Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q1-2 2004 Earnings Presentation
38 slides from Kemira Oyj's earnings presentation, Aug 3, 2004
Slide 1: Kemira Result Q1-2 2004
Kemira Result Q1-2 2004 3 August 2004
Slide 2: Our Businesses
Our Businesses Pulp & Paper Kemwater Paints & Industrial Growhow GrowHow Chemicals Coatings Chemicals 2 738 M€ (2003) 2003 2003 Q1-2/2004 Asia Other Pulp & Finland Other Pulp & Paper Paper Chemicals Other Americas Chemicals Eastern Kemwater Europe GrowHow GrowHow Other Kemwater Euro area Paints & Co
Slide 3: Highlights Q1-2 2004: Focus on efficiency
Highlights Q1-2 2004 Focus on efficiency Q2 Q2 Change Q1-2 Q1-2 Change Q1-4 Reached €, million 2004 2003 % 2004 2003 % 2003 %, 2003 Net sales 730 672 9 1447 1371 6 2738 53 Operating income 55 47 17 109 81 35 149 73 Capital employed 1922 1898 1922 1898 1918 ROCE, % 9 7 9 7 7 EPS, € 0.29 0.25 16 0.52
Slide 4: Highlights Q1-2 2004: Portfolio focus
Highlights Q1-2 2004 Portfolio focus Ecocat Oy and Metpela Oy sold Agreement on the sale of Fine Chemicals Oy Discussions on divestment of calcium chloride business Sale of Kemira Engineering Oy agreed Other non-core asset divestments*) Kemwater acquisitions in Poland and Slovenia Evaluating the Gro
Slide 5: Kemira Group
Kemira Group Net sales Operating income & ROCE*) *) excluding € 78 m impairment loss in 2002 2800 180 % 2400 160 10 2000 140 8 120 € million 1600 € million 100 6 1200 80 4 800 60 40 400 2 20 0 0 0 00 01 02 03 04 00 01 02 03 04 Q1 Q2 Q3 Q4 Operating margin ROCE 5 3 August, 2004
Slide 6: Operating Income by business unit
Operating Income 40 Q1-2 2003 Q1-2 2004 All strategic business 30 units increased operating income € million 20 10 Kemira applies IFRS from the beginning of 2004; 0 2003 figures are restated Pulp&Paper Coatings Chemicals Kemwater GrowHow Paints & Industrial Chemicals Operating income Q1-2 2004: € 10
Slide 7: Income Statement
Income Statement Change Change Reached € million Q2 2004 Q2 2003 % Q1-2 2004 Q1-2 2003 % 2003 %, 2003 Net sales 730 672 9 1 447 1 371 6 2 738 53 Other income from operations 17 4 24 10 28 Cost of sales -649 -588 -1 275 -1 217 -2 446 Depreciation -43 -41 -87 -83 -171 Operating income 55 47 17 109 81
Slide 8: Balance Sheet
Balance Sheet € million 30.6.2004 31.12.2003 ASSETS Non-current assets Intangible assets 224 228 Tangible assets 1103 1091 Deferred tax assets 10 17 Other shares 74 76 Other investments 110 122 Total non-current assets 1521 1534 Current assets Inventories 371 390 Receivables Interest-bearing receiva
Slide 9: Balance Sheet
Balance Sheet LIABILITIES AND SHAREHOLDERS´ EQUITY 30.6.2004 31.12.2003 Shareholders´ equity Share capital 217 217 Share premium account 253 253 Valuation and other reserves 55 52 Own shares -28 -28 Retained earnings 509 466 Net profit 62 76 Total shareholders´ equity 1 068 1 036 Minority interests
Slide 10: Gearing %
Net Debt 800 100 80 600 Gearing % 60 € million 400 40 200 20 0 0 00 01 02 03 Q2 04 10 3 August, 2004
Slide 11: 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 Q1 Q2 Q3 Q4 Average cost *) not including share of associates’ net income 11 3 August, 2004
Slide 12: Cash Flow after Investments and Disposals
Cash Flow after Investments and Disposals 550 450 350 € million 250 150 50 -50 -150 00 01 02 03 04 Whole year Q1-2 12 3 August, 2004
Slide 13: Earnings / Share and ROCE
Earnings / Share and ROCE 0,8 10 0,7 8 0,6 0,5 ROCE, % 6 EPS, € 0,4 0,3 4 0,2 2 0,1 0 0 00 01 02 03 04 EPS Q1 EPS Q2 EPS Q3 EPS Q4 ROCE 13 3 August, 2004
Slide 14: Valuation & Ownership
Valuation & Ownership Market capitalisation & equity Ownership 30 July 2004 1400 Finnish Public 6.9 % institutions 1200 25.2% Kemira 1000 3.4 % € million 800 600 International 400 institutions 8.3 % 200 Finnish state 0 56.2 % 00 01 02 03 04 State’s minimum ownership 15% Market cap. Equity 2 685
Slide 15: Pulp & Paper Chemicals
Pulp & Paper Chemicals Strategic focus Target among top 3 paper chemical Market positions in paper industry suppliers Complete solutions in paper making Global No 5 process Europe No 4 Increasing global presence following customers US No 4 Application development driven by Nordic No 2 customer needs
Slide 16: Biggest Pulp and Paper Chemical Companies
Biggest Pulp and Paper Chemical Companies Bleaching Retention Sizing Dry/wet Deposit Water Coating Sales Strength Control Treatment M€ Ciba - 930 Hercules - - 800 BASF 780 Eka - 750 Kemira 600 Nalco - - - 550 Dow - - - - - - 520 Clariant - - - - 350 Bayer - - - 300 = strong market/technology positio
Slide 17: Pulp & Paper Chemicals
Pulp & Paper Chemicals Sales 14% higher mostly due to North American acquisition Pigments & Operating income 17% higher, Additives 6% of sales Bleaching Margin pressure due to heavy Chemicals competition, maintenance shutdowns and increased raw material prices compensated by synergies/savings Specia
Slide 18: Pulp & Paper Chemicals
Pulp & Paper Chemicals Net sales Operating income & ROCE 500 50 12 % 40 10 400 8 € million 300 30 € million 6 200 20 4 100 10 2 0 0 0 00 01 02 03 04 00 01 02 03 04 Q1 Q2 Q3 Q4 Operating margin ROCE Figures are not fully comparable due to changes in business structure 18 3 August, 2004
Slide 19: Kemwater
Kemwater Strategic focus Market positions (coagulants) Global leadership in coagulants for municipalities Global No 1 Increasing global market coverage US No 2 Local / regional business based on low- Europe No 1 cost raw material sourcing and logistics Nordic No 1 Solutions for industrial waste wate
Slide 20: 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 13.5 million tonnes € 1.9 billion 20 3 August, 2004
Slide 21: Kemwater
Kemwater Sales up by 49% largely due to US acquisition, positive development also in Europe Operating income 38% higher, 9% of sales Increased raw material costs, especially aluminium and iron; partly compensated by higher prices and volumes Acquisition of Zlotniki in Poland and Belinka in Slovenia
Slide 22: Kemwater
Kemwater Net sales Operating income & ROCE 250 Net sales 30 25 % 200 25 20 € million 150 20 15 € million 100 15 10 10 50 5 5 0 0 0 00 01 02 03 04 00 01 02 03 04 Q1 Q2 Q3 Q4 Operating margin ROCE Figures are not fully comparable due to changes in business structure 22 3 August, 2004
Slide 23: Paints & Coatings
Paints & Coatings Strategic focus Leading decorative paint company in Market positions / Deco Nordic countries and Eastern Europe Decorative paints 70 % Finland No 1 Coatings 30 % of sales, supported Sweden No 1 by Deco infrastructure Baltic states No 1 Poland No 2 Strong regional brands Russia Best
Slide 24: Paint Consumption in Europe by Area
Paint Consumption in Europe by Area (litres/person) Consumption per Population/country: capita highest in million people Western Europe. Significant growth 5 9 5 145 potential in Eastern 7 Europe. 5 10 39 16 48 11 22 < 20 litres/person 31 8 < 10 litres/person < 5 litres/person 24 3 August, 2004
Slide 25: Paints & Coatings
Paints & Coatings Deco (~70% of sales) Sales increased slightly Operating income increased 36% Profitability improved, driven by efficiency increase and one-time items Coatings (~30% of sales) Sales decreased 4% Operating income increased 20% Move to a single-site operation in Great Britain Irish sa
Slide 26: Paints & Coatings
Paints & Coatings Net sales Operating income & ROCE 500 40 % 400 30 10 300 20 6 € million € million 10 200 2 0 100 -2 -10 0 -20 -6 00 01 02 03 04 00 01 02 03 04 Q1 Q2 Q3 Q4 Operating margin ROCE 26 3 August, 2004
Slide 27: Industrial Chemicals
Industrial Chemicals Strategic focus Platform for organic growth with Market positions high profitability and strong cash TiO2 One of the most efficient flow sulphate processes Strong technology base Formics No 2 worlwide Differentiation into specialty Chemidet No 3 worldwide products Calcium chlori
Slide 28: Industrial Chemicals Market Segments
Industrial Chemicals Market Segments Business Offer Application Area Position Unit Pigments TiO2 pigments Printing industry => benchmark grades Cosmetics, food, drugs and => strong focus for textile industry growth Paints & coatings, plastics => one of the most By-products Water treatment efficient
Slide 29: Industrial Chemicals
Industrial Chemicals Sales 2% lower than last year Operating income 7% higher, 11% of sales; includes € 4.6 Nordic million (€ 1.0 m) one-time income Other countries TiO2 prices 9% lower in euros; volumes 10% higher Americas Demand for formic acid improved in Q2 Eastern Europe Chemidet volumes increa
Slide 30: Industrial Chemicals
Industrial Chemicals Net sales Operating income & ROCE 500 60 % Net sales 18 400 50 16 14 40 300 12 € million € million 30 10 200 8 20 6 100 10 4 2 0 0 0 00 01 02 03 04 00 01 02 03 04 Q1 Q2 Q3 Q4 Operating margin ROCE Figures are not fully comparable due to changes in business structure 30 3 August,
Slide 31: GrowHow
GrowHow Strategic focus Market positions Value creation from segment specific customer concepts Finland No 1 Operational leadership Denmark No 1 Organic growth and development Baltic countries No 1 based on own cash flow Benelux No 2 UK No 2 Net sales 1 205 M€ in 2003 Animal Nutrition Intermediates
Slide 32: World Grain Stocks Drive Fertilizer Demand
World Grain Stocks Drive Fertilizer Demand World wheat stocks vs. price Long-term growth of 40 fertilizer demand 180 World population 35 continues to grow 140 Decreasing arable USD/t 30 land/capita % 100 Dietary changes 25 60 Fertilizer demand and prices historically 20 20 correlate with grain stock
Slide 33: GrowHow
GrowHow Sales slightly down to € 621 million (€ 632 m) Fertilizer sales volumes 8% lower, especially in UK Operating income increased 46% with higher fertilizer prices more than offsetting higher raw material, mainly gas, costs, € 8 m production shutdowns in Tertre and UK, € 10 m JV in Jordan still
Slide 34: GrowHow
GrowHow Net sales Operating income & ROCE *) *) excluding € 78 m impairment loss in 2002 1 200 % 1 000 50 7,0 800 5,0 € million 30 € million 600 3,0 400 10 1,0 200 0 -10 -1,0 00 01 02 03 04 00 01 02 03 04 Q1 Q2 Q3 Q4 ROCE Operating margin 34 3 August, 2004
Slide 35: Outlook for the Year 2004
Outlook for the Year 2004 Pulp & Paper Chemicals Low business cycle in pulp & paper industry is forecast to slowly improve towards the year end Geographical presence, product range and scope of services has strengthened especially in North America, increasing the expected net sales Operating income
Slide 36: Outlook for the Year 2004
Outlook for the Year 2004 Paints & Coatings Net sales expected to be on previous year’s level Growth will continue in Russia with emphasis on locally produced paints Operating income expected to improve based on efficiency improvements and synergy benefits Industrial Chemicals With current structure
Slide 37: Outlook for the Year 2004
Outlook for the Year 2004 GrowHow Fertilizer prices expected to continue firm Grain stocks exceptionally low, supporting grain and fertilizer prices Net sales on previous year’s level, operating income expected to improve Evaluating of listing of GrowHow continues Kemira Group Net sales, operating i
Slide 38: Kemira's targets - FAST
Kemira’s targets - FAST We will focus our actions Focus We will raise our ambition level significantly Ambition We will speed up implementation Speed We will intensify teamwork Teamwork KEMIRA – FROM GOOD TO GREAT 38 3 August, 2004