Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — FY2001 Earnings Presentation
38 slides from Kemira Oyj's earnings presentation, 2002
Slide 1: Strategy 2000
Strategy 2000 High World-scale leaders Pulp & Paints & KW Paper C. Coatings Growth ambitions Specialty Industrial Fertilisers Chemicals Low World-scale performers Average High Competitiveness 1 www.kemira.com
Slide 2: Strategy: Our vision
Strategy Our vision We are the preferred partner to our customers, offering complete solutions. “Push” Focus “Pull” Focus Brand Capital Human Capital Working Capital Physical Capital (Outsourcing Network) 2 www.kemira.com
Slide 3: Strategy implementation 2001
Strategy implementation 2001 ing Sales c us ents - 450 M€ Fo stm Cash iv e Pigments Inc., Pigments B.V., Safety, CPS D + 514 M€ ns it io uis q PPC: Krems, Van Baerle Paper Chem, Cargas Blancas, A c Sales Vinings + 400 M€ KW: 15% Kemiron Inc., Kemwater (Yixing), Ageco/Italy Cash Paints & Coatings: Al
Slide 4: Strategy implementation 2001
Strategy implementation 2001 Organic growth & efficiency Sodium percarbonate TiO2 in Pori Capex 72 €M Formic acid in Oulu EBIT + 20 €M Fine Chemicals/pharma by 2004 Paint factory in Moscow Efficiency investments and plant Capex 38 €M closures in Agro EBIT +30 €M (Rozenburg/Pernis) by 2004 www.kemira
Slide 5: Message from the market
Message from the market Kemira valuation burdened with Cyclicality and large share of Agro business Small size State ownership low liquidity of Kemira share market risk caused by overhang www.kemira.com 5
Slide 6: Growth strategy
Growth strategy Group strategy planning process underway, outcome to be published soon Develop Pulp & Paper Chemicals and Kemwater further Paints and Coatings growing in Europe with a strong Baltic rim base Profitability and healthy balance sheet www.kemira.com 6
Slide 7: Pulp and Paper Chemicals
Pulp and Paper Chemicals Global number 6 as paper chemical Mergers & 1200 supplier acquisitions Acquistions 1000 Net Sales, € mill Complete solutions from pulping to 800 paper production 600 400 Latest acquisition: excellent match 200 technologically, geographically and 0 operationally Net sales Vin
Slide 8: Pulp and Paper Chemicals Industry
Pulp and Paper Chemicals Industry Global market for pulp and paper chemicals est. 13,5 B€ Bleaching chemicals 3,0 B€ Big suppliers ClO2, O2, O3 1,6 peroxide 1,2 Hercules 900 M$ dithionite 0,2 Eka Chemicals 750 M€ Process chemicals 2,8 alum, retention, BASF 700 M€ deposit control, Nalco 650 M$ water
Slide 9: Kemwater - World leader in chemical water purification
Kemwater - World leader in chemical water purification 400 Mergers & World leader in coagulants 350 Acquisitions Net Sales, € mill 300 Acquisition based growth and stable 250 profitability 200 Local/regional business by low cost 150 raw material sourcing and logistics 100 50 Differentiated products/
Slide 10: Kemwater strategy
Kemwater strategy Geographical expansion in Americas/Asia Mergers & Market restructuring acquisitions Cost Product efficiency and Service differentiation Sludge management Recycled rawmaterials Polymers/blends Production technology Partnership co-operations Overall manufacturing structure Bio-soluti
Slide 11: Coagulant consumption
Coagulant consumption Pohjakartta /Geodata Oy, lupa N:o 1164 /2000 18 kg / person 5,5 kg / person 2,5 kg / person 5 kg / person 1,5 kg / person Total market 10 million tonnes 1,5 billion € www.kemira.com 11
Slide 12: Industrial Chemicals - Growth through innovation and excellent business practices
Industrial Chemicals - Growth through innovation and excellent business practices Mergers & Benefits from Kemira’s 600 acquisitions synergistic competencies Net sales, € mill 500 400 Platform for organic growth with 300 high profitability and strong 200 cash-flow 100 Differentiation into specialty 0
Slide 13: Paints and Coatings
Paints and Coatings Decorative paints ~70 % coatings ~30 % of sales 1200 Mergers & acquisitions Net Sales, € mill (coatings: metal and coil coating, wood 1000 finishes) 800 Biggest decorative paint company 600 in Nordic countries 400 200 Target to become a leading (1-5) 0 paint company in Europe Sal
Slide 14: Paint consumption in Europe
Paint consumption in Europe Population, million people Pohjakartta /Geodata Oy, lupa N:o 1164 /2000 Paint consumption <20 l / capita 49 5 148 62 <10 l / capita 8 26 5 <5 l / capita 82 39 15 51 Total market 58 11 22 5,600,000 22 tonnes 15 58 9 62 49 11 www.kemira.com 14
Slide 15: Meeting the targets with the new strategy
Meeting the targets with the new strategy Financial targets Profitable growth, capital efficiency and healthy balance sheet 1998 1999 2000 2001 Target Growth rate (%)1) 0 5 11 8 > 10 EBIT margin (%)1) 6 4 8 6 > 10 EPS growth (%) neg. neg. 217 neg. > 10 CFROI (%) 7 9 11 7 > 10 Gearing 2) (%) 94 95 37
Slide 16: Highlights 2001
Highlights 2001 Sales € 2454 million, underlying growth 8% Operating income € 144 million, down by 18% - increased pension contributions, TiO2 cycle down, Alcro-Beckers integration EPS € 0.58 down by 21% (excl. discontinuing operations) Dividend proposal 0,30 €/ share Equity / share € 9.35 All busin
Slide 17: Kemira Group 2001
Kemira Group 2001 120 110 100 90 Chemicals 80 € million 35 % 70 2001 Agro 60 50 2000 45 % 40 30 20 10 Other 0 3% Agro Chemicals Coatings Paints & Paints & Coatings 17 % Net sales 2001: € 2 454 m Operating income 2001: € 144 m www.kemira.com 17
Slide 18: Strong growth
Strong growth Capital expenditure € 298 m Acquisitions Other 3% - Alcro-Beckers, Sweden Agro - van Baerle paper chemicals, Switzerland 20 % Chemicals - ferrichloride business of Ageco, Italy 36 % - Cargas Blancas calcium sulphate pigment business, Spain Organic growth - extension of the sodium perca
Slide 19: Chemicals
Chemicals Net sales Operating income 900 Net sales % 120 16 14 100 600 12 € million 80 10 € million 60 8 300 40 6 4 20 2 0 0 0 96 97 98 99 00 01 96 97 98 99 00 01 Q1 Q2 Q3 Q4 www.kemira.com 19
Slide 20: Chemicals
Chemicals Industrial Pulp and Pulp and Chemicals Industrial Paper C. Paper C. 44% Chemicals 38% 38 % 44 % Kemwater Kemwater 18 % 18% Net sales 2000: € 888 m Net sales 2001: € 901 m www.kemira.com 20
Slide 21: Pulp & Paper Chemicals
Pulp & Paper Chemicals Sales + 3% over 2000 y-o-y Continued production cutbacks within pulp & paper industry Bleaching Sulphur chemicals Finnish paper and chemical pulp chemicals production - 8% in 2001 y-o-y Low operating rates squeezed margins Acquisition of - paper chemicals operations of Special
Slide 22: Kemwater
Kemwater Sales growth 6% over 2000 y-o-y Strong improvement in Central and Southern Europe Vision of Ferrichloride business of Ageco bought emistry in Italy Acquisition of water treatment chemicals business of Pigment Corporation in St. Petersburg in 2002 Further emphasis on R & D - water competence
Slide 23: Industrial Chemicals
Industrial Chemicals Fine Chemicals Sales down by 3% y-o-y Chemidet TiO2 volumes + 2%, prices -2 % Formic acid continues strong, calcium CC-products Pigments chloride sales and profitability improved Extension of sodium percarbonate Formics production started successfully Fine Chemicals sales - 6% y
Slide 24: Paints and Coatings
Paints and Coatings Net sales 500 Operating income % 50 20 400 40 16 300 € million 30 12 € million 20 8 200 10 4 100 0 0 -10 -4 0 96 97 98 99 00 01 -20 -8 96 97 98 99 00 01 Q1 Q2 Q3 Q4 www.kemira.com 24
Slide 25: Paints and Coatings
Paints and Coatings Paints Coatings 48% 30% Coatings Deco 52% 70% Net sales 2000: € 243 m Net sales 2001: € 445 m www.kemira.com 25
Slide 26: Paints and Coatings
Paints and Coatings Deco Sales growth slowed down towards the year end due to market uncertainty Integration of Tikkurila Paints and Alcro-Beckers continues Sales up by 159% Margins reduced due to restructuring costs Coatings Sales 4% over 2000 y-o-y Depreciation of Swedish krona affected margins UK
Slide 27: Agro
Agro Net sales Operating income % 150 15 1 200 1 000 100 10 € million € million 800 50 5 600 400 0 0 200 0 -50 -5 96 97 98 99 00 01 96 97 98 99 00 01 Q1 Q2 Q3 Q4 www.kemira.com 27
Slide 28: Agro
Agro Food Chain Partner Agro Specialties 28% 45 % Agro Nitrogen 42 % Agro Nitrogen 55 % Specialty Crop Care 11% Intermediates Animal 12% Nutrition 7% Net sales 2000: € 1 219 m Net sales 2001: € 1 158 m www.kemira.com 28
Slide 29: Agro Specialties
Agro Specialties Reported sales growth strong y-o-y boosted by the increase in ownership of UAB Kemira Lifosa and strong performance of feed phosphates NPK prices continued firm, volumes down by 4% Uusikaupunki plant in Finland to be modernized by EUR 10 million New logistics joint venture in Lithua
Slide 30: Agro Nitrogen
Agro Nitrogen Sales clearly below 2000 y-o-y; prices continued firm, volumes down substantially Record wet spring affected sales leading to production cutbacks Natural gas prices higher than in the previous year Fixed costs markedly lower following the closure of the Rozenburg plant One time items a
Slide 31: Kemira Group
Kemira Group Net sales Operating income % 2800 250 12 2400 200 10 2000 € million 8 1600 150 € million 6 1200 100 800 4 400 50 2 0 0 0 96 97 98 99 00 01 96 97 98 99 00 01 Q1 Q2 Q3 Q4 www.kemira.com 31
Slide 32: Gearing
Net debt 1 050 100 900 80 750 60 € million Gearing 600 450 40 300 20 150 0 0 96 97 98 99 00 01 www.kemira.com 32
Slide 33: Net financing expenses and average interest rate
Net financing expenses 80 8 70 7 Average interest rate 60 6 50 5 € million 40 4 30 3 20 2 10 1 0 0 96 97 98 99 00 01 Q1 Q2 Q3 Q4 Average interest rate www.kemira.com 33
Slide 34: Cash flow
Cash flow 550 450 350 € million 250 150 50 -50 -150 96 97 98 99 00 01 Cash flow from operations Cash flow after investments and disposals www.kemira.com 34
Slide 35: Net income and CFROI
Net income and CFROI 250 16 14 200 12 150 10 € million CFROI % 8 100 6 4 50 2 0 0 96 97 98 99 00 01 EPS* 0.86 0.81 0.61 0.23 0.73 0.58 CFPS 2.05 2.00 0.96 1.41 1.69 1.03 *) excluding non-recurring items 2000 www.kemira.com 35
Slide 36: Valuation / ownership
Valuation / ownership Market capitalisation / equity Ownership 28 Dec 2001 1500 Finnish 1200 instit. Public 28.5 % 6.5 % 900 milj.€ Kemira 600 2.4 % Int. instit. 6.4 % 300 Finnish 0 State 95 96 97 98 99 00 01 02 56.2 % Equity / share € 9.35 State’s minimum 15% Option programme until 2.9 million own
Slide 37: Outlook for the year 2002 (1)
Outlook for the year 2002 (1) Chemicals – Higher demand for pulp & paper chemicals as customer industry starts recovering towards year end – Vinings acquisition strengthens the group´s position in the global market – Kemwater will develop favourably – Profitability for titanium dioxide pigments will
Slide 38: Outlook for the year 2002 (2)
Outlook for the year 2002 (2) Agro – Demand is expected to recover to replenish soil nutrient levels – Last year’s wetness and animal diseases depressed fertilizer use – Agro’s operating income is expected to improve on last year. Kemira Group – Operating income is expected to exceed last year´s fig