3 2.1 3.6 Kemira Coatings 11.2 13.1 11.2 16.4 16.4 Other - - 0.5 0.8 -7.6 Kemira Group 13.7 16.1 15.5 30.2 23.2 18
Slide 19: Operating profit, excluding non-recurring items
Operating profit, excluding non-recurring items MEUR Q3/07 Q3/06 Ch-% Q1-Q3/07 Q1-Q3/06 Ch-% Kemira Pulp&Paper 22.4 21.3 +5 67.5 60.1 +12 Kemira Water 14.9 9.0 +66 39.8 24.7 +61 Kemira Specialty 8.7 11.7 -26 26.1 32.6 -20 Kemira Coatings 27.7 25.9 +7 67.8 57.2 +19 Other -7.9 -8.9 +11 -30.7 -32.7 +6
Slide 20: Operating profit-%, excluding non-recurring items
Operating profit-%, excluding non-recurring items % Q3/07 Q3/06 Q1-Q3/07 Q1-Q3/06 2006 Kemira Pulp&Paper 8.8 8.1 8.8 8.2 8.0 Kemira Water 7.9 8.8 7.3 8.3 7.6 Kemira Specialty 7.9 10.4 8.1 9.6 9.3 Kemira Coatings 15.2 15.7 13.4 12.6 9.9 Kemira Group 9.0 9.0 7.9 7.7 6.8 20
Slide 21: Kemira Pulp&Paper
Kemira Pulp&Paper Kemira 21
Slide 22: Pulp&Paper in Q3
Kemira Pulp&Paper in Q3 Revenue down 3%, impacted by weak USD exchange rate Exchange rates had a 2% negative impact on revenue Divestment of the South Korean hydrogen peroxide business in 2006 Stoppages at pulp mills in Finland and disturbances in raw material supply in Maitland Operating
Slide 23: Pulp&Paper revenue and EBIT charts
Kemira Pulp&Paper Revenue & Capital turnover EBIT & ROCE MEUR MEUR % 100 20 1200 2 90 1000 80 15 1,5 70 800 60 600 1 50 10 40 400 30 0,5 5 20 200 10 0 0 0 0 03 04 05 06 07 04* 03 05 06 07 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE The figures are not fully comparable. 23
Slide 24: Pulp&Paper's Outlook
Kemira Pulp&Paper’s Outlook Revenue for 2007 is anticipated to grow from previous year level Good operating rates expected in customer industry Acquisition of Lanxess New products and solutions EBIT expected to increase Successful integration of acquired companies bringing synergies Im
Slide 25: Kemira Water
Kemira Water Kemira —_ 25
Slide 26: Water in Q3
Kemira Water in Q3 Revenue up 84%, Organic growth 11% in local currencies Foreign exchange rates had a 3% negative impact on revenue Operating profit up 66%, ROCE 11.9% (14.2%) Cytec water treatment chemicals included for the first time Integration of Cytec water treatment chemicals progre
Slide 27: Water revenue and EBIT charts
Kemira Water Revenue & Capital turnover EBIT & ROCE MEUR MEUR % 600 2 50 20 500 40 1,5 15 400 30 300 1 10 20 200 0,5 5 10 100 0 0 0 0 04* 03 05 06 07 03 04 05 06 07 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE The figures are not fully comparable. Q4/04 excluding extra write-downs and costs of 11 MEUR.
Slide 28: Water's Outlook
Kemira Water’s Outlook Revenue expected to increase from previous year level Acquisitions Demand for water treatment chemicals expected to remain at a good level Operating profit expected to increase Focus on integration of acquired companies and development of new products 28
Slide 29: Kemira Specialty
Kemira Specialty Kemira LFLAAS ES | \ ee
Slide 30: Specialty in Q3
Kemira Specialty in Q3 Revenue impacted by weak USD Exchange rates depressed sales by 1% Tough competition in TiO2 continued Stoppage in formic acid production due to expansion of production line Operating profit down to 10.0 MEUR from 11.7 MEUR Including 1.3 MEUR non-recurring items L
Slide 31: Specialty revenue and EBIT charts
Kemira Specialty Revenue & Capital turnover EBIT & ROCE MEUR MEUR % 500 2 50 20 400 40 1,5 15 300 30 1 10 200 20 0,5 5 100 10 0 0 0 0 03 05 06 07 04* 04* 03 05 06 07 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE The figures are not fully comparable. *Continuing operations 31
Slide 32: Specialty's Outlook
Kemira Specialty’s Outlook Revenue and EBIT expected to be below their 2006 levels Competition expected to remain tough in Ti02 Development in US housing markets Weak dollar giving competitive edge to US producers in Europe Euro prices to be lower than a year ago The evaluation of strate
Slide 33: Kemira Coatings
Kemira Coatings Kemira
Slide 34: Coatings in Q3
Kemira Coatings in Q3 Revenue up 11% Organic growth 8% Good sales development in all market areas continued Operating profit, excl. non-recurring items EUR 27.7 (25.9) million, +7%, Operating profit-%, excl. non-recurring items 15.2% (15.7%) Good sales performance ROCE 25.8% (26.9%)
Slide 35: Coatings revenue and EBIT charts
Kemira Coatings Revenue & Capital turnover EBIT & ROCE MEUR MEUR % 600 2 80 28 70 ------ 24 500 1,5 60 20 400 50 16 40 ------ 300 1 12 30 ------ 8 200 20 0,5 10 4 100 0 0 0 0 -10 -4 03 04 05 06 07 03 04 05 06 07 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE 35
Slide 36: Coatings' Outlook
Kemira Coatings’ Outlook Revenue expected to increase from previous year level Demand remaining at a good level in all market areas Strongest growth anticipated in Russia and other CIS countries EBIT expected to grow from previous year Integration of acquired companies Continued good sal
Slide 37: Outlook
Outlook Revenue expected to grow in 2007 Previous acquisitions and organic growth Demand for Kemira’s products is projected to remain at a healthy level Operating profit and earnings per share for 2007 are expected to show an increase from 2006 levels Raw material and energy prices and tra
Slide 38: IR contact
IR: Andreas Langhoff, tel +358 10 862 1140 July 26, 2007 40