Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Investor Day (September 2024)
70 slides from Kemira Oyj's investor day presentation, Sep 26, 2024
Slide 1: Kemira's Capital Markets Day 2024
Kemira’s Capital Markets Day 2024 KULTTUURIKASARMI, HELSINKI SEPTEMBER 26, 2024
Slide 2: Agenda (Finnish time)
KEMIRA’S CAPITAL MARKETS DAY KULTTUURIKASARMI, HELSINKI, SEPTEMBER 26, 2024 Agenda (Finnish time) 14.00 Opening words 15.45 Fiber Essentials Mikko Pohjala, VP, Investor Relations Antti Matula, EVP, Fiber Essentials 14.05 Kemira’s strategy 16.05 Packaging & Hygiene solutions Antti Salminen, President
Slide 3: The New Kemira: Accelerating Profitable Growth with Increased Focus on Water
ANTTI SALMINEN PRESIDENT AND CEO The New Kemira: Accelerating Profitable Growth with Increased Focus on Water CAPITAL MARKETS DAY SEPTEMBER 26, 2024
Slide 4: We are well-positioned for profitable growth
WE ARE WELL-POSITIONED FOR PROFITABLE GROWTH We are We have We will execute accelerating structurally faster through growth – driven stronger the new Kemira by water and margins organization sustainability SEPTEMBER 26, 2024 CAPITAL MARKETS DAY 4
Slide 5: We have delivered on multiple fronts
We have delivered on multiple fronts IMPROVED FINANCIALS REDUCED EMISSIONS SHAREHOLDER RETURNS EUR million % KT CO2e (INDEXED) 5 993 700 667 22 6 000 2,5 20.2 20 5 321 600 17.9 572 18 5 000 15.9 16.0 19.7 15.4 16 4 267 4 108 2,0 500 435 426 4 000 410 14 3 602 400 12 3 000 1,5 303 10 300 8 2 000 200
Slide 6: We have already started on a more ambitious growth strategy
We have already started on a more ambitious growth strategy • Acquisition of SimAnalytics, a digital start-up • Coagulant capacity expansion in the UK • Expanded renewables partnership with IFF H2 2024 Announcement 2022 2024 of a new organizational 2023 model and updated long-term financial targets
Slide 7: First steps towards the new Kemira launching in 2025
First steps towards the new Kemira launching in 2025… NEW ORGANIZATIONAL MODEL NEW LONG-TERM FINANCIAL THE NEW KEMIRA TARGETS ORGANIZATION WILL PROVIDE: 2025 onwards • speed & agility AVERAGE >4% • increased strategic focus ANNUAL • even higher customer- ORGANIC centricity GROWTH WATER SOLUTIONS MAI
Slide 8: Clear performance mandates for the new business units
…with clear performance mandates for the new business units BUSINESS UNIT WATER FIBER PACKAGING & SOLUTIONS ESSENTIALS HYGIENE SOLUTIONS % of total sales* ~45% ~20% ~35% Mandate in the Growth + Cash flow + Growth + Kemira portfolio cash flow selective growth transformation Growth profile Su
Slide 9: Increased ambition levels in sustainability-driven strategic priorities
We have increased ambition levels in our sustainability-driven strategic priorities EXPAND IN WATER BUILD LEADING RENEWABLE UNLOCK NEW GROWTH SOLUTIONS PORTFOLIO PLATFORMS Significantly grow our water Enable sustainability transformation Increase penetration into selected new business by expanding t
Slide 10: We will grow through organic and inorganic opportunities
We will grow through organic and inorganic opportunities – particularly in water ILLUSTRATIVE EXAMPLE INORGANIC GROWTH OPPORTUNITIES STRONG APPETITE FOR M&A; ORGANIC GROWTH OPPORTUNITIES DISCIPLINED IN VALUATIONS FINANCIAL TARGET Key focus areas FOR AVERAGE ~4 B€ Water ANNUAL ORGANIC ~2.9 B€ GROWTH
Slide 11: We are building on a strong foundation
We are building on a strong foundation KEMIRA’S STRENGTHS TODAY WHERE WE NEED TO DEVELOP KEMIRA IN 2030 STRONG BUSINESS MODEL CULTURAL CHANGE THE LEADING PROVIDER Focused portfolio Higher growth mindset OF SUSTAINABILITY SOLUTIONS Customer-centric approach Courage and openness for with strong commit
Slide 12: Forward with the new leadership team
FORWARD WITH THE NEW LEADERSHIP TEAM Antti Harri Linus Salminen Eronen Hildebrandt President & EVP, EVP, Strategy CEO Packaging & & Sustainability Hygiene Solutions Petri Antti Sampo Castrén Matula Lahtinen CFO EVP, Fiber EVP, Essentials Research & Innovation Tuija Eeva Peter Pohjolainen- Salonen Er
Slide 13: Our commitment to sustainability supports customers
SUSTAINABILITY IS A DRIVER FOR GROWTH Our commitment Enabling our industry’s sustainability transformation Our sustainability commitment makes us a preferred to sustainability partner for customers and suppliers Clear and measurable targets; top performer in supports customers the chemicals industry
Slide 14: Driving shareholder value through accelerated profitable growth
Driving shareholder value through accelerated profitable growth NEW FINANCIAL TARGETS WE ARE ACCELERATING GROWTH AVERAGE – DRIVEN BY WATER AND SUSTAINABILITY ANNUAL ORGANIC GROWTH >4% WE HAVE STRUCTURALLY STRONGER MARGINS OPERATIVE EBITDA 18-21% WE WILL EXECUTE FASTER THROUGH THE NEW KEMIRA ORGANIZA
Slide 15: Chemistry with a purpose
4 e mM | cra Chemistry with a purpose. Better every day.
Slide 16: Renewable Solutions: Progressing Towards Our EUR 500 Million Target
SAMPO LAHTINEN SVP, GROWTH ACCELERATOR EVP, RESEARCH & INNOVATION AS OF 01/2025 Renewable Solutions: Progressing Towards Our EUR 500 Million Target CAPITAL MARKETS DAY SEPTEMBER 26, 2024
Slide 17: Significant number of renewable products in our portfolio
We already have a significant number of renewable products in our portfolio REVENUE SPLIT IN 2023* CURRENT RENEWABLE PORTFOLIO Renewable (> 50%) Partly biobased Sizing • The majority of our current renewable offering Renewable polymers Does not • Biomass-balanced polymers both for water contain foss
Slide 18: Four paths to reach the EUR 500 million renewable revenue target
We have four paths to reach the EUR 500 million renewable revenue target CURRENT Boost the sales of commercially PORTFOLIO available renewable products Convert current fossil-based products to renewable PRODUCT products by replacing raw materials CONVERSION and feedstocks New products based on NEW R
Slide 19: Strategic partnerships, feedstock conversion and product innovation
Strategic LEADING MARKET POSITION IN partnerships, feedstock KEY PROJECTS PRODUCT CONVERSION conversion and Biomass-Balanced: Expanding ISCC+ certifications of NEW RENEWABLE renewable carbon alternatives of our current products product innovation CHEMISTRIES Renewable Coatings: Renewable barriers to
Slide 20: Good traction in biomass-balanced
Good traction in biomass-balanced LATEST DEVELOPMENTS • First biomass-balanced polymers were introduced in 2022, particularly targeted for water treatment WHAT ARE THE BIOMASS-BALANCED customers PRODUCTS? • Enhanced value proposition and new sales roll-out Products based on in 2023, significant sale
Slide 21: Strong demand from customers for renewable coatings
Strong demand from customers for renewable coatings LATEST DEVELOPMENTS • Strong demand from customers for renewable WHAT ARE coatings to replace plastics RENEWABLE COATINGS? • Technical proof-of-concept work ongoing with Renewable barriers for paper innovative renewable products with numerous & boa
Slide 22: Evaluating Alpha Glucan manufacturing opportunity
Evaluating Alpha Glucan manufacturing opportunity LATEST DEVELOPMENTS • Collaboration with International Flavors and Fragrances (IFF) started in 2020, partnership now WHAT IS ALPHA GLUCAN? expanded to production of renewable materials Platform of renewable polymers capable of replacing fossil-based
Slide 23: Delivering EUR 500 million target by 2030
Delivering EUR 500 million target by 2030 ILLUSTRATIVE PLAN ON HOW TO REACH THE 2030 TARGET Mainly sizing products ~230 2023 revenue Biomass-Balanced Alpha Glucan Renewable 2030 target Coatings SEPTEMBER 26, 2024 CAPITAL MARKETS DAY 23
Slide 24: Optimizing how we work in research and development
Optimizing how we work in research and development NEW ORGANIZATIONAL MODEL BEING PLANNED • Product development relocating to the three new business units as of 2025 to further increase customer-centricity, speed-to-market and commercialization of new products • New Research & Innovation unit focusi
Slide 25: Chemistry with a purpose
4 e mM | cra Chemistry with a purpose. Better every day.
Slide 26: Water Solutions: Ambition to double revenue
TUIJA POHJOLAINEN-HILTUNEN PRESIDENT, INDUSTRY & WATER EVP, WATER SOLUTIONS AS OF 1/2025 Water Solutions: Ambition to double revenue CAPITAL MARKETS DAY SEPTEMBER 26, 2024
Slide 27: Our water business is in excellent shape
Our water business is in excellent shape STRONG FINANCIAL PERFORMANCE WE HAVE AN EFFICIENT OPERATING PLATFORM IN RECENT YEARS EUR million % • Strong value proposition to customers: application know-how, product quality and supply security 350 336 23.3% 24 23.2% • Strong and typically long customer r
Slide 28: Our solutions improve our customers' footprint
MORE PHOSPHORUS REMOVAL WITH LOWER CARBON CHEMICAL FOOTPRINT WITH PHOSPHORUS CHEMICAL TREATMENT REMOVAL Up to Min Our solutions 90% 30% play a significant Coagulation enables better removal of phosphorus from With pre-precipitation at wastewater treatment plants role in improving wastewater discharg
Slide 29: Trends in water treatment provide opportunities for sustainable growth
Trends in water treatment provide solid opportunities for sustainable growth RELEVANT WATER TREATMENT RELEVANT MARKET TREND PRODUCTS & SOLUTIONS AND EXPECTED GROWTH MARKET CAGR EUR billion Energy efficiency in water 8-9% treatment processes CAGR 4-5% 18.4 5-6% Micropollutants removal 14.3 Accelerate
Slide 30: Regulation continues to support growth in water treatment
Regulation continues to support the growth in water treatment REGION REGULATION UNDER REVIEW COMMENTS & IMPLICATIONS EUROPE Urban Wastewater Treatment Directive (UWWT) • Driver for the enforcement of existing legislation in all countries especially for phosphorus removal; tighter limits gradually st
Slide 31: Micropollutant removal growth opportunity
Micropollutant removal is an increasingly attractive and synergistic growth opportunity MARKET DESCRIPTION KEMIRA AND MICROPOLLUTANT REMOVAL Activated Carbon (AC) the most commonly used technology • Acquisition of Norit’s reactivation in micropollutant removal; market moving increasingly operations
Slide 32: Biogas applications are of increasing interest
Biogas applications are of increasing interest MARKET DESCRIPTION KEMIRA AND BIOGAS APPLICATIONS Biogas market expected to grow significantly in coming years • Our products, particularly coagulants, can due to increased focus on energy independence and green transition significantly enhance biogas y
Slide 33: Industrial water services growth potential
Industrial water services also present interesting growth potential MARKET DESCRIPTION KEMIRA AND INDUSTRIAL WATER SERVICES Industrial water services include several applications, such • Kemira’s current industrial water treatment revenue as boiler & cooling, raw water intake and wastewater around E
Slide 34: Organic and inorganic investments to double the revenue
Both organic and inorganic investments will contribute to our ambition to double the revenue INORGANIC GROWTH OPPORTUNITIES • New technologies, ORGANIC GROWTH particularly around OPPORTUNITIES micropollutants removal • Growth driven by • Market expansion in tightening regulation in APAC Europe and N
Slide 35: Ambitious growth while retaining high profitability
Well-positioned for ambitious growth while retaining high profitability CONTRIBUTION FOR NEW RETAIN HIGH PROFITABILITY OF BASE BUSINESS GROUP FINANCIAL TARGETS • Strong focus on commercial excellence and pricing Average annual • Utilize in-depth market understanding in business decisions organic gro
Slide 36: Ambition to double the revenue
Water solutions is a Focus on retaining significant strong margins contributor to Kemira’s revenue Ambition to growth double the revenue Several attractive organic and inorganic growth opportunities; Kemira remains financially disciplined in inorganic opportunities SEPTEMBER 26, 2024 CAPITAL MARKETS
Slide 37: Chemistry with a purpose
4 e mM | cra Chemistry with a purpose. Better every day.
Slide 38: Fiber Essentials: Cash Generator with Selected Growth Opportunities
ANTTI MATULA SVP, GLOBAL PRODUCT LINES AND BUSINESS DEVELOPMENT, PULP & PAPER EVP, FIBER ESSENTIALS AS OF 01/2025 Fiber Essentials: Cash Generator with Selected Growth Opportunities CAPITAL MARKETS DAY SEPTEMBER 26, 2024
Slide 39: Fiber Essentials focuses on critical pulp chemicals
Fiber Essentials focuses on critical pulp chemicals, particularly in mature markets KEY STRENGTHS OF NEW BUSINESS UNIT 5% • Strong customer loyalty and high retention 15% 15% • Long customer contracts with pricing largely based on formulas 15% REVENUE GEOGRAPHIC • Strong commitment to quality and re
Slide 40: Sodium Chlorate is our largest business
Sodium Chlorate is our largest business; market growing particularly in South America REGIONAL MARKET CAPACITIES* MARKET GROWING SLIGHTLY KEMIRA HAS A GOOD POSITION EUR billion +1% 20% of the global capacity* 10% 1.7 CAGR 1.5 #1 Market leader NA: -1% in EMEA 20% 45% In the growing South #2 American
Slide 41: Fiber Essentials focuses on capital efficiency and cash flow
Fiber Essentials focuses on capital efficiency and cash flow CAPITAL AND OPERATIONAL EFFICIENCY CONTRIBUTION FOR NEW • Continue optimizing operational efficiencies during times of GROUP FINANCIAL TARGETS volatility Average annual • Investing in capacity debottlenecking or into selective new organic
Slide 42: We benefit from our customers' sustainability transition
We benefit from our customers’ sustainability transition CHEMICALS ARE A SIGNIFICANT CONTRIBUTOR WE ARE WORKING TO EXPAND OUR TO OUR CUSTOMERS’ SCOPE 3 EMISSIONS RENEWABLE PRODUCT PORTFOLIO Introducing sustainable and carbon free electrochemical as one of the pioneering suppliers Increasing customer
Slide 43: We have a competitive electricity positioning
We have a competitive electricity positioning COMPETITIVE POSITIONING PARTICULARLY IN KEMIRA’S ANNUAL ELECTRICITY PURCHASES FINLAND AROUND EUR 130 MILLION IN 2023 Kemira is entitled to electricity at production cost based Fixed price energy from adjacent pulp on its ownership share in partner energy
Slide 44: Opportunities to grow in South America
We see opportunities to grow in South America PLANNED PULP PROJECTS South America is the preferred region for new pulp IN SOUTH AMERICA investments Pulp producers in South America enjoy the lowest production costs due to fast growth rates of eucalyptus, availability of land, unit size and pulp mills
Slide 45: Chemical islands are attractive investments
Chemical islands are attractive investments BENEFITS OF THE CHEMICAL ISLAND CONCEPT • Close proximity to a pulp mill: full integration or KEMIRA location adjacent to a pulp mill FRAY BENTOS • Main products: sodium chlorate + hydrogen peroxide Recent expansion of existing chemical island; completed i
Slide 46: Cash generator with selected growth opportunities
Cash Key contributor for Focus on capital Kemira’s operative efficiency and EBITDA margin target maximizing cash flow generator with selected growth opportunities Strong cash generation supporting selective growth investments in new bleaching capacity and also investments in other business units SEP
Slide 47: Chemistry with a purpose
4 e mM | cra Chemistry with a purpose. Better every day.
Slide 48: Packaging & Hygiene Solutions: Solid Base Business with Accelerated Growth
HARRI ERONEN INTERIM PRESIDENT, PULP & PAPER EVP, PACKAGING AND HYGIENE SOLUTIONS AS OF 01/2025 Packaging & Hygiene Solutions: Solid Base Business with Accelerated Growth from Sustainable Solutions CAPITAL MARKETS DAY SEPTEMBER 26, 2024
Slide 49: Packaging & Hygiene Solutions well positioned in several applications
Packaging & Hygiene Solutions is well positioned in several applications KEY STRENGTHS OF THE NEW BUSINESS UNIT • Long-term customer relationships 10% demonstrated through consistent reliability 25% and extensive collaboration; high customer 10% satisfaction KEMIRA KEMIRA 40% REVENUE REVENUE • High
Slide 50: We are #2 in an expanding global market
We are #2 in an expanding global market LARGE ADDRESSABLE MARKET SOME MARKET GROWTH KEMIRA HAS A GOOD MARKET EXPECTED POSITION 5% EUR billion ~2% 7.6 15% 6.7 #2 ~16% GLOBAL MARKET EUR MARKET POSITION ~7 BILLION 5.0 SHARE 15% 4.3 65% 1.1 1.3 Packaging & Board Other 1.0 0.8 Tissue 0.4 0.5 Printing & W
Slide 51: Our products significantly improve our customers' footprint
RENEWABLE PRODUCTS Our products Positive climate impact* while maintaining product functionality Fossil-based raw materials cut by significantly >50% vs. standard products improve our customers’ STRENGTH DIGITAL SOLUTIONS footprint Making packaging Optimizing overall lighter and stronger, process im
Slide 52: Increasing efficiencies with product and regional expansion
Our focus will be on increasing efficiencies together with product and regional expansion IMPROVE OPERATIONAL EFFICIENCY CONTRIBUTION FOR NEW • Continued emphasis on margin management GROUP FINANCIAL TARGETS • Focus on capacity utilization Average annual • Leverage presence and cash flow in Printing
Slide 53: Invest increasingly in new applications to complement growth
We will invest increasingly in new applications to ACCELERATED GROWTH complement the growth Renewable chemical ENHANCED Textiles of our base business solutions CROSS-SELLING Enhanced cross-selling opportunities in the existing business can be leveraged as a bridge to accelerated growth BASE BUSINESS
Slide 54: Attractive growth in new end-markets
We see attractive growth in new end-markets… MOLDED TEXTILE RENEWABLE DIGITAL FIBERS FIBERS CHEMISTRY SOLUTIONS SERVICES Molded fiber continues Demand for novel sustainable Transition away from fossil- The chemical market is momentum as the sustain- solutions in the textile value based materials pro
Slide 55: A clear plan to capitalize on new end-markets
… and have a clear plan to capitalize on them MOLDED TEXTILE RENEWABLE DIGITAL FIBERS FIBERS 1 CHEMISTRY SOLUTIONS SERVICES Kemira’s position and Kemira’s position and Kemira’s position and Kemira’s position and next steps next steps next steps next steps 2024: 2024: 2024: 2024: Expand digital advis
Slide 56: Solid base business with accelerated growth from sustainable solutions
Solid Base We see opportunity We are actively looking for new Business with for operational improvement, growth opportunities in existing business and new end- Accelerated including margins markets Growth from Sustainable Solutions We are well-positioned to benefit from consumers’ increasing focus o
Slide 57: Chemistry with a purpose
4 e mM | cra Chemistry with a purpose. Better every day.
Slide 58: Strong Balance Sheet Enabling Ambitious Growth
PETRI CASTRÉN CFO Strong Balance Sheet Enabling Ambitious Growth CAPITAL MARKETS DAY SEPTEMBER 26, 2024
Slide 59: New long-term financial targets
New long-term financial targets reflect our profitable growth ambitions and stronger fundamentals AVERAGE ANNUAL OPERATIVE OPERATIVE RETURN ON ORGANIC GROWTH EBITDA CAPITAL EMPLOYED > 4% 18-21% > 16% SEPTEMBER 26, 2024 CAPITAL MARKETS DAY 59
Slide 60: New business units have different financial profiles
New business units have different financial profiles BUSINESS WATER FIBER PACKAGING & UNIT SOLUTIONS ESSENTIALS HYGIENE SOLUTIONS % of total sales* ~45% ~20% ~35% Cyclicality Low Medium Medium Pricing structure Majority fixed pricing Majority formula-based Majority fixed pricing Capital intensity Lo
Slide 61: New Operations function targets further efficiencies
Our new Operations function will continue to target further efficiencies PRIORITIES OF THE NEW UNIT • Retain our efficient operational backbone ~3,000 57 • Drive profitability through optimizing efficiency of Number of manufacturing, operations and related functions Employees manufacturing • Enhance
Slide 62: Portfolio more predictable and resilient after divesting Oil & Gas
Our portfolio is more predictable and resilient after divesting Oil & Gas LOWER CYCLICALITY LOWER NET WORKING CAPITAL LOWER CAPITAL EXPENDITURE Revenue development, EUR million EUR million EUR million 1 000 450 12% 90 10 400 11% 80 9 800 350 70 8 300 11% 60 7 600 250 50 6 200 40 5 400 150 30 4 200 1
Slide 63: Structurally higher margins due to systematic improvements
Our structurally higher margins are due to systematic improvements OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN DEVELOPMENT EUR million % 596 REASONS BEHIND THE STRONGER 600 24 MARGIN PROFILE 518 COMMERCIAL EXCELLENCE 500 22 435 426 20.6% 20.6% • Strong focus on pricing and customer-level profitabil
Slide 64: Capex expected to be 6-7% of revenue
Capex expected to be 6-7% of revenue excluding large investments CAPEX DEVELOPMENT AND ITS SHARE OF REVENUE EUR million CAPEX PRIORITIES GOING FORWARD Share of revenue Improvement capex • Water Solutions Maintenance capex Expansion capex • Renewable solutions; investments in alpha 250 Maintenance an
Slide 65: Balance sheet very strong with no large debt maturities
Our balance sheet is very strong with no large debt maturities GROSS DEBT EUR 753 MILLION (AT END OF JUNE 2024), BALANCE SHEET HAS MATURITY PROFILE EXCLUDING LEASES STRENGTHENED CONSIDERABLY 450 41% 17% Loans from banks and 2.5 400 2.3 Leases financial institutions 129 million EUR 313 million 350 2.
Slide 66: We have a disciplined M&A strategy
We have a disciplined M&A strategy • M&A is one tool to accelerate Kemira’s ambitions for profitable growth • Looking at opportunities particularly in water and the renewables space: interested in both new technologies and market consolidation • Preference for small-to mid-sized acquisitions • Clear
Slide 67: Attractive shareholder returns combined with higher growth investments
Attractive shareholder returns combined with higher growth investments SHAREHOLDER CAPITAL EXPENDITURE M&A TO RETURNS TO REMAIN TO DRIVE GROWTH DRIVE GROWTH COMPETITIVE Capex to remain roughly within Increased focus Maintain current dividend policy existing capex range of 6-7% of on M&A, particularl
Slide 68: Factors to watch in 2025
Factors to watch in 2025 FACTORS EXPECTED TO IMPACT THE OPERATIVE EBITDA DEVELOPMENT IN 2025 SUPPORTING UNCERTAINTIES POSSIBLE NEGATIVE FACTORS • Solid end-market demand in • Global economic uncertainty water treatment and its impact on Pulp & • Fixed cost pressure Paper market following strong infl
Slide 69: Strong balance sheet enabling ambitious growth
Strong 1. 2. balance STRONGER STRUCTURALLY AMBITION HIGHER MARGIN TO GROW PROFILE Financial target to Financial target sheet reach average annual for operative EBITDA organic growth of >4% 18-21% enabling ambitious 3. ATTRACTIVE GROWTH OPPORTUNITIES ORGANICALLY AND INORGANICALLY growth Disciplined M
Slide 70: Chemistry with a purpose. Better every day.
4 e mM | cra Chemistry with a purpose. Better every day.