Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q3 2006 Earnings Presentation
33 slides from Kemira Oyj's earnings presentation, Oct 31, 2006
Slide 1: Third Quarter Results 2006: Focus to Value Creation
Third Quarter Results 2006 Focus to Value Creation Lasse Kurkilahti, President & CEO 31 October 2006 Investor Relations: Päivi Antola, tel. +358 1086 21140
Slide 2: Contents
Contents Q3 and Q1-Q3 Group Highlights Business Area Highlights Looking Forward 2
Slide 3: Q3 and Q1-Q3 Group Highlights
Q3 and Q1-Q3 Group Highlights
Slide 4: Growth Boosted by Acquisitions
Growth Boosted by Acquisitions Organic Q3/06 Q3/05 Change growth Revenue (MEUR) 652.6 543.0 20% 5% EBIT (MEUR) 75.1 59.2 27% EBIT, % 11.5 10.9 EPS (EUR) 0.37 0.28 32% ROCE, % 11.2 9.3 Cash flow after CapEx, excl. 73.0 72.0 acquisitions (MEUR) 4
Slide 5: Revenue up 20% in Q3
Revenue up 20% in Q3 MEUR 700 652.6 650 600 543.0 550 500 450 400 Q3/2005 Price Volume Currency Acquisitions Divestments Q3/2006 5
Slide 6: Revenue up 20% in Q3
Revenue up 20% in Q3 Q3 organic growth 5% 35 30 25 % 20 15 27% 21% 10 5 10% 8% 6% 0 2% Pulp & Paper Kemwater Performance Paints & Chemicals Coatings Organic Growth Acquisitions 6
Slide 7: EBIT up 27% in Q3
7 0 15 30 45 60 75 90 Q 3/ 20 05 MEUR 59.2 Pr ic e Vo lu m e C ur re nc Va y ria b le EBIT up 27% in Q3 co st s Fi xe d co st s A cq u is i tio n s D iv e N st m on en -r t e cu rr in g ite m s O th er Q 3/ 20 06 75.1
Slide 8: Non-Recurring Items
Non-Recurring Items EUR million Q3/06 Q3/05 2005 Pulp & Paper 3.0 -0.7 -3.4 Kemwater - - 2.2 Performance Chemicals - - 6.1 Paints & Coatings 13.1 - 9.5 Other - 1.9 0.2 Total 16.1 1.2 14.6 8
Slide 9: Revenue Development 2002-2006
Revenue Development 2002-2006 Q1-Q3/2006: 1,853.0 MEUR, +26% (Q1-Q3/2005: 1,472.9 MEUR) 2800 2400 2000 1600 MEUR 1200 800 400 0 2002 2003 2004* 2005 2006 Q1 Q2 Q3 Q4 *Continuing operations 9
Slide 10: EBIT by Quarter
EBIT by Quarter Q1-Q3/2006: 172.1 MEUR, +33% (Q1-Q3/2005: 129.1 MEUR) 200 12 10 150 MEUR 8 100 6 % 4 50 2 0 0 04* 02 03 05 06 *Continuing operations. Excluding a write-down of 78 EBIT % MEUR in Q4/02 10
Slide 11: EPS up by 32% in Q3 to EUR 0.37; ROCE from 9.3% to 11.2%
EPS up by 32% in Q3 to EUR 0.37 ROCE from 9.3% to 11.2% 1 12 0,9 0,8 10 0,7 8 0,6 EUR % 0,5 6 0,4 0,3 4 0,2 2 0,1 * Continuing operations 0 0 excluding a non- recurring charge of 44.2 2002 2003 2005 2006 2004* MEUR in Q4/04. Q4/02 exludes a write- down of 78 MEUR. ROCE, 12-month rolling average 11
Slide 12: Balance Sheet
Balance Sheet 30 Sept 06 31 Dec 05 Net debt (MEUR) 712.6 619.7 Equity (MEUR) 1,086.5 1,019.2 Equity ratio, % 42 44 Gearing, % 66 61 Capital employed (MEUR) 1,867.7 1,766.2 Personnel 9,119 7,670 12
Slide 13: Cash Flows, Q1–Q3
Cash Flows, Q1–Q3 MEUR Q1–Q3/06 Q1–Q3/05 Cash flows from operations 108.1 85.8 Acquisitions -108.1 -285.5 CapEx excl. acquisitions -96.8 -78.0 Sale of fixed assets 64.2 56.0 Cash flows from investing activities -140.7 -307.5 Free cash flow -32.6 -221.7 13
Slide 14: CapEx Excluding Acquisitions
CapEx Excluding Acquisitions CapEx Q1–Q3/06: 96.8 MEUR (Q1–Q3/05: 78.0) Investment in the chemical plant in Uruguay 22.4 MEUR Depreciation in Q1–Q3/06: 89.9 MEUR (Q1–Q3/05: 88.1) Maintenance Improvement 25 % 30 % Expansion 45 % 14
Slide 15: Business Area Highlights
Business Area Highlights O = = ® ¥
Slide 16: Pulp & Paper Chemicals in Q3
Pulp & Paper Chemicals in Q3 Revenue up 29% Organic growth 2% Integration of Lanxess paper chemicals progressing well Sales depressed by the Finnish pulp industry’s maintenance downtimes EBIT up 5%, ROCE 11.2% (8.6%) One-time income of 3.0 MEUR (-0.7 MEUR) Lanxess paper chemicals +0.8 MEUR Pulp indu
Slide 17: Pulp & Paper Chemicals
Pulp & Paper Chemicals MEUR Revenue EBIT & ROCE MEUR % 900 80 20 800 70 700 60 15 600 50 500 40 10 400 300 30 200 20 5 100 10 0 0 0 02 03 04 05 06 02 03 04 05 06 EBIT % ROCE Q1 Q2 Q3 Q4 The figures are not fully comparable. 17
Slide 18: Kemwater in Q3
Kemwater in Q3 Revenue up 10% All growth organic Sales increased in all market areas EBIT up 13%, ROCE 14.2% (13.5%) Acquisition of Cytec water treatment was completed 1 October Projected to raise EPS from 2007 Acquisitions of Parcon A/S and Oy Galvatek Ab Q3/06 Q3/05 Ch% 2005 Revenue, MEUR 101.7 92
Slide 19: Kemwater
Kemwater MEUR 400 Revenue MEUR EBIT & ROCE % 350 35 20 300 30 15 250 25 200 20 10 150 15 100 10 5 50 5 0 0 0 02 03 04 05 06 02 03 04 05 06 EBIT % ROCE Q1 Q2 Q3 Q4 Q4/04 excluding extra write-downs and The figures are not fully comparable. costs of 11 MEUR. 19
Slide 20: Performance Chemicals in Q3
Performance Chemicals in Q3 Revenue up 8% All growth organic Strong sales in organic acids and acid derivatives A scheduled maintenance downtime in TiO2 production Prices of TiO2 at last year’s level, prices expected to rise in 2007 EBIT at last year’s level, ROCE 11.1% (9.6%) Maintenance downtime Q
Slide 21: Performance Chemicals
Performance Chemicals MEUR Revenue EBIT & ROCE MEUR % 500 50 20 Net sales 400 40 15 300 30 10 200 20 100 5 10 0 0 0 02 03 05 06 04* 02 03 05 06 04* Q1 Q2 Q3 Q4 EBIT % ROCE The figures are not fully comparable. *Continuing operations 21
Slide 22: Paints & Coatings in Q3
Paints & Coatings in Q3 Revenue up 27% Organic growth 6% Integration of Kraski Teks progressing well EBIT up 89%, ROCE 26.9% (16.8%) One-time income of 13.1 MEUR from the sale of a factory site in Stockholm Acquisition of Kraski Teks +2.9 MEUR A new sales company in Kazakhstan 100% shareholding in F
Slide 23: Paints & Coatings
Paints & Coatings MEUR Revenue EBIT & ROCE MEUR % 600 80 28 500 70 24 60 20 400 50 16 300 40 ------ 12 30 ------ 200 20 ------ 8 10 4 100 0 0 0 -10 -4 02 03 04 05 06 02 03 04 05 06 Q1 Q2 Q3 Q4 EBIT % ROCE 23
Slide 24: Outlook
Outlook Kemira Group expects to continue its growth during the fourth quarter of 2006 Previous acquisitions and organic growth On average, raw material prices are projected to remain unchanged during the rest of the year Kemira’s full-year revenue, operating profit and earnings per share are expecte
Slide 25: Looking Forward
Looking Forward O = = ® ¥
Slide 26: Strategic Goal
Strategic Goal Global group of leading chemicals businesses with unique positions and high mutual synergy Great profitability, continuous improvement (EPS, ROCE) Continuous growth, organic and through M&A Expansion into emerging markets Solution provider leadership driven by customer needs Participa
Slide 27: Primary Focus in Profitability
Primary Focus in Profitability Streamlining the production network Professional attitude towards customers and suppliers Economies of scale, utilizing the leading position Internal synergies to use Idle / low productive capital out → World class internal efficiency 27
Slide 28: Organic Growth > 5% / Year
Organic Growth > 5% / Year Extended sales New customers New geographies Cross-selling New products and applications/solutions Strong R&D New Sales Ratio up 28
Slide 29: Expansion into Emerging Markets
Expansion into Emerging Markets Brazil / Russia India & China Current activity Lat. / CIS Neigh- America bours Emerging markets (Eastern Europe, Pulp & Paper South-America, Asia): ~ 13% of sales Kemwater BRIC countries: ~ 9% of sales Perf. Chem. ■ Production & sales activities Paints & Coat. ■ Sales
Slide 30: From Manufacturing to Customer Specific Solutions
From Manufacturing to Customer Specific Solutions Traditional chemicals production chain: Appli- Custo- Raw Manu- cation mer Product material facturing Custo- mer New approach: Own Raw Custo- Appli- production material Product mer cation 3rd party Raw production material 30
Slide 31: Shareholder Value Creation 2000-2004
31 Shareholder return -110% -90% -70% -50% -30% -10% 10% 30% 50% 70% 90% 110% 130% 150% KEMIRA OY CELANESE AG IMERYS SA URALITA, S.A. GIVAUDAN SA YULE CATTO ERCROS, S.A. "Leaders" BORSODCHEM NORSK HYDRO ASA SIKA SOLVAY SA CHRISTIAN HANSEN HOLDING BRITISH VITA PLC DSM N.V. SYNGENTA AG CRODA INTERNATI
Slide 32: Transformation Program “From Good to Great”
Transformation Program “From Good to Great” Operational Efficiency Culture Brand & Strategy All our actions lead We work for a strong, We want to be regarded towards World Class participative, as the leading expert in Operative Efficiency. entrepreneurial culture. our areas of Chemical We will creat
Slide 33: Just add
Just add