Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — FY2006 Earnings Presentation
35 slides from Kemira Oyj's earnings presentation, Feb 6, 2007
Slide 1: Focus to Profitability Improvement
Full-Year Results 2006 Focus to Profitability Improvement Lasse Kurkilahti, President & CEO February 6, 2007 Investor Relations: Päivi Antola, tel. +358 1086 21140
Slide 2: Contents
Contents Full Year 2006 and Q4 Group Highlights Q4 Business Area Highlights Outlook for 2007 2
Slide 3: Full Year 2006 and Q4 Group Highlights
Full Year 2006 and Q4 Group Highlights
Slide 4: Key Figures and Ratios for 2006
Key Figures and Ratios for 2006 Organic 2006 2005 Change growth Revenue (MEUR) 2,522.5 1,994.4 26% 5% EBIT (MEUR) 201.7 165.5 22% EBIT, % 8.0 8.3 EPS (EUR) 0.96 0.73 32% ROCE, % 10.6 9.9 Cash flow after CapEx, excl. 155.0 170.8 acquisitions (MEUR) Dividend proposal EUR 0.48 (0.36), dividend payout r
Slide 5: Revenue Development 2002-2006
Revenue Development 2002-2006 2006: 2,522.5 MEUR, +26% (2005: 1,994.4 MEUR) MEUR 2800 2400 2000 1600 1200 800 400 0 2002 2003 2004* 2005 2006 Q1 Q2 Q3 Q4 *Continuing operations 5
Slide 6: Revenue up 26% in 2006
Revenue up 26% in 2006 MEUR 2600 2,522.5 Finnish Chemicals 2400 Lanxess Cytec Parcon Galvatek 2200 Verdugt & IFAC Kraski Teks 1,994.4 2000 1800 te s e 06 05 ts e er y n ic m nc pu en th 20 20 tio Pr lu re O is m Vo i is ur d st u C al e cq iv tri A D dus In 6
Slide 7: EBIT by Quarter
EBIT by Quarter 2006: 201.7 MEUR, +22% (2005: 165.5 MEUR) MEUR 12 200 10 150 8 6 % 100 4 50 2 0 0 02 03 05 06 04* *Continuing operations. EBIT % Excluding a write-down of 78 MEUR in Q4/02 7
Slide 8: EBIT up 22% in 2006
8 100 150 200 250 0 50 MEUR 20 05 165.5 Pr ic e Vo lu m e C ur re nc Va y ria b le co st s EBIT up 22% in 2006 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 it e m s O th er 20 06 201.7
Slide 9: EPS up by 32% in 2006
EPS up by 32% in 2006 EUR % 1 0.96 14 0,9 12 0,8 10.6% 0,7 10 0,6 8 0,5 6 0,4 0,3 4 0,2 2 0,1 0 0 * Continuing operations excluding a non-recurring 2004* 2002 2003 2005 2006 charge of 44.2 MEUR in Q4/04. Q4/02 exludes a write- ROCE, 12-month rolling average down of 78 MEUR. 9
Slide 10: Growth Continued in October-December
Growth Continued in October-December Organic Q4/06 Q4/05 Change growth Revenue (MEUR) 669.5 521.5 28% 3% EBIT (MEUR) 29.6* 36.4* -19% EBIT, % 4.4 7.0 EPS (EUR) 0.12 0.15 -20% ROCE, % 10.6 9.9 Cash flow after CapEx, excl. 79.5 106.8 acquisitions (MEUR) * Non-recurring items in Q4/06 were +1.0 MEUR, i
Slide 11: Revenue up 28% in Q4
Revenue up 28% in Q4 MEUR 700 669.5 650 Lanxess Cytec Parcon 600 Galvatek IFAC Kraski Teks 550 521.5 500 450 400 2005 Price Volume Acquisitions Divestments Other 2006 11
Slide 12: EBIT from 36.4 MEUR to 29.6 MEUR in October-December
12 0 15 30 45 60 MEUR 20 05 36.4 Pr ic e Vo lu m e C ur re nc Va y ria b le co st s in October-December 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 EBIT from 36.4 MEUR to 29.6 MEUR ite m s O th er 20 06 29.6
Slide 13: EBIT from 36.4 MEUR to 29.6 MEUR in October-December
EBIT from 36.4 MEUR to 29.6 MEUR in October-December 10.1 MEUR higher non-recurring income in 2005 Production losses at the Pori titanium dioxide plant due to a power failure The acquired Lanxess (1 April) and Cytec (1 October) had lower than average profitability Integration costs → Pro forma EBIT-
Slide 14: Non-Recurring Items
Non-Recurring Items MEUR Q4/06 Q4/05 2006 2005 Kemira Pulp&Paper 0.4 0.1 11.0 -3.4 Kemira Water -0.5 2.2 -0.2 2.2 Kemira Specialty 1.5 6.2 3.6 6.1 Kemira Coatings - 9.5 16.4 9.5 Other -0.4 -7.0 0.4 0.2 Total 1.0 11.1 31.2 14.6 14
Slide 15: Kemira Spend 2006: EUR 1.84 billion
Kemira Spend 2006: EUR 1.84 billion Indirect Purchases 20 % Raw material and energy Logistics prices as well as 12 % transportation costs are projected to behave Packaging moderately in 2007 4% Raw Materials Energy* 56 % 8% *Electricity appr. 5%; appr. 3% hedged 15
Slide 16: Balance Sheet
Balance Sheet 31 Dec 06 31 Dec 05 Net debt (MEUR) 827.4 619.7 Equity (MEUR) 1,090.5 1,019.2 Equity ratio, % 39 44 Gearing, % 76 61 Capital employed (MEUR) 1,893.4 1,766.2 Personnel 9,327 7,670 16
Slide 17: Cash Flows
Cash Flows MEUR 2006 2005 Cash flows from operations 216.8 115.6 Acquisitions -297.3 -285.5 CapEx excl. acquisitions -164.7 -116.4 Sale of fixed assets 102.8 131.5 Cash flows from investing activities -359.1 -270.4 Free cash flow -142.3 -114.8 17
Slide 18: Operative CapEx on the Level of Depreciation
Operative CapEx on the Level of Depreciation CapEx 2006: 164.7 MEUR (116.4) Investment in the chemical plant in Uruguay 41.2 MEUR Depreciation in 2006: 123.5 MEUR (118.9) Maintenance Improvement 24 % 33 % Expansion 43 % 18
Slide 19: Personnel
Personnel Personnel 31 December 2006: 9,327 (7,670) Other Asia 7% 3% Pulp&Paper Americas 25 % 16 % Coatings 37 % Water 20 % Europe 81 % Specialty 11 % 19
Slide 20: Shareholders 31 January 2007
Shareholders 31 January 2007 (31 January 2006) International Institutions 22.7% (18.3) Finnish State Finnish 48.6% (48.7) Institutions 17.4% (21.4) Households Kemira 8.1% (8.4) 3.2% (3.3) Minimum state ownership 15% 20
Slide 21: Share Price and Volume
Share Price and Volume 2003-2006 20,0 10 000 000 2006+1/07: +36% 18,0 9 000 000 16,0 8 000 000 2005: +33% 14,0 7 000 000 2004: +10% 12,0 6 000 000 2003: +40% 10,0 5 000 000 8,0 4 000 000 6,0 3 000 000 4,0 2 000 000 2,0 1 000 000 0,0 0 01.03 05.03 11.04 03.03 07.03 09.03 11.03 01.04 03.04 05.04 07.04
Slide 22: Q4 Business Area Highlights
Q4 Business Area Highlights O = = ® ¥
Slide 23: Kemira Pulp&Paper
Kemira Pulp&Paper Revenue EBIT & ROCE MEUR MEUR % 1 100 100 20 1 000 90 900 80 800 15 70 700 60 600 50 10 500 400 40 300 30 5 200 20 100 10 0 0 0 02 03 04 05 06 02 03 04 05 06 Q1 Q2 Q3 Q4 EBIT % ROCE The figures are not fully comparable. 23
Slide 24: Kemira Pulp&Paper in Q4
Kemira Pulp&Paper in Q4 Revenue up 27% Organic growth 4% High forest-industry capacity utilization rates Integration of Lanxess paper chemicals progressing well EBIT down 4%, ROCE 11.0% (8.7%) Lanxess paper chemicals -2.1 MEUR due to integration costs Divestment of the South Korean hydrogen peroxide
Slide 25: Kemira Water
Kemira Water MEUR 500 Revenue MEUR EBIT & ROCE % 40 20 450 400 35 350 30 15 300 25 250 20 10 200 15 150 100 10 5 50 5 0 0 0 02 03 04 05 06 02 03 04 05 06 Q1 Q2 Q3 Q4 EBIT % ROCE The figures are not fully comparable. Q4/04 excluding extra write-downs and costs of 11 MEUR. 25
Slide 26: Kemira Water in Q4
Kemira Water in Q4 Revenue up 88% Organic growth 6%, sales increased in all market areas EBIT up 49%, ROCE 13.4% (13.8%) Cytec water chemicals’ profitability lower than Kemira Water’s One-time expenses of 0.5 MEUR (income of 2.2 MEUR) Integration of Cytec water treatment chemicals progressing Projec
Slide 27: Kemira Specialty
Kemira Specialty Revenue EBIT & ROCE MEUR MEUR 500 % 50 20 Net sales 400 40 15 300 30 10 200 20 5 100 10 0 0 0 02 03 05 06 02 03 05 06 04* 04* Q1 Q2 Q3 Q4 EBIT % ROCE The figures are not fully comparable. *Continuing operations 27
Slide 28: Kemira Specialty in Q4
Kemira Specialty in Q4 Revenue down 2% Low demand for deicer chemicals due to mild weather in Europe US dollar impact EBIT down to 11.1 MEUR from 16.2 MEUR Production losses in TiO2 caused by a power failure One-time income of 1.5 MEUR (6.2 MEUR) ROCE 10.1% (10.8%) Q4/06 Q4/05 Ch% 2006 2005 Ch% Reve
Slide 29: Kemira Coatings
Kemira Coatings Revenue EBIT & ROCE MEUR MEUR 600 % 80 28 70 ------ 500 24 60 20 400 50 16 40 300 ------ 12 30 ------ 8 200 20 ------ 10 4 100 0 0 0 -10 -4 02 03 04 05 06 02 03 04 05 06 Q1 Q2 Q3 Q4 EBIT % ROCE 29
Slide 30: Kemira Coatings in Q4
Kemira Coatings in Q4 Revenue up 21% Organic growth 8% Integration of Kraski Teks progressing well Operating loss -1.5 MEUR Q4 typically the weakest for Kemira Coatings Q4/2005 EBIT includes one-time income of 9.5 MEUR Acquisition of Kraski Teks -0.6 MEUR ROCE 23.7% (20.2%) Agreement on buying 70% h
Slide 31: Outlook for 2007
Outlook for 2007 O = = ® ¥
Slide 32: Outlook
Outlook Revenue expected to grow in 2007 Previous acquisitions and organic growth Demand for Kemira’s products is projected to remain at a healthy level Operating profit and earnings per share for 2007 are expected to show an increase from 2006 levels Raw material and energy prices and transportatio
Slide 33: Primary Focus in Profitability
Primary Focus in Profitability Economies of scale, utilizing the leading position also towards customers and suppliers Streamlining the production network Idle / low productive capital out Business concept change from products to solutions More new products and solutions to the market Internal syner
Slide 34: Strategic Goal
Strategic Goal Global group of leading chemical businesses with unique positions and a high degree of mutual synergy Great profitability, continuous profitability improvement (EPS, ROCE) Continuous growth, organic and through M&A Expansion into emerging markets Solution provider leadership driven by
Slide 35: Just add
Just add