Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q3 2004 Earnings Presentation
46 slides from Kemira Oyj's earnings presentation, 2004
Slide 1: Kemira – from Good to Great
Kemira – from Good to Great CEO Lasse Kurkilahti Interim Report Q1 - Q3, 2004
Slide 2: Result Q1-3, 2004; Restructuring; New Kemira
Kemira Interim Report Q1 – Q3, 2004 Result Q1-3, 2004 Restructuring New Kemira 2
Slide 3: July-September 2004 in brief
July-September 2004 in brief Q3 Q3 2004 2003 Change Net sales 695 683 2% Operating income 91 * 49 86% Earnings/share, € 0.52 * 0.22 136% Cash flow after capital exp. 136 37 368% * Including 52 m€ of extraordinary gain 3
Slide 4: January-September 2004 in brief
January-September 2004 in brief Q1-3 Q1-3 2004 2003 Change Net sales 2,142 2,054 4% Operating income 200 129 55% Earnings/share, € 1.05 0.63 67% Cash flow after capital exp. 190 -22 Equity ratio 45% 40% Gearing 47% 76% Capital employed 1,870 1,904 Return on capital employed 11% 8% Personnel, average
Slide 5: Kemira Group net sales and operating income
Kemira Group Net sales Operating income 2800 200 12 2400 180 160 10 2000 € million 140 8 1600 € million 120 % 1200 100 6 80 800 60 4 400 40 2 20 0 0 0 03 04 00 02 01 * ** 00 04 01 02 03 1-3 4-6 7-9 10-12 Operating margin * Excluding write-down of 78 m€ in 2002 ** Including 52 m€ extraordinary gain i
Slide 6: Earnings/share and return on capital employed (ROCE)
Earnings/share and return on capital employed (ROCE) 1,2 12 1 10 0,8 8 0,6 6 EPS, € ROCE, % 0,4 4 0,2 2 0 0 00 01 02 * 03 04 ** 1-3 4-6 7-9 10-12 ROCE * Excluding write-down of 78 m€ in 2002 ** Including 52 m€ extraordinary gain in Q3 6
Slide 7: Net financing expenses and average financing cost
Net financing expenses * 35 6 30 5 Average financing cost % 25 4 € million 20 3 15 2 10 5 1 0 0 00 01 02 03 04 1-3 4-6 7-9 10-12 Average financing cost * Excluding share of associates’ net income. 7
Slide 8: Cash flow
Cash flow 550 450 350 € million 250 150 50 -50 00 01 02 03 9 / 04 -150 Cash flow from operations Cash flow after net capital expenditure 8
Slide 9: Shares and ownership
Shares and ownership Market capitalisation & equity Ownership 19 Oct. 2004 (31 Dec. 2003) Households 1400 Finnish 7.2% institutions (6.8%) 1200 23.7% (27.7%) Kemira 1000 3.4% International (3.4%) milj. € 800 institutions 600 10.4% (5.9%) 400 200 Finnish state 0 55.3% (56.2%) 00 01 02 03 04 Market ca
Slide 10: Outlook for 2004
Outlook for 2004 Kemira Group Due to restructuring, Group net sales will be lower than last year Group operating income and net profit are expected to grow on last year Net sales of continuing businesses are expected to grow on last year Operating income and net profit of continuing businesses are e
Slide 11: Restructuring
Restructuring O 7 = ® ¥
Slide 12: Targets for 2004
Targets for 2004 Improve efficiency and result Clean out major idle capital Build acquisition cash Do strategic work to find unique positions 12
Slide 13: Focus on core businesses
Focus on core businesses Kemira GrowHow listed successfully Calcium chloride business sold to Tetra Technologies Inc. Kemira Fine Chemicals Oy sold to 3i Kemira Engineering Oy sold to PIC Kemira Ecocat sold to Eqvitec Metpela sold to Godarp Other asset divestments (M/S Kemira, Kotkaniemi manor, Hede
Slide 14: Growth by investments and acquisitions
Growth by investments and acquisitions Pulp & Paper: Investment in hydrogen peroxide, Rozenburg, Helsingborg Acquisition: E.QU.I.P International, Canada Kemwater: Acquisition: Zlotniki, Poland Acquisition: Belinka, Slovenia Industrial Chemicals: Investment in ferrous sulphate, Pori Paints & Coatings
Slide 15: New Kemira Starting point
New Kemira Starting point O 7 = ® ¥
Slide 16: New Kemira net sales by business area
New Kemira Net sales Q1-3 / 2004: 1,391 m€ Paints & Pulp & Coatings Paper 28 % Chemicals 32 % Industrial Chemicals Kemwater 24 % 16 % 16
Slide 17: New Kemira operating income by business area
New Kemira Operating income Q1-3 / 2004: 122 m€ = 9% of net sales* Paints & Coatings 33 % Pulp & Paper Chemicals 25 % Industrial Chemicals 28 % * Kemwater * Excluding gain on sale of Fine Chemicals 14 % and calcium chloride businesses 17
Slide 18: Earnings before interests and taxes % (EBIT)
Earnings before interests and taxes % (EBIT) 15 % 10 5 * Excluding gain on sale of Fine Chemicals and calcium chloride businesses 0 2000 2001 2002 2003 2004 (1-9) Pulp & Paper Chemicals Kemwater Industrial Chemicals * Paints & Coatings 18
Slide 19: Return on capital employed % (ROCE)
Return on capital employed % (ROCE) 25 % 20 15 10 5 * Excluding gain on sale of Fine Chemicals and calcium chloride businesses 0 2000 2001 2002 2003 2004 (1-9) Pulp & Paper Chemicals Kemwater Industrial Chemicals * Paints & Coatings 19
Slide 20: Gearing %
Net debt 800 100 80 600 60 € million Gearing % 400 40 200 20 0 0 00 01 02 03 10 / 04 * *New Kemira 20
Slide 21: Equity ratio
Equity ratio 50 40 30 Equity % 20 10 0 00 01 02 03 10 / 04 * *New Kemira 21
Slide 22: Positive development of Kemira share
Positive development of Kemira share 11,00 10,00 9,00 8,00 7,00 6,00 5,00 4,00 01.03 02.03 03.03 04.03 05.03 06.03 07.03 08.03 09.03 10.03 11.03 12.03 01.04 02.04 03.04 04.04 05.04 06.04 07.04 08.04 09.04 10.04 KEMIRA HEX GENERAL HEX PORTFOLIO FTSE EUROTOP 300 CHEMICALS (dividend adjusted) 22
Slide 23: Personnel New Kemira
Personnel 10 000 8 000 6 000 4 000 2 000 0 00 01 02 03 9 / 04 * Finland Other countries *New Kemira 23
Slide 24: New Kemira, starting point
New Kemira, starting point NEW KEMIRA KEMIRA 2003 Business areas 4 5 Net sales * ca. 1.8 bn € 2.7 bn € Operating income ** 9% 5% ROCE * 13% 7% Equity ratio *** 49% 41% Net debt *** 236 m€ 725 m€ Gearing *** 24% 68% Personnel *** 7,130 10,536 * rolling 12 months ** Q1-3, 2004 *** after spin-off of Gr
Slide 25: New Kemira Strategy
New Kemira Strategy O 7 = ® ¥
Slide 26: Kemira strategy
Kemira strategy Kemira strengthens its four main business areas through organic growth and acquisitions Pulp and paper chemicals Water treatment chemicals Industrial chemicals Paints and coatings Strategic priorities when allocating financial resources Improve profitability Ability to create growth
Slide 27: Pulp & Paper Chemicals
Pulp & Paper Chemicals Pulp & Paper Chemicals is one of the leading paper chemical suppliers globally Net sales 422 m€ Q1-3 / 2004, 30% of the new Kemira Good market position Operating in main markets Finland Global No 5 Asia Europe No 4 Americas US No 4 Nordic No 2 Scandinavia Other Europe 27
Slide 28: Pulp & Paper Chemicals
Pulp & Paper Chemicals Q3 net sales were 3% higher and operative result 30% higher than a year earlier Q1-3 operating income was 8% of net sales and ROCE 9%, both slightly below last year Acquisition of E.QU.I.P International => position strengthened in North America Expansion of hydrogen peroxide p
Slide 29: Pulp & Paper Chemicals financials
Pulp & Paper Chemicals Net sales Operating income & ROCE 500 50 12 % 10 400 40 € million 8 300 30 € million 6 200 20 4 100 10 2 0 0 0 00 01 02 03 04 00 01 02 03 04 1-3 4-6 7-9 10-12 Operating income % ROCE The figures are not fully comparable due to changes in business structure. 29
Slide 30: Outlook for 2004: Pulp & Paper Chemicals
Outlook for 2004 Pulp & Paper Chemicals Low business cycle of the pulp & paper industry is forecast to improve Tight competition will continue and higher raw material prices will affect profitability towards the end of the year Strengthened position and expanded products and services portfolio, part
Slide 31: Kemwater
Kemwater Kemwater has a globally leading position as a supplier of coagulation chemicals to municipal waterworks. Also, it provides solutions for the management of industrial waste water and sludge problems. Net sales 205 m€ Q1-3 / 2004, 16% of the new Kemira Leading market positions Good geographic
Slide 32: Kemwater
Kemwater Q3 net sales were up 21% on last year and operating income 23% down due to higher prices of raw materials and restructuring of business in Italy Q1-3 operating income was 9% of net sales and ROCE 17%, both slightly below last year’s figure Acquisitions strengthened water treatment position
Slide 33: Kemwater financials
Kemwater Net sales Operating income & ROCE 250 30 25 % 200 25 20 150 € million 20 15 € million 100 15 10 10 50 5 5 0 0 0 00 01 02 03 04 00 01 02 03 04 1-3 4-6 7-9 10-12 Operating income % ROCE The figures are not fully comparable due to changes in business structure. 33
Slide 34: Outlook for 2004: Kemwater
Outlook for 2004 Kemwater Demand is expected to continue to grow Rise in raw materials prices burdens profitability; this is in part compensated by alternative raw materials, better selling prices and rising sales volumes Net sales are expected to grow and operating income to be slightly better comp
Slide 35: Industrial Chemicals
Industrial Chemicals Industrial Chemicals is a world-class specialist with a strong technology base and a leading position in attractive speciality product markets Net sales 310 m€ Q1-3 / 2004, 24% of the new Kemira Good market position New business structure TiO2 leading producer Chemidet of printi
Slide 36: Industrial Chemicals
Industrial Chemicals Q3 net sales were at last year’s level and operative result was 59% higher* Q1-3 operative result* was 12% of net sales and ROCE 14%*, both clearly better than last year Average TiO2 prices were 8% below last year’s level, sales volumes were 12% higher than a year ago After a sl
Slide 37: Industrial Chemicals financials
Industrial Chemicals Operating income & ROCE Net sales 500 60 % Net sales 18 400 50 16 14 300 40 € million 12 € million 30 10 200 8 20 6 100 4 10 2 0 0 0 00 01 02 03 04 00 01 02 03 04 1-3 4-6 7-9 10-12 Operating income % ROCE The figures are not fully comparable In Q3, 2004 excluding capital gain on
Slide 38: Outlook for 2004: Industrial Chemicals
Outlook for 2004 Industrial Chemicals Prices of titanium dioxide have been lower than last year, however demand has picked up and prices are expected to rise gradually Demand for formic acid and sodium percarbonate is expected to continue stable Net sales are estimated be less than last year due to
Slide 39: Paints & Coatings
Paints & Coatings Paints & Coatings grows in the Baltic Rim area and eastern Europe, including Russia. The business has strong local brands. Net sales 356 m€ Q1-3 / 2004, 28% of the new Kemira Leading market positions Selected markets Finland No 1 * Eastern Sweden No 1 Europe Other Finland Baltic co
Slide 40: Paints & Coatings
Paints & Coatings Q3 net sales and operating income were at the same level as last year Q1-3 operating income was 12% of net sales and ROCE 13%, both clearly above last year’s figures Industrial coatings business in Great Britain was restructured Acquisition of 51% of Kolorit Paints of Ukraine to st
Slide 41: Paints & Coatings financials
Paints & Coatings Net sales Operating income & ROCE 500 50 % 400 40 10 30 300 6 € million € million 20 200 10 2 0 100 -2 -10 0 -20 -6 00 01 02 03 04 00 01 02 03 04 1-3 4-6 7-9 10-12 Operating income % ROCE 41
Slide 42: Outlook for 2004: Paints & Coatings
Outlook for 2004 Paints & Coatings Net sales are expected to remain at last year’s level Growth continues in Russia and the Baltic countries Business in Russia more and more based on local production Operating income is believed to be better than last year All forecasts and estimates mentioned in th
Slide 43: Future Kemira: global group of leading businesses
Future Kemira A global group of leading businesses with high mutual synergy Businesses with unique competitive positions 43
Slide 44: Future Kemira: strong organic growth with new products
Future Kemira Strong organic growth with continuous flow of new products Strong market positions built through acquisitions and mergers 44
Slide 45: Future Kemira: high internal efficiency
Future Kemira High and continuously improving internal efficiency, which contributes to better profitability Participative corporate culture 45
Slide 46: Kemira – from Good to Great: targets FAST
Kemira targets - FAST FOCUS – focus actions AMBITION – more efficiency, profit and growth SPEED – speed up action TEAMWORK – effective cooperation KEMIRA – FROM GOOD TO GREAT 46