Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q2 2003 Earnings Presentation
39 slides from Kemira Oyj's earnings presentation, 2003
Slide 1: Kemira Group
Kemira Group Pulp&Paper Kemwater Paints and Industrial GrowHow Chemicals Coatings Chemicals Net sales 2002, € 2 612 million Other Pulp & Asia Other 2% Paper 6% 2% Finland Chemicals America 18 % 18 % 9% Kemwater Eastern GrowHow 43 % 6% Europe 12 % Paints and Other Coatings Euro area 16 % Other 26 % W
Slide 2: Growth Ambitions
Growth Ambitions Globally Leading in Europe among top 3 High with a strong Baltic Pulp & rim base Paper Paints and Kemwater Chemicals Coatings Growth ambitions World-scale performers Industrial GrowHow Chemicals Low Average High Competitiveness (relative to industry) 2
Slide 3: Growth Strategy
Growth Strategy Dimensions for Growth Serving Global Leveraging the Growth Customers Potential in Europe Leading Innovations in Demanding Technologies 3
Slide 4: Growth Strategy – Innovation and New Technologies
Growth Strategy – Innovation and New Technologies Competence Centres – core technology platforms enhancing synergies !Modern sludge management technologies Water Quality for environmental Wood Fibre Line protection and recycling Management ! Process solutions for minimum environmental impact pulp an
Slide 5: Pulp & Paper Chemicals – Growth through Partnerships
Pulp & Paper Chemicals – Growth through Partnerships Global number 5 as paper chemical Mergers & acquisitions supplier 1000 Acquistions Net sales, € mill. Complete solutions from pulping to 800 paper 600 Strong synergies between 400 geographical areas 200 Application development driven by 0 customer
Slide 6: Pulp and Paper Chemicals Industry
Pulp and Paper Chemicals Industry Global market for pulp and paper chemicals est. 19 B€ Pulping and Bleaching 4.7 B€ Major suppliers H2SO4, SO2, chlorate, H2O2, chelating agents, defoamers, Hercules 900 M$ de-inking, caustic soda, oxygen BASF 780 M€ Process chemicals 2.8 retention, deposit control,
Slide 7: Kemwater – Growth Potential in Chemical Water Purification
Kemwater – Growth Potential in Chemical Water Purification World leader in coagulants 400 Mergers & acquisitions Net sales, € mill. Acquisition-based growth and 300 stable profitability 200 Local/regional business based on low-cost raw material 100 sourcing and logistics 0 Differentiated products/se
Slide 8: Kemwater Strategy
Kemwater Strategy ! Global expansion ambition with focus on North and Latin America Acquisitions ! Market restructuring Product Productivity and service differentiation ! Recycled raw materials ! Sludge management ! Production technology ! Service concepts ! Overall manufacturing structure ! Complet
Slide 9: 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 9
Slide 10: Paints and Coatings – Growth Based on Strong Baltic Rim Presence
Paints and Coatings – Growth Based on Strong Baltic Rim Presence Decorative paints ~70 % of sales Mergers & Coatings ~30 % 1000 acquisitions Net sales, € mill. (paints and coatings for the metal and 800 wood industry, coil coatings) 600 Biggest decorative paint company 400 in Nordic countries 200 Ta
Slide 11: Paint Consumption in Europe
Paint Consumption in Europe Population, Million People Pohjakartta /Geodata Oy, lupa N:o 1164 /2000 <20 l / person <10 l / person 59 5 145 64 < 5 l / person 7 26 5 10 17 Western European 83 39 market € 16 billion 16 48 60 11 22 31 16 15 58 8 67 50 11 Source: Industry sources 11
Slide 12: Industrial Chemicals – Growth through Innovation and Excellent Business Practices
Industrial Chemicals – Growth through Innovation and Excellent Business Practices ! Benefits from Kemira’s Mergers & synergistic competencies 800 ! Platform for organic growth with acquisitions Net sales, € mill. 600 high profitability and strong cash-flow 400 ! Differentiation into specialty 200 pr
Slide 13: Industrial Chemicals Market Segments
Industrial Chemicals Market Segments Business Offer Application Area Position Unit Calcium Dust binding Road maintenance Leading in De-icing Europe chloride Drilling fluids Oil fields De-humidifiers Different industrial areas Chemidet Bleaching agents Detergent industry Among top three percarbonate
Slide 14: GrowHow – the Partner in Food Chain
GrowHow – the Partner in Food Chain Balanced portfolio with differentiated products All crop nutrients and 1500 Net sales, € mill. integrated services 1200 Animal nutrients 900 Process chemicals 600 Specialty products 300 Excellence in all 0 operations Net sales 2002 Organic growth Sales by area 200
Slide 15: World Grain Stocks Drive Fertilizer Demand
World Grain Stocks Drive Fertilizer Demand World wheat stocks vs. price Long-term growth of 39 fertilizer demand 180 37 World population 160 continues to grow 35 140 Decreasing arable USD/t 33 120 land/capita % 31 100 Dietary changes 29 80 Fertilizer demand and 27 60 prices historically 25 40 correl
Slide 16: Highlights Q1-2 2003
Highlights Q1-2 2003 Sales € 1 371 million, growth 1% Q2 clearly better than last year, January-June operating income € 76 million (€ 79 million), 6% of net sales EPS € 0.38 (€ 0.36) Equity / share € 8.87 (€ 8.94 end 2002) - dividend € 0.30 / share paid in Q2 Acquisition of the pulp & paper chemical
Slide 17: Kemira Group Q1-2 2003
Kemira Group Q1-2 2003 Pulp & 40 Q1-2 2003 Other Paper Q1-2 2002 3% Chemicals 30 17 % € million Kemwater 20 6% GrowHow 43 % 10 Paints and Coatings 0 16 % Pulp&Paper Chemicals Paints and Kemwater GrowHow Industrial Coatings Chemicals Industrial Chemicals 15 % Net sales Q1-2 2003: € 1 371 m Operating
Slide 18: Capital Expenditure – Source of Growth
Capital Expenditure – Source of Growth Acquisitions Vulcan Materials Company’s pulp&paper chemicals business in America Pulp & Klebstoffwerke Collodin Dr. Schultz & Other Paper Chemicals Nauth GmbH paper chemicals in 3% 17 % Frankfurt Ageco water treatment chemicals in Italy GrowHow Water treatment
Slide 19: Pulp & Paper Chemicals
Pulp & Paper Chemicals Sales 4% over 2002 y-o-y, operating Sulphur income better than last year chemicals Bleaching North American (Vinings) acquisition chemicals included for six months (five months in 2002) Sales growth slowed down by low production volumes of main clients Pulp and paper chemicals
Slide 20: Pulp & Paper Chemicals
Pulp & Paper Chemicals Net sales Operating income 500 Net sales % 50 16 400 14 40 12 € million 300 10 30 € million 8 200 20 6 100 4 10 2 0 0 0 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 Figures are not fully comparable due to changes in business structure 20
Slide 21: Kemwater
Kemwater Sales down slightly y-o-y partly due to dry weather in Nordic countries Operating income up by 4% Kemwater (Yixing) Co. Ltd in China and Kemwater Services Oy entirely to Kemira’s ownership Water treatment chemical company in St. Petersburg in Kemira’s ownership Kemira to utilize Ageco’s pla
Slide 22: Kemwater
Kemwater Net sales Operating income 200 Net sales % 25 14 12 150 20 10 € million 15 € million 100 8 10 6 50 4 5 2 0 0 0 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 Figures are not fully comparable due to changes in business structure 22
Slide 23: Paints and Coatings
Paints and Coatings Deco 71% of sales Sales slighty lower y-o-y due to unfavourable weather conditions Strong growth in Russia Coatings 29% of sales Sales 7% higher y-o-y mostly due to acquisition of Akzo Nobel’s Nordic industrial coatings Good development in the Nordic countries, Poland and Russia
Slide 24: Paints and Coatings
Paints and Coatings Net sales Operating income 500 % 40 400 10 30 300 20 6 € million € million 10 200 2 0 100 -2 -10 0 -20 -6 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 24
Slide 25: Industrial Chemicals
Industrial Chemicals Sales slightly up, operating income 29% higher than last year TiO2 prices turned into decline towards Fine the end of second quarter; average Chemicals prices in the first half of the year 3% higher than last year € 8 million investment in Pori, Finland Chemidet for specialty an
Slide 26: Industrial Chemicals
Industrial Chemicals Net sales Operating income 500 70 16 % Net sales 60 14 400 50 12 € million 300 10 € million 40 8 200 30 6 20 4 100 10 2 0 0 0 00 01 02 03 00 01 02 03 Q1 Q2 Q3 Q4 Figures are not fully comparable due to changes in business structure 26
Slide 27: GrowHow
GrowHow Food Chain Partner 26% Food Chain Agro Agro Partner Nitrogen Nitrogen 33% 38% 32% Specialty Crop Care 15% Intermediates Specialty Intermediates Crop Care 11% Animal Animal 16% 10% Nutrition Nutrition 10% 9% Net sales 2002: € 1 165 m Net sales Q1-2 2003: € 632 m 27
Slide 28: GrowHow
GrowHow Sales up by 1%, fertilizer sales volumes rose about 11% Operating income hurt by weakening dollar impacting especially overseas exports and Kemphos unit Compound fertilizer prices stable in the Nordic markets, market prices up by nearly 10% in some European markets Sales of Kemira Agro Nitro
Slide 29: GrowHow
GrowHow Net sales Operating income *) % 1 200 60 6 1 000 40 4 € million 800 € million 600 20 2 400 0 0 200 0 -20 -2 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 *) excluding € 78 m impairment loss in 2002 29
Slide 30: Kemira Group
Kemira Group Net sales Operating income *) 2800 180 10 % 2400 160 140 8 2000 120 € million 1600 6 € million 100 1200 80 4 60 800 40 2 400 20 0 0 0 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 *) excluding € 78 m impairment loss in 2002 30
Slide 31: Profitability Improvement
Profitability Improvement Efficiency kEmpower -project - enhancing production throughput and capacity utilisation and optimising variable costs - currently running at Oulu, Helsingborg and Pori plants, rollout to all major Kemira sites Efficiency programme - enhancing UK, continental and Finnish sit
Slide 32: Net Debt
Net Debt 1 050 100 900 80 750 Gearing % 60 € million 600 450 40 300 20 150 0 0 98 99 00 01 02 Q2 03 32
Slide 33: Net Financing Expenses
Net Financing Expenses 60 7 50 6 5 40 Average cost € million 4 30 3 20 2 10 1 0 0 98 99 00 01 02 03 Q1 Q2 Q3 Q4 Average cost 33
Slide 34: Cash Flow
Cash Flow 550 450 350 € million 250 150 50 -50 -150 98 99 00 01 02 Q2 03 Cash flow from operations Cash flow after investments and disposals 34
Slide 35: Net Income and CFROI
Net Income and CFROI 100 16 90 14 80 12 70 10 € million CFROI % 60 50 8 40 6 30 4 20 10 2 0 0 98 99 00 01 02 Q2 03 Net income and EPS excluding non-recurring items EPS 0.61 0.53 0.73 0.58 0.61 0.38 CFPS 0.96 1.41 1.69 1.03 2.45 0.03 35
Slide 36: Valuation / Ownership
Valuation / Ownership Market capitalisation / equity Ownership 30 June 2003 1500 Finnish instit. Public 1200 27.8 % 6.7 % 900 € million Kemira 3.4 % 600 Int. instit. 5.9 % 300 Finnish state 0 56.2 % 99 00 01 02 03 ! Equity / share € 8.87 ! State’s minimum ownership 15% ! Option programme until ! No
Slide 37: Outlook for the Year 2003
Outlook for the Year 2003 Pulp & Paper Chemicals Depressed phase in cycle is estimated to continue US acquisition provides further opportunities Despite the challenging industry outlook, operating income is expected to improve Kemwater Developing favourably, profitability is expected to continue at
Slide 38: Outlook for the Year 2003
Outlook for the Year 2003 Paints and Coatings Demand for paints improving after a cold spring Strongest growth in Russia Synergies from combining Alcro-Beckers and Tikkurila and productivity improvement measures continue to improve the operating income even if there will be some restructuring charge
Slide 39: Outlook for the Year 2003
Outlook for the Year 2003 GrowHow Fertilizer prices have improved fast as the season has progressed Overseas exports suffer from the weakening dollar; weak dollar and price war in animal nutrition reduces profitability Operating income expected to fall below last year’s level Kemira Group Several ex