Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Kemira Oyj Ord — Q3 2024 Earnings Presentation
33 slides from Kemira Oyj's earnings presentation, Oct 25, 2024
Slide 1: Organic revenue growth with continued strong margin performance
ANTTI SALMINEN, PRESIDENT & CEO PETRI CASTRÉN, CFO OCTOBER 25, 2024 Organic revenue growth with continued strong margin performance JANUARY – SEPTEMBER 2024
Slide 2: Highlights of Q3 2024
Highlights of Q3 2024 • Solid financial performance during the quarter; organic growth +2% driven by Industry & Water • Robust market demand in water treatment; recovery in the Pulp & Paper market slowed during the quarter • Operative EBITDA margin at 20.3% with solid margin performance in both segm
Slide 3: Setting the standard with a frontrunner climate target
SETTING THE STANDARD WITH A FRONTRUNNER CLIMATE TARGET The SBTi has validated SCOPE 1&2 TARGET SCOPE 3 TARGET Kemira’s science-based ~52% reduction ~33% reduction greenhouse gas emission by the end of 2030, by the end of 2033, reduction targets base year 2018 base year 2021 Kemira is a true frontrun
Slide 4: Financial highlights of Q3 2024
Financial highlights of Q3 2024 Revenue EUR million Q3 Q3 1-9 1-9 • Considerable volume growth year-on-year of (except ratios) 2024 2023 Δ% 2024 2023 Δ% 2023 over 5% with growth in both segments. Rather Revenue 727.6 828.7 -12% 2,224.3 2,574.8 -14% 3,383.7 stable sales volumes sequentially. • Sales
Slide 5: Pulp & Paper: Volume growth and margin improvement
Pulp & Paper: Volume growth and margin improvement REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million Market environment in Q3 537 556 505 447 488 421 404 419 423 412 399 • Gradual market recovery slowed during the quarter • Softer demand in the APAC region impacting global 17% 22% 29% 28% 12%
Slide 6: Industry & Water: Strong organic growth and continued strong margin performance
Industry & Water: Strong organic growth and continued strong margin performance REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million Market environment in Q3 435 412 401 419 425 374 390 • Robust demand in both municipal and industrial water 322 340 329 329 291 288 291 296 321 321 treatment Organi
Slide 7: Focus areas for 2024
Focus areas for 2024 OPERATIVE PRIORITIES • Maintain strong financial performance in Industry & Water • Retain agility in Pulp & Paper following slowed market recovery in Q3 2024 STRATEGIC PRIORITIES • Explore organic and inorganic growth opportunities, particularly in water treatment • Design of th
Slide 8: We are well-positioned for profitable growth
WE ARE WELL-POSITIONED FOR PROFITABLE GROWTH We are We have We will execute accelerating structurally faster through growth – driven stronger the new Kemira by water and margins organization sustainability OCTOBER 25, 2024 Q3 2024 RESULT PRESENTATION 8
Slide 9: First steps towards the new Kemira launching in 2025
First steps towards the new Kemira launching in 2025 NEW ORGANIZATIONAL MODEL NEW LONG-TERM FINANCIAL THE NEW KEMIRA TARGETS ORGANIZATION WILL PROVIDE: 2025 onwards • speed & agility AVERAGE • increased strategic focus ANNUAL • even higher customer- centricity ORGANIC >4% GROWTH WATER SOLUTIONS MAIN
Slide 10: We have increased ambition levels in our sustainability-driven strategic priorities
We have increased ambition levels in our sustainability-driven strategic priorities EXPAND IN WATER BUILD LEADING RENEWABLE UNLOCK NEW GROWTH SOLUTIONS PORTFOLIO PLATFORMS Significantly grow our water Enable sustainability transformation Increase penetration into selected new business by expanding t
Slide 11: Financials Q3 2024
PETRI CASTRÉN CFO Financials Q3 2024 OCTOBER 25, 2024 Q3 2024 RESULT PRESENTATION 11
Slide 12: Solid margin performance in both segments
Solid margin performance in both segments Q3/2024 REVENUE AND ORGANIC GROWTH (Y-ON-Y) Organic revenue growth 2% in Q3 2024, -2% in EUR million 1-9 2024 829 • Strong organic growth in Industry & Water compensated for * 728 -16% 695 6% -5% -1% 3% stable development in Pulp & Paper • Considerable year-
Slide 13: Net impact from variable costs and sales prices slightly negative
Net impact from variable costs and sales prices slightly negative SALES PRICES AND VARIABLE COSTS (CHANGE Y-O-Y) EUR million 300 269 250 256 200 197 188 129 174 150 152 138 141 99 122 100 68 64 97 59 11 4 8 32 28 70 36 75 50 -20 -10 -2 -2 24 28 25 16 28 15 62 16 66 9 5 -3 47 42 -16 16 26 37 34 43 38
Slide 14: Strong balance sheet and operative ROCE
Strong balance sheet and operative ROCE NET DEBT (EUR million) AND LEVERAGE RATIO* 850 • Balance sheet remains record-strong 771 535 • Gearing 18% (34% in Q4 2023) 310 • Net debt / operative EBITDA at a record-strong level 2.0 1.3 0.8 of 0.5 0.5 • Average interest rate of net debt excluding leases D
Slide 15: Continued solid cash flow generation
Continued solid cash flow generation ALL KEY FIGURES IN EUR MILLION CASH FLOW FROM OPERATIONS Q1 Q3 • Solid cash flow during the quarter; net working capital 546 Q2 Q4 increased slightly 97 401 413 133 • Supplementary pension fund Neliapila returned the 42 143 115 97 319 excess funds of around EUR 1
Slide 16: Outlook for 2024 (unchanged)
Outlook for 2024 (unchanged) OUTLOOK REVENUE ASSUMPTIONS BEHIND THE OUTLOOK (UNCHANGED) Kemira's revenue is expected to be between EUR • Kemira’s end-market demand (in volumes) is expected to 2,800 million and EUR 3,200 million in 2024 (reported grow in 2024 following expected gradual demand recover
Slide 17: New long-term financial targets reflect our profitable growth ambitions
New long-term financial targets reflect our profitable growth ambitions and stronger fundamentals AVERAGE ANNUAL OPERATIVE OPERATIVE RETURN ON ORGANIC GROWTH EBITDA CAPITAL EMPLOYED > 4% 18-21% > 16% OCTOBER 25, 2024 Q3 2024 RESULT PRESENTATION 17
Slide 18: New business units have different financial profiles
New business units have different financial profiles BUSINESS WATER FIBER PACKAGING & UNIT SOLUTIONS ESSENTIALS HYGIENE SOLUTIONS % of total sales* ~45% ~20% ~35% Cyclicality Low Medium Medium Pricing structure Majority fixed pricing Majority formula-based Majority fixed pricing Capital intensity Lo
Slide 19: Factors to watch in 2025
Factors to watch in 2025 FACTORS EXPECTED TO IMPACT THE OPERATIVE EBITDA DEVELOPMENT IN 2025 SUPPORTING UNCERTAINTIES POSSIBLE NEGATIVE FACTORS • Solid end-market demand in • Global economic uncertainty water treatment and its impact on Pulp & • Fixed cost pressure Paper market following strong infl
Slide 20: Chemistry with a purpose. Better every day.
4 e mn | cra Chemistry with a purpose. Better every day.
Slide 21: Appendix
Appendix OCTOBER 25, 2024 Q3 2024 RESULT PRESENTATION 21
Slide 22: Kemira in brief
Kemira in brief LTM EXCL. OIL & GAS: REVENUE EUR 2,870 MILLION, OPERATIVE EBITDA EUR 596 MILLION, OPERATIVE EBITDA MARGIN 20.8%, OPERATIVE ROCE 21.6% SEGMENT SPLIT GEOGRAPHIES PRODUCTS ◼ 40% ◼ 60% 10% ◼ 15% Other: APAC e.g. defoamers, ◼ 25% Bleaching Industry & Water Pulp & Paper 35% 1. China disper
Slide 23: Pulp & Paper – strong business with solid track record
Pulp & Paper – strong business with solid track record REVENUE AND OPERATIVE EBITDA REVENUE BY CUSTOMER REVENUE BY EUR million TYPE AND MARKET GROWTH PRODUCT CATEGORY 2,200 348 ◼ 40% ◼ 45% ◼ 15% ◼ 1% Other 331 2,000 Pulp Board & Printing & ◼ 40% 1,800 tissue writing papers ◼ 10% 260 Bleaching 245 Po
Slide 24: Industry & Water – strong market positions
Industry & Water – strong market positions REVENUE AND OPERATIVE EBITDA REVENUE BY APPLICATION REVENUE BY EUR million TYPE AND MARKET GROWTH PRODUCT CATEGORY 1,800 336 1,600 ◼ 90% ◼ 10% ◼ 15% ◼ 60% 1,400 1,200 224 Water treatment Other Other Coagulants 192 175 181 products 1,000 Municipal Industrial
Slide 25: Very limited currency impact in Q3 2024
Very limited currency impact in Q3 2024 KEMIRA REVENUE DISTRIBUTION IN 2023 (EXCL. O&G BUSINESS) • Main currency exposure comes via translation ◼ 7% Others impact ◼ 2% PLN ◼ 43% EUR • Transaction risk is limited as revenues and costs ◼ 2% BRL are typically in same currency due to local ◼ 2% SEK manu
Slide 26: Key figures (reported)
Key figures (reported) EUR million Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 2023 2022 Revenue 727.6 733.4 763.3 808.8 828.7 3,383.7 3,569.6 Operative EBITDA 147.4 140.5 162.5 162.7 160.3 666.7 571.6 margin 20.3% 19.2% 21.3% 20.1% 19.3% 19.7% 16.0% Operative EBIT 100.8 94.0 117.6 112.6 107.6 463.0 361
Slide 27: Key figures, Oil & Gas divestment adjusted
Key figures, Oil & Gas divestment adjusted EUR million Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 2023 2022 Revenue 727.6 733.4 718.8 690.2 694.3 2,889.0 3,141.1 Operative EBITDA 147.4 140.5 159.2 149.3 143.8 595.9 518.3 margin 20.3% 19.2% 22.2% 21.6% 20.7% 20.6% 16.5% Operative EBIT 100.8 94.0 114.4 1
Slide 28: Cash flow
Cash flow EUR million Q3 2024 Q3 2023 2023 2022 Net profit for the period 67.2 75.2 211.3 239.7 Total adjustments 78.9 78.3 429.4 348.1 Change in net working capital -17.6 37.9 14.9 -101.8 Finance expenses -3.7 -5.7 -18.8 -52.2 Income taxes paid -12.7 -12.6 -90.8 -33.5 Net cash generated from operat
Slide 29: Pulp & Paper key financials
Pulp & Paper KEY FINANCIALS EUR million Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 2023 2022 Revenue 399.0 412.4 422.9 418.8 403.6 1,748.2 2,027.7 Operative EBITDA 70.7 67.9 88.2 87.5 68.9 330.9 348.0 margin 17.7% 16.5% 20.9% 20.9% 17.1% 18.9% 17.2% Operative EBIT 41.1 37.1 59.8 58.6 39.8 193.4 225.7 m
Slide 30: Industry & Water key financials
Industry & Water KEY FINANCIALS EUR million Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 2023 2022 Revenue 328.6 321.0 340.5 390.0 425.1 1,635.5 1,541.9 Revenue, O&G divestment adjusted 328.6 321.0 295.9 271.4 290.7 1,140.9 1 113,40 Operative EBITDA 76.7 72.6 74.3 75.2 91.5 335.8 223.7 Margin 23.3% 22.6%
Slide 31: Revenue split by country (excl. Oil & Gas)
Revenue split by country (excl. Oil & Gas) FY 2023 Other APAC 6% China 4% Other EMEA 9% USA 25% Belgium 2% Netherlands 2% France 2% Spain 3% Italy 3% Canada 6% Poland 3% Brazil 2% UK 3% Other Americas 3% Germany 4% Sweden 7% Finland 15% OCTOBER 25, 2024 Q3 2024 RESULT PRESENTATION 31
Slide 32: Important information about financial figures
Important information about financial figures Kemira provides certain financial performance measures (alternative performance measures) that are not defined by IFRS. Kemira believes that alternative performance measures followed by capital markets and Kemira management, such as revenue growth in loc
Slide 33: WWW.KEMIRA.COM
WWW.KEMIRA.COM