Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Investor Day (November 2020)
56 slides from Kemira Oyj's investor day presentation, Nov 19, 2020
Slide 1: Capital Markets Day 2020
Capital Markets Day 2020 November 19, 2020
Slide 2: Agenda
Capital Markets Day 2020 AGENDA (EET): 14:00 Opening remarks, Mikko Pohjala, Head of Investor Relations Jari Rosendal Petri Castrén President and CEO CFO PRESENTATIONS: 14:00 Jari Rosendal, President and CEO + Q&A* 14:25 Antti Salminen, Industry & Water + Q&A* 14:50 Harri Eronen, Pulp & Paper + Q&A*
Slide 3: Q&A via webcast platform
Capital Markets Day 2020 Q&A VIA WEBCAST PLATFORM Questions can be submitted through the form in the webcast window during the presentations. Questions are only visible to the moderator. Q&A VIA TELEPHONE CONFERENCE AT THE END Telephone lines open at approximately 15.45 EET Finland Toll: +358 981710
Slide 4: Disclaimer
Disclaimer This presentation includes, or may be deemed to include, forward-looking statements. These statements relate to expected future events or expected future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital
Slide 5: Fundamentally stronger Kemira
CAPITAL MARKETS DAY 2020 Fundamentally stronger Kemira JARI ROSENDAL, PRESIDENT AND CEO NOVEMBER 19, 2020
Slide 6: We have delivered since our last CMD in 2017
We have delivered since our last CMD in 2017 REVENUE OPERATIVE TRIF** NET PROMOTER EBITDA SCORE EUR EUR % million million 2,593 2,659 450 20.0 3.9 47 2,486 410 18.0% 3.5 400 17.5 15.4% 350 36 323 327 15.0 1,822 311 33 300 30 12.5 2.3 250 12.5% 12.5% 2.1 10.0 200 7.5 150 5.0 100 50 2.5 0 0.0 2017 201
Slide 7: Strengthening the foundation and improving profitability
Strengthening the foundation and improving profitability Organic growth / expansion of site Acquisition Operational efficiencies Closure of site / divestment Start-up of Ortigueira Chevron CEOR deal & Ramp-up of of new AKD Botlek expansion Start-up of new AKD wax site sodium chlorate site (BR) wax s
Slide 8: 1-9 2020: Solid performance in a challenging environment
1-9 2020: Solid performance in a challenging environment STRONG PROFITABILITY DESPITE LOWER SALES VOLUMES REVENUE OPERATIVE EBITDA & CASH FLOW FROM NET PROMOTER SCORE MARGIN OPERATING ACTIVITIES EUR EUR EUR million million million -9% +2% -6% 47 2,001 319.9 327.2 243.7 1,822 228.3 18% 32 16% 1-9 201
Slide 9: We have a strong commitment to sustainability
We have a strong commitment to sustainability FIVE THEMES AS SUSTAINABILITY FOCUS AREAS SAFETY Safe production and use of our products throughout their lifecycle, strong safety culture Chemical PEOPLE sector Strong company culture, diversity and commitment average Chemical to people sector average W
Slide 10: Looking to the future
Looking to the future NOVEMBER 19, 2020 CAPITAL MARKETS DAY 10
Slide 11: After several years of focusing on improving fundamentals, we are now increasing focus on growth
After several years of focusing on improving the business fundamentals, we are now increasing focus on growth Portfolio Organic growth Continuous operational restructuring & investments and improvements with Fit for Growth focus on improving increased focus on growth fundamentals: Focus on improving
Slide 12: Global megatrends largely favor Kemira – sustainability
Global megatrends largely favor Kemira – sustainability becoming a key driver for the long term CHANGING GROWING DEMOGRAPHICS ENVIRONMENTAL AWARENESS Growing Changing More efficient use Focus on biobased Tightening Climate change middle-class lifestyles with of scarce natural and recyclable environm
Slide 13: Customer behavior is changing with an increased focus on sustainability
SUSTAINABILITY WILL BE A KEY DRIVER FOR FUTURE GROWTH Customer behavior TO SUPPORT OUR CUSTOMERS IN THE SHIFT TOWARDS HIGHER SUSTAINABILITY, is changing with an WE WILL: Address growing recyclability and increased focus on biodegradability demand for products sustainability Gradually transform our p
Slide 14: Becoming the leading provider of sustainable chemical solutions
W E WA N T TO E N S U R E P R O F I TA B L E GROWTH BY BECOMING THE LEADING P R O V I D E R O F S U S TA I N A B L E C H E M I C A L S O L U T I O N S F O R WAT E R - I N T E N S I V E INDUSTRIES CURRENT REVENUE TARGET REVENUE IN 2030 ~100 MEUR >500 MEUR FROM BIOBASED FROM BIOBASED PRODUCTS PRODUCTS
Slide 15: What will the sustainability focus mean for our businesses?
What will the sustainability focus mean for our businesses? Pulp & Paper Industry & Water • Increase focus on circularity as customers • Increase focus and investments on water are demanding recyclability and treatment biodegradability • In Oil & Gas, direct focus to growing and less • Focus investm
Slide 16: Maintaining a close eye on profitability, while investing in sustainable growth
Maintaining a close eye on profitability, while investing in sustainable growth P R O F I TA B I L I T Y GROWTH Continuous focus On-going investments • Disciplined price and cost management • Polymers: Mobile, U.S.A, South Korea • Capitalizing on completed investments in China, • Coagulants: Goole,
Slide 17: We will focus on profitable growth driven by sustainability
We will focus on profitable growth driven by sustainability 1. 2. 3. Look for above-the-market growth Aim to become the leading provider Financial target for operative both organically and inorganically, of sustainable chemical solutions EBITDA updated to 15-18%. particularly in water treatment. for
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Slide 19: Industry & Water: Increasing focus on water treatment
CAPITAL MARKETS DAY 2020 Industry & Water: Increasing focus on water treatment ANTTI SALMINEN PRESIDENT, INDUSTRY & WATER
Slide 20: We have strengthened our business and improved profitability since 2017
We have strengthened our business and improved profitability since 2017 OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN DEVELOPMENT 1. BUSINESS FUNDAMENTALS: EUR • Two segments merged into one in 2017 million % • Streamlining of business and product portfolio, including 200 192 18.5% 20 optimization of
Slide 21: We have significantly improved profitability in North American water treatment
We have significantly improved profitability in North American water treatment Key actions since 2017 to improve profitability • Organization restructuring in 2018 • Disciplined price and cost management • Focus on customer profitability NORTH AMERICA WATER TREATMENT REVENUE AND MARGIN DEVELOPMENT 2
Slide 22: Our polymer investment in the Netherlands serves growing CEOR market
Our polymer investment in the Netherlands serves growing CEOR market • Capacity addition announced in October 2017, facility fully operational with positive EBITDA contribution as of Q1 2020 • Manufacturing facility serves offshore CEOR • Investment includes capacity addition as well as improves bac
Slide 23: Profitability has remained strong in 2020 despite volatility in shale
Profitability has remained strong in 2020 despite volatility in shale WATER TREATMENT 1-9 2020 OIL & GAS 1-9 2020 Revenue: Municipal water treatment (2/3 of water treatment Revenue: Significantly down due to shale and oil revenue) revenue grew slightly, industrial water treatment sands tailings, sli
Slide 24: Looking to the future
Looking to the future NOVEMBER 19, 2020 CAPITAL MARKETS DAY 2020 24
Slide 25: COVID-19 impact clear on shale, but remaining I&W business areas resilient
COVID-19 impact clear on shale, but remaining I&W business areas continue to be resilient short and long-term SHORT TERM IMPACT LONG TERM IMPACT EXPECTED CAGR OF COVID-19 OF COVID-19 2020-2026* Municipal Marginal drop in volumes due to lower activity mainly Expected to grow with around GDP Water in
Slide 26: APAC, CEOR and oil sands tailings provide strong growth opportunities
APAC, CEOR and oil sands tailings provide strong growth opportunities GROWING NEED FOR POLYMERS WATER TREATMENT IN APAC OIL SANDS TAILINGS CEOR • Largest and fastest growing • Market growth driven by regulatory • Exploration and drilling of new water treatment market liability to treat tailings from
Slide 27: Regulation continues to support growth in European water treatment market
Regulation continues to support growth in European water treatment market Regulation under update Comments & Implications Urban • Basis for wastewater treatment business in Europe Wastewater • Target to better enforce existing legislation in all countries Treatment Directive • Other potential improv
Slide 28: Water treatment customers focus increasingly on sustainability
Water treatment customers focus increasingly on sustainability • Consumers increasingly aware of sustainability issues • Water treatment customers increasingly focused on reducing CO2 footprint • Kemira survey shows customers are willing to pay a premium for biobased products • Micropollutant remova
Slide 29: We will increase focus on water treatment to further improve sustainability of portfolio
We will increase focus on water treatment to further improve sustainability of portfolio 24% WE WILL CREATE AN ACTION PLAN TO FURTHER IMPROVE THE SUSTAINABILITY of current raw materials PROFILE OF THE I&W PORTFOLIO from recycled sources Further improve the circularity of our business by increasing s
Slide 30: Our focus is to maintain profitability while increasing focus on growth
Our focus is to maintain profitability while increasing focus on growth PRIORITIZED GROWTH ACTIONS FURTHER PROFITABILITY • Increase focus on sustainable IMPROVEMENT water treatment business and ON-GOING look for growth, particularly in Oil & Gas profitability • Disciplined price and cost APAC • Cost
Slide 31: KEMIFA bemisty
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Slide 32: We have strong positions particularly in EMEA water treatment
We have strong positions particularly in EMEA water treatment Market position Market outlook EMEA Water treatment1,2) #1 North America Water treatment1) #1 APAC Water treatment2) #9 Oil & Gas CEOR2) #6 Shale2) #2 Oil Sands Tailings2) #2 NOVEMBER 19, 2020 CAPITAL MARKETS DAY 2020 I&W main product lin
Slide 33: Pulp & Paper: Building on our improved profitability
CAPITAL MARKETS DAY 2020 Pulp & Paper: Building on our improved profitability HARRI ERONEN SVP, PULP & PAPER, EMEA
Slide 34: We have strengthened our business and improved profitability since 2017
We have strengthened our business and improved profitability since 2017 OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN DEVELOPMENT 1. BUSINESS FUNDAMENTALS: EUR • Focus on growing segments and product lines million % • Complexity reduction: streamlining P&P product portfolio 250 20 from 1,100 to 800 p
Slide 35: We have significantly improved profitability in Asia-Pacific
We have significantly AKD WAX INVESTMENT IN CHINA IMPROVING improved profitability ASIA-PACIFIC PROFITABILITY • Manufacturing facility fully operational with in Asia-Pacific positive EBITDA contribution as of Q1 2020 Key actions behind Asia-Pacific profitability • Capacity expansion: produces mainly
Slide 36: Upcoming investments will further strengthen our long-term performance
Upcoming investments will further strengthen our long-term performance B L E A C H I N G E X P A N S I O N I N U R U G U AY SOUTH KOREA • Multi-year agreement with UPM-Kymmene • Joint Venture with Yongsan Chemicals, includes bleaching capacity to existing Fray Kemira minority shareholder Bentos mill
Slide 37: Pulp & Paper profitability has been strong in 2020 despite unprecedented situation
Pulp & Paper profitability has been strong in 2020 despite unprecedented situation REVENUE: PROFITABILITY: • Economic slowdown impacted overall volumes, • Improved profitability due to good management of particularly in printing & writing applications variable and fixed costs. Efficiency improvement
Slide 38: Looking to the future
Looking to the future NOVEMBER 19, 2020 CAPITAL MARKETS DAY 2020 38
Slide 39: Markets impacted by COVID-19 in the short term, long-term drivers remain solid
Markets impacted by COVID-19 in the short term, long-term drivers remain solid SHORT TERM IMPACT LONG TERM IMPACT EXPECTED CAGR OF COVID-19 OF COVID-19 2020-2026* Graphic Paper Demand declined, particularly advertising-driven paper Structural decline and digitalization likely to consumption and offi
Slide 40: Growth opportunities in Asia-Pacific and in Pulp
From our existing markets, we see growth opportunities in Asia-Pacific and in Pulp AS I A - PA C I F I C PULP • Customer demand to shift increasingly to • Growth in pulp expected to be driven by Asia-Pacific with most of new board and paper increasing need for packaging and tissue production capacit
Slide 41: We are looking to transform our portfolio more towards biobased products
We are looking to transform our portfolio more towards biobased products C U S T O M E R S S E E K I N G A D D E D VA L U E WE WILL BECOME THE LEADING F R O M S U S TA I N A B I L I T Y A N D P R O V I D E R O F S U S TA I N A B L E B I O M AT E R I A L S C H E M I C A L S O L U T I O N S F O R W AT
Slide 42: Barrier market provides interesting opportunities in the long term
Barrier market provides interesting opportunities in the long term • Consumers expect significantly more THE BARRIER MARKET IS EXPECTED TO GROW RAPIDLY sustainable packaging from brand-owners EUR billion • Brand owner initiatives Phasing out ”non- 12 Dispersion barrier market (Kemira’s recyclable” p
Slide 43: Our focus is to maintain profitability while increasing focus on growth
Our focus is to maintain profitability while increasing focus on growth PRIORITIZED GROWTH ACTIONS FURTHER PROFITABILITY • Shift current portfolio more IMPROVEMENT towards packaging and tissue ON-GOING • Continuous performance and • Disciplined price and cost • Capture growth in Asia-Pacific cost-st
Slide 44: KEMIFA bemisty
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Slide 45: We have a strong position particularly in EMEA
We have a strong position particularly in EMEA PULP PACKAGING & TISSUE PRINTING & WRITING EMEA Market position #1/2 #1/2 #1/2 Market outlook North America Market position #3/4 #3 #2/3 Market outlook APAC Market position n.a. #1/2 #1/2 Market outlook South America Market position #2 #2/3 #2/3 Market
Slide 46: Strong foundation to build on
CAPITAL MARKETS DAY Strong foundation to build on PETRI CASTRÉN CFO
Slide 47: We have delivered on our three promises from CMD 2017
We have delivered on our three promises from CMD 2017 HIGHER PROFITABILITY IMPROVED CASH FLOW EFFICIENT CAPITAL RETURNS OPERATIVE EBITDA CASH FLOW AFTER CAPITAL EMPLOYED OPERATIVE EBITDA MARGIN INVESTING ACTIVITIES OPERATIVE ROCE % (rolling 12 months) EUR EUR EUR million % million million % 1,998 1,
Slide 48: Operative ROCE and EBIT margins have improved in recent years
Operative ROCE and EBIT margins have improved in recent years PULP & PAPER INDUSTRY & WATER OPERATIVE ROCE AND EBIT MARGIN DEVELOPMENT OPERATIVE ROCE AND EBIT MARGIN DEVELOPMENT % % 20 20 17.6% 16 16 13.6% 14.0% 13.3% 12 11.1% 11.6% 11.2% 11.0% 12 10.5% 10.2% 10.0% 9.7% 9.8% 9.7%9.1% 8.9% 9.0% 11.0%
Slide 49: Stronger foundation is based on three pillars
Stronger foundation is based on three pillars 1. 2. 3. CUSTOMER PROFITABILITY EFFICIENCY OF OPERATIONS PRODUCT PORTFOLIO • Increased focus on customer-level • Two-segment structure EUR 15 AND MIX profitability since 2017 million • We have clearly simplified the • Share of low margin customers has •
Slide 50: Healthy financial position
Healthy financial position DEBT AND LIQUIDITY AS OF SEPTEMBER 30, 2020 MATURITY PROFILE EXCLUDING LEASES • Total interest-bearing debt EUR 972 million 450 400 400 • Liquidity EUR 186 million + undrawn RCF of EUR 400 350 million 300 250 182 200 200 156 150 150 129 100 Leases 121 million 13% 50 0 2020
Slide 51: Focus on building sustainable growth - target for operative EBITDA margin updated
Focus on building sustainable growth- target for operative EBITDA margin updated 1. ABOVE-THE MARKET GROWTH (UNCHANGED) +4% NEXT STEPS • Build further growth organically and via partnerships 2,486 2,593 2,662 2,137 2,373 2,363 1,822 • Growth opportunities: water treatment, CEOR, Oil sands tailings,
Slide 52: Capital allocation principles
Capital allocation principles CAPITAL ALLOCATION PRIORITIES CAPITAL EXPENDITURE • Continue to focus on key product areas: bleaching, Balanced capital allocation between: coagulants, polymers and sizing chemicals • Capex expected to be around similar levels in coming Profitable growth years • Investm
Slide 53: The dividend policy has been updated
The dividend policy has been updated KEMIRA’S NEW DIVIDEND POLICY Competitive and over-time increasing dividend No fixed payout ratio We have a solid dividend track record ◼ Dividend per share Dividend yield 0.56* 0.53 0.53 0.53 0.53 0.53 5.4% 4.9% 4.4% 4.6% 5.4% 5.2%** 2014 2015 2016 2017 2018 20
Slide 54: Factors to watch for in 2021
Factors to watch for in 2021 FACTORS IMPACTING OPERATIVE EBITDA DEVELOPMENT IN 2021 SUPPORTING UNCERTAINTIES POSSIBLE NEGATIVE • Contribution from recent • Uncertainty related to global FACTORS investments economic situation and its • Time lag to pass raw material • Restructuring in Pulp & impact on
Slide 55: Investment highlights
Investment highlights Strong profitability improvement track record 1 Focus on profitable sustainable growth Operative EBITDA margin target updated Attractive dividend 2 Updated dividend policy: competitive and over-time increasing dividend Increased focus on sustainability 3 Kemira will become the
Slide 56: KEMIFA bemisty
KEMIFA 100 bemisty