Kemira Oyj · OMXHEX:KEMIRA

Kemira Oyj — FY2007 Earnings Presentation

61 slides from Kemira Oyj's earnings presentation, Feb 6, 2008

  1. Slide 1: Full-Year Results 2007

    Full-Year Results 2007 Harri Kerminen, President & CEO IR: Andreas Langhoff, tel +358 10 862 1140 February 6, 2008 1

  2. Slide 2: Contents

    Contents ƒ Kemira Group - Full-Year 2007 and Q4 Highlights ƒ Business Areas – 2007 and Q4 Highlights ƒ Outlook 2008 ƒ Strategy Review 2

  3. Slide 3: Kemira Group – Full-Year 2007 and Q4 Highlights

    Kemira Group – Full-Year 2007 and Q4 Highlights 3

  4. Slide 4: Kemira in 2007

    Kemira in 2007 ƒ Revenue up 11% ƒ Organic growth in local currencies 2% ƒ Acquisitions ƒ Revenue depressed by weak USD and weaker performance in Kemira Specialty ƒ Operating profit, excl. non-recurring items was 174.6 MEUR (170.5) ƒ Good performance in Kemira Water and Kemira Coatings ƒ Operating pr

  5. Slide 5: Key Figures for Q4 and full-year 2007

    Key Figures for Q4 and full-year 2007 (MEUR) Q4/07 Q4/06 Ch-% 2007 2006 Ch-% Revenue 654.4 669.5 -2 2,810.2 2,522.5 11 Operating profit -42.9 21.6 -299 143.1 193.7 -26 Operating profit, % -6.6 3.2 5.1 7.7 Operating profit, excl. non- 4.1 28.6 -86 174.6 170.5 2 recurring items Operating profit, %, ex

  6. Slide 6: Revenue Development and Capital turnover 2003-2007

    Revenue Development and Capital turnover 2003-2007 Q4/07: 654.4 MEUR (Q4/06: 669.5 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 6

  7. Slide 7: Operating profit by Quarter

    Operating profit by Quarter Q4/07: -42.9 MEUR (Q4/06: 21.6 MEUR) MEUR 12 200 10 150 8 6% 100 4 50 2 0 06** 0 04* 07*** 03 05 * 2004 Continuing operations ** Q4/06 restated EBIT % ***Q4/07 excl. 47.1 MEUR write down of assets 7

  8. Slide 8: EPS by Quarter

    EPS by Quarter EUR % 1 14 12 0,8 10 0,6 8 0,4 6 0,2 4 0 06** 2 04* 07*** * Continuing operations excluding a 03 05 non-recurring charge of 44.2 MEUR in Q4/04. -0,2 0 ** Q4/06 restated ***Q4/07 excl. 47.1 MEUR write- ROCE, 12-month rolling average down of assets 8

  9. Slide 9: Balance Sheet

    Balance Sheet 31 Dec 07 31 Dec 06 Change% Net debt (MEUR) 1,003.4 827.4 +21 Equity (MEUR) 1,087.3 1,082.5 Equity ratio, % 39 39 Gearing, % 92 76 Capital employed (MEUR) 1,978.0 1,893.4 +4 Personnel 10,007 9,327 +7 9

  10. Slide 10: Cash Flows

    Cash Flows MEUR 2007 2006 Funds from operations 211.2 157.2 Change in net working capital -39.1 59.6 Cash flows from operations 172.1 216.8 Acquisitions -66.6 -297.4 CapEx excl. acquisitions -254.4 -164.6 Sale of assets -0.2* 102.9 Cash flows from investing activities -321.2 -359.1 Free cash flow -1

  11. Slide 11: CapEx excluding Acquisitions

    CapEx exluding Acquisitions CapEx in 2007: 254.4 MEUR (164.6) ƒ Investment in chemical plant in Uruguay 43.1 MEUR ƒ Investment in paint factory in Sweden 12.4 MEUR ƒ Group IT investment 23.3 MEUR ƒ Environmental investment in Pori 17.2 MEUR Depreciation in 2007: 173.8 MEUR incl. 37.9 MEUR write-off

  12. Slide 12: Personnel

    Personnel Personnel 31 December 2007: 10,007 (31 December 2006: 9,327) Asia Other 5% 5% Russia Pulp&Paper Americas (3 %) 16 % (7 %) 23 % 17 % (16 %) (25 %) (16 %) Eastern Coatings Europe 14 % 38 % (15 %) (37 %) Water 24 % (20 %) Europe Specialty 10 % 62 % (11 %) (65 %) 12

  13. Slide 13: Business Areas

    Business Areas Kemira

  14. Slide 14: Non-recurring items (incl. write down of assets)

    Non-recurring items (incl. write down of assets) MEUR Q4/07 Q4/06 2007 2006 Kemira Pulp&Paper -14.1 0.4 -11.6 11.0 Kemira Water -3.1 -0.5 -3.1 -0.2 Kemira Specialty -11.9 1.5 -10.6 3.6 Kemira Coatings -2.4 - 8.8 16.4 Other -15.5 -8.4 -15.0 -7.6 Kemira Group -47.0 -7.0 -31.5 23.2 14

  15. Slide 15: Operating profit, excluding non-recurring items

    Operating profit, excluding non-recurring items MEUR Q4/07 Q4/06 Ch-% 2007 2006 Ch-% Kemira Pulp&Paper 10.9 19.7 -45 78.4 79.8 -2 Kemira Water 8.3 10.8 -23 48.1 35.5 35 Kemira Specialty -2.0 9.6 -121 24.1 42.2 -43 Kemira Coatings -3.5 -1.5 -134 64.3 55.7 15 Other -9.6 -10.0 4 -40.2 -42.7 6 Kemira Gr

  16. Slide 16: Operating profit-%, excluding non-recurring items

    Operating profit-%, excluding non-recurring items % Q4/07 Q4/06 2007 2006 Kemira Pulp&Paper 4.3 7.5 7.7 8.0 Kemira Water 4.4 6.3 6.6 7.6 Kemira Specialty -2.0 8.2 5.7 9.3 Kemira Coatings -3.0 -1.4 10.3 9.9 Kemira Group 0.6 4.3 6.2 6.8 16

  17. Slide 17: Kemira Pulp&Paper

    Kemira Pulp&Paper Kemira 17

  18. Slide 18: Kemira Pulp&Paper in Q4

    Kemira Pulp&Paper in Q4 ƒ Revenue down 5%, ƒ Impacted by weak USD exchange rate ƒ Lower volumes ƒ Operating profit, excl. non-recurring items 10.9 MEUR (19.7) ƒ Negative impact from USD ƒ Delay in start up of plant in Uruguay ƒ Lower volumes, high energy prices and increased fixed costs ƒ Write down

  19. Slide 19: Kemira Pulp&Paper

    Kemira Pulp&Paper Revenue & Capital turnover EBIT & ROCE MEUR MEUR % 100 20 1200 2 90 1000 80 15 1,5 70 800 60 50 10 600 1 40 400 30 5 0,5 20 200 10 0 0 0 0 03 04 05 06 07 03 04 05 06 07 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE Q4/07 excl. write-down of assets 17.1 MEUR The figures are not fully com

  20. Slide 20: Kemira Pulp&Paper’s Outlook

    Kemira Pulp&Paper’s Outlook ƒ Global demand from customer industries are estimated to remain good ƒ Restructuring of customer industries’ operations in North America and Europe will affect the growth ƒ Growth is anticipated mainly from the emerging markets ƒ First year of operation of the pulp chemi

  21. Slide 21: Kemira Water

    Kemira Water Kemira —_ 21

  22. Slide 22: Kemira Water in Q4

    Kemira Water in Q4 ƒ Revenue up 10% ƒ Organic growth 11% in local currencies ƒ Operating profit, excl. non-recurring items 8.3 MEUR (10.8) ƒ Increase in raw material costs ƒ Write down of assets in Denmark and USA, 5.8 MEUR ƒ Other non-recurring profits 2.7 MEUR ƒ ROCE 10.3% (13.4%) ƒ Integration of

  23. Slide 23: Kemira Water

    Kemira Water Revenue & Capital turnover EBIT & ROCE MEUR MEUR % 800 2 50 20 700 40 600 1,5 15 500 30 400 1 10 20 300 200 0,5 5 10 100 0 0 0 0 03 04 05 06 07 03 04 05 06 07 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE Q4/04 excl. write-downs and costs of 11 MEUR. The figures are not fully comparable. Q4/

  24. Slide 24: Kemira Water’s Outlook

    Kemira Water’s Outlook ƒ Demand for water treatment chemicals expected to remain at a good level ƒ Good organic growth ƒ Acquisitions completed in 2007 will increase revenue ƒ Revenue will be decreased by around 44 MEUR due to internal change in customer segments between Kemira Pulp&Paper and Kemira

  25. Slide 25: Kemira Specialty

    Kemira Specialty Kemira LFLAAS ES | \ ee

  26. Slide 26: Kemira Specialty in Q4

    Kemira Specialty in Q4 ƒ Revenue impacted by: ƒ Lower volumes in ChemSolutions business ƒ Lower prices in TiO2 and strike in TiO2 production ƒ Weak USD dollar ƒ Operating profit, excluding non-recurring items down to -2.0 MEUR from 9.6 MEUR ƒ Lower volumes in ChemSolutions ƒ Lower euro sales prices

  27. Slide 27: Kemira Specialty

    Kemira Specialty Revenue & Capital turnover EBIT & ROCE MEUR MEUR % 500 2 50 20 400 40 1,5 15 300 30 1 20 10 200 0,5 10 100 5 0 03 04 05 06 07* 0 0 04* 03 05 06 07 -10 0 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE The figures are not fully comparable. *Continuing operations Q4/07 excl. write down of 27

  28. Slide 28: Kemira Specialty’s Outlook

    Kemira Specialty’s Outlook ƒ Demand for titanium dioxide, organic acids and sodium percarbonate is expected to be good ƒ Titanium dioxide average sales price in euros are not expected to rise significantly yet during the first half of the year, despite of some implemented price increases in dollar m

  29. Slide 29: Kemira Coatings

    Kemira Coatings Kemira

  30. Slide 30: Kemira Coatings in Q4

    Kemira Coatings in Q4 ƒ Revenue up 8% ƒ Organic growth 6% ƒ Good sales development in all market areas continued ƒ Operating profit, excl. non-recurring items -3.5 MEUR (-1.5) ƒ Higher fixed costs ƒ Negative non-recurring items of 2.4 MEUR ƒ ROCE 23.9% (23.7%) ƒ New logistics and customer service ce

  31. Slide 31: Kemira Coatings

    Kemira Coatings Revenue & Capital turnover EBIT & ROCE MEUR MEUR % 700 80 28 2 600 70 24 60 20 500 1,5 50 16 400 40 1 12 300 30 8 20 200 4 0,5 10 100 0 0 0 0 -10 -4 03 04 05 06 07 03 04 05 06 07 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE 31

  32. Slide 32: Kemira Coatings’ Outlook

    Kemira Coatings’ Outlook ƒ Demand remaining at a good level in most market areas ƒ Strongest growth anticipated in Russia and other CIS countries 32

  33. Slide 33: Kemira Group’s Outlook

    Kemira Group’s Outlook ƒ Growth is expected to continue moderately ƒ Mainly through organic growth ƒ Operating profit and EPS are expected to increase from 2007 (excluding non- recurring items) ƒ Increase in prices of oil-based raw materials and energy puts challenges at least to first quarter profi

  34. Slide 34: Strategy Review

    Strategy Review Kemira

  35. Slide 35: World of Water

    World of Water Municipalities - drinking water - waste water - sludge Industries - paper industry - mining & minerals - oil & refineries - energy - food & beverages Agriculture - nutrient runoff prevention Recycling and re-use in key role while solving problems 35

  36. Slide 36: Water is an Opportunity

    Water is an Opportunity Seawater 97,5 % Glaciers 1,8 % Demand for water treatment Freshwater available 0,7 % 450 400 350 300 250 200 The total usable freshwater is only 0,01 % of all the water on Earth 36

  37. Slide 37: Water carries paper fibres, energy, minerals

    Water carries paper fibres, energy, minerals World paper market Pulp and board is a sustainable industry based on renewable raw material and bioenergy 37

  38. Slide 38: Exciting growth opportunities

    Exciting growth opportunities North America Europe - water and paper - water and paper Russia - pulp, paper, water and coatings Latin America - pulp, paper and water Asia Pacific - paper and water 38

  39. Slide 39: 2007 - All-Time High in Revenue

    2007 - All-Time High in Revenue ƒ Revenue 2007 ~ EUR 2.8 Billion Asia Other 5% 1% Latin America Eastern Europe Kemira Coatings 4% 16 % 22 % Kemira Pulp&Paper 37 % North America 23 % Kemira Specialty 15 % Western Europe Kemira Water 51 % 26 % 39

  40. Slide 40: Focus From Restructuring to Profitability

    Focus From Restructuring to Profitability Focus on Portfolio Restructuring Towards Focus on Integra- Focus Towards 2004 Leading Positions 2006 tion & Efficiency 2007 Profitability Intensive resructuring period Bayer paper chemicals agencies 2006 • Required a lot of management focus Lanxess paper che

  41. Slide 41: #1 Positions Reached, Progress in Synergies

    #1 Positions Reached, Progress in Synergies Kemira Group Kemira Kemira Water Kemira Specialty Kemira Coatings Pulp&Paper Global and leading positions ƒGood in Europe and ƒ#1 ƒ#1 in coagulants #1 in selected #1 in Finland, Sweden, NA ƒ# 3 in polymers customer segments Russia and in the Baltic ƒContin

  42. Slide 42: Shareholders January 31, 2008

    Shareholders January 31, 2008 (December 31, 2006) Oras Invest International group Institutions 18.1% (0) 15.4% (21.6) Other Finnish Finnish State Institutions 16.5% (48.6) 20.8% (14.9) Varma Households Pension 9.7% (8.1) Insurance Ilmarinen Kemira 9.7% (1.7) Pension 3.1% (3.2) Insurance 6.8% (1.9) 4

  43. Slide 43: Strategic Goal

    Strategic Goal ƒ Global and leading chemicals businesses with unique positions in selected customer segments ƒ Profitability ƒ World class performance ƒ Full synergy capture ƒ Growth ƒ Strenghtening of current customer segments ƒ Capturing new business opportunities and segments ƒ Stronger presence

  44. Slide 44: Financial Targets

    Financial Targets ƒ Organic revenue growth > 5% annually ƒ EBIT % of revenue > 10% ƒ Cash flow after investments and dividend payments: positive ƒ ROCE %: continuous improvement ƒ Gearing: comfort zone 40-80% 44

  45. Slide 45: New Roles of Businesses to Create Value

    New Roles of Businesses to Create Value Kemira Group Kemira Kemira Kemira Kemira Pulp&Paper + Water Coatings Specialty Joint development Business specific development ƒ Growth through utilization of common ƒ Kemira Coatings through expansion competences, technology and product towards the East platf

  46. Slide 46: New Structure to be established during 2008

    New Structure to be established during 2008 ƒ Business structure ƒ Based on customer segments ƒ Pulp&Paper, Water and Specialty in joint excercise ƒ Kemira Coatings with a separate process ƒ partly external board to guide development ƒ Functions ƒ All functions support business segments globally and

  47. Slide 47: Appointments in Kemira’s Management

    Appointments in Kemira’s Management ƒ Pekka Ojanpää has been appointed President of Kemira Water ƒ Mats Jungar will be responsible for development of Kemira Water’s customer segment based strategy and organization together with Pekka Ojanpää ƒ Hannu Virolainen has been appointed President of Kemira

  48. Slide 48: Growth – Key Focus Areas in 2008

    Growth – Key Focus Areas in 2008 ƒ Strenghtening of current customer segments ƒ Chemical and mechanical pulp, recycled fiber ƒ Printing and writing paper, packaging and board, tissue ƒ Municipal water treatment ƒ Industrial water treatment ƒ Capturing new business opportunities and segments ƒ Oil an

  49. Slide 49: Profitability – Key Focus Areas in 2008 (1/2)

    Profitability – Key Focus Areas in 2008 (1/2) ƒ Reshaping the company structures ƒ Define clear roles for businesses, functions and regions ƒ Improve organisational efficiency ƒ Obtain full synergies between Kemira Pulp&Paper and Kemira Water ƒ Capture full integration benefits from acquisitions ƒ C

  50. Slide 50: Profitability – Key Focus Areas in 2008 (2/2)

    Profitability – Key Focus Areas in 2008 (2/2) ƒ Productivity improvement programs ƒ Reduction of fixed and variable costs at manufacturing sites ƒ Capacity utilization ƒ OneKem (SAP) completion ƒ Transparency and real time access to accurate data ƒ KemStar-program completion ƒ Sourcing & procurement

  51. Slide 51: Culture – Key Focus Areas in 2008

    Culture – Key Focus Areas in 2008 ƒ Key focus areas for development in 2008 ƒ Define Kemira Vision during the strategy process ƒ Redefine shared values for uniform global guidance ƒ New management steering system aligned with new structure ƒ Leadership renewal and development ƒ Performance managemen

  52. Slide 52: IR: Andreas Langhoff

    IR: Andreas Langhoff, tel +358 10 862 1140 February 6, 2008 52

  53. Slide 53: Appendix

    Appendix Kemira February 6, 2008 53

  54. Slide 54: 2007 Revenue up 11%

    2007 Revenue up 11% MEUR 12% -1% 315 -1% -27 -14 2810 2% 1% -2% 55 15 -56 2522 2006 Price Volume Currency Acquisitions Divestments Other 2007 54

  55. Slide 55: Revenue Q4 2007 vs. Q4 2006

    Revenue Q4 2007 vs. Q4 2006 MEUR 8 -11 670 -18 13 -5 -2 654 2006 Price Volume Currency Acquisitions Divestments Other 2007 55

  56. Slide 56: 2007 Revenue up +11%

    2007 Revenue up +11% MEUR • Acquisitions • Organic growth +8% • Organic growth +9% • Negative impact from USD +62 -32 +263 -30 2,810 • Lower volumes • Lower prices in TiO2 • Negative impact from USD • Negative impact from USD • Acquisitions • Divestments +25 2,522 Revenue 2006 Pulp&Paper Water Speci

  57. Slide 57: Revenue Q4 2007 vs. Q4 2006

    Revenue Q4 2007 vs. Q4 2006 MEUR • Negative impact from USD • Negative impact from USD • Lower volumes • Lower volumes • Strike in TiO2 670 -14 +16 -15 +9 -11 654 • Negative impact from USD • Higher volumes • Higher volumes and prices and prices Revenue Q4 Pulp&Paper Water Specialty Coatings Other &

  58. Slide 58: 2007 Operating Profit Year-on-Year

    20 06 194 Pr MEUR ic e Vo lu 55 m e 6 Cu rr en cy -10 Va ria bl e co st s -32 Fi xe d co st s -30 Ac qu is iti on s 14 Di ve st m 2007 Operating Profit Year-on-Year No en n -r t -2 ec ur rin g W ite rit m e s do 58 -7 w n of as se ts -47 O th e r 2 20 07 143

  59. Slide 59: Operating Profit Q4 2007 vs. Q4 2006

    Operating Profit Q4 2007 vs. Q4 2006 MEUR 8 -3 -2 -15 22 -11 7 -1 -47 -1 -43 2006 Price Volume Currency Variable Fixed costs Divestment Non- Write down Other 2007 costs recurring of assets items 59

  60. Slide 60: 2007 Operating Profit Year-on-Year

    2007 Operating Profit Year-on-Year MEUR • USD impact • Raw material cost increases passed into selling prices • Good sales • Write down of assets • Other non-recurring items +12.6 -18.1 +8.6 +2.5 174.6 -31.5 170.5 -1.4 • USD impact • USD impact • Raw material cost • Lower volumes and 143.1 increases

  61. Slide 61: Operating Profit Q4 2007 vs. Q4 2006

    Operating Profit Q4 2007 vs. Q4 2006 MEUR • Increase in raw material prices • Fixed costs 28.6 -8.8 -2.5 • Write down of assets -11.6 • Other non-recurring items -2.0 +0.4 4.1 • Negative impact from USD • Negative impact from USD • Lower volumes • Lower volumes and prices • Fixed costs • Strike in T

Kemira — FY2007 Earnings Presentation on 6ix