Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q3 2021 Earnings Presentation
29 slides from Kemira Oyj's earnings presentation, Oct 26, 2021
Slide 1: Record quarterly revenue
JARI ROSENDAL, PRESIDENT AND CEO PETRI CASTRÉN, CFO OCTOBER 26, 2021 Record quarterly revenue JANUARY-SEPTEMBER 2021
Slide 2: Summary of Q3 2021
Summary of Q3 2021 • Strong end-market growth continued • Organic revenue growth +16%, record-high quarterly revenue in a seasonally strong quarter • Profitability impacted by strong raw material inflation. Impact from inflationary pressures expected to continue in the coming quarters, particularly
Slide 3: Financial highlights of Q3 2021
Financial highlights of Q3 2021 Strong organic revenue growth of 16% • Strong demand in both segments, EUR million Q3 Q3 Δ% 1-9 1-9 Δ% FY geographically particularly in EMEA and the (except ratios) 2021 2020 2021 2020 2020 Americas Revenue 692.7 596.7 +16% 1,956.2 1,821.6 +7% 2,427.2 • Organic reven
Slide 4: Pulp & Paper: Revenue growth across customer segments
Pulp & Paper: Revenue growth across customer segments Market environment in Q3 2021 REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million • Strong demand in pulp, board and tissue; continued 391 381 383 386 recovery in printing and writing demand. 373 378 370 370 378 357 352 Organic growth +11% •
Slide 5: Industry & Water: Strong organic growth
Industry & Water: Strong organic growth Market environment in Q3 2021 REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million • Water treatment: Good demand in both municipal 290 307 301 272 279 and industrial water treatment 267 264 244 236 237 226 • Oil & Gas: demand improved sequentially and year
Slide 6: Oil & Gas: Shale market continued to grow
Oil & Gas: Shale market continued to grow US RIG COUNT & FRAC CREW COUNT Rig count Frac crew count Market environment in Q3 2021 1200 • Shale: market continued to recover sequentially; strong 1000 growth versus low comparison period 800 • Oil sands tailings: Good demand, customer treatment 600 seaso
Slide 7: Good customer satisfaction; customers appreciate Kemira's delivery reliability
Good customer satisfaction; customers appreciate Kemira’s delivery reliability NET PROMOTER SCORE (NPS) DEVELOPMENT 50 Chemical industry 44 average 36 33 30 32 2017 2018 2019 2020 YTD 2021 OCTOBER 26, 2021 Q3 2021 RESULT PRESENTATION 7
Slide 8: Our products help to improve our customers' resource-efficiency
Our products help to improve our customers’ resource-efficiency OVER 50% OF OUR REVENUE COMES FROM PRODUCTS THAT How satisfied are you with Kemira’s IMPROVE CUSTOMER RESOURCE-EFFICIENCY ability to support you on matters relating to sustainability? PULP & PAPER: improving manufacturing process and en
Slide 9: Key operative focus areas
Key operative focus areas SHORT-TERM MID- TO LONG-TERM • Return to normality from COVID-19; maintain well- • Construction of new manufacturing capacity in China above industry average employee engagement and Uruguay • Continue to mitigate impacts from significant • Biobased strategy: continue partne
Slide 10: Financials Q3 2021
PETRI CASTRÉN, CFO OCTOBER 26, 2021 Financials Q3 2021 OCTOBER 26, 2021 Q3 2021 RESULT PRESENTATION 10
Slide 11: Sales volumes and prices grew
Sales volumes and prices grew Q3/2021 REVENUE AND ORGANIC GROWTH (Y-ON-Y) Organic revenue growth 16% in Q3 2021 EUR million • Strong revenue growth driven mainly by higher sales volumes. Also sales prices increased clearly. 6% 693 0% 0% 597 10% • Organic revenue growth excluding Oil & Gas 11% Operat
Slide 12: Net impact from sales prices and variable costs negative
Net impact from sales prices and variable costs negative SALES PRICE VS VARIABLE COST TREND SALES PRICES AND VARIABLE COSTS (ROLLING 12-MONTH CHANGE Y-O-Y) (CHANGE Y-O-Y) EUR million EUR million 47 62 180 42 37 34 32 43 120 26 38 28 28 28 36 25 38 16 13 29 24 16 15 9 13 23 11 8 23 60 5 4 19 11 14 12
Slide 13: Cash flow
Cash flow ALL KEY FIGURES IN EUR MILLION CASH FLOW FROM OPERATIONS 386 • Cash flow from operations declined due to changes in 375 net working capital. Kemira paid EUR 22.75 million in 143 146 compensation and costs to CDC during Q3 2021. Q4 205 210 228 Q3 71 88 121 117 139 • Net working capital incr
Slide 14: Gearing below financial target range
Gearing below financial target range DEVELOPMENT OF OPERATIVE ROCE, % 12.1% 11.3% 12.0% 11.2% 9.8% • Operative ROCE good at 12.0% driven by improvement in Pulp & Paper • Pulp & Paper operative ROCE 10.8% (Q3 2020: 9.8%) 2018* 2019 2020 Q3 2020 LTM Q3 2021 LTM • Industry & Water operative ROCE 13.9%
Slide 15: Electricity & energy account for around 10% of direct purchase and logistics costs
Electricity & energy account for around 10% of direct purchase and logistics costs DIRECT PURCHASES AND ELECTRICITY & ENERGY USE BY ELECTRICITY HEDGING LOGISTICS COSTS 2020 COUNTRY (BY GWH) EUR 1.4 billion ◼ 20% FINLAND • Electricity at cost from Pohjolan Voima Logistics Group 31% • In addition, par
Slide 16: Outlook for 2021 unchanged
Outlook for 2021 unchanged OUTLOOK REVENUE ASSUMPTIONS FOR 2021 (SPECIFIED) Kemira’s revenue in local currencies, excluding acquisitions and divestments, is expected to increase from 2020 (EUR • COVID-19 pandemic continues to cause uncertainty, 2,427 million) but overall demand in Kemira’s end marke
Slide 17: WWW.KEMIRA.COM
WWW.KEMIRA.COM
Slide 18: Appendix
Appendix OCTOBER 26, 2021 Q3 2021 RESULT PRESENTATION 18
Slide 19: Kemira in brief
Kemira in brief LAST 12 MONTHS: REVENUE EUR 2,562 MILLION, OPERATIVE EBITDA EUR 436 MILLION, OPERATIVE EBITDA MARGIN 17.0%, OPERATIVE ROCE 12.0% SEGMENT SPLIT GEOGRAPHIES PRODUCTS ◼ 40% ◼ 60% 10% ◼ 20% Other: APAC e.g. defoamers, ◼ 25% Bleaching Industry & Water Pulp & Paper 35% 1. China dispersants
Slide 20: Pulp & Paper – strong business with solid track record
Pulp & Paper – strong business with solid track record REVENUE AND OPERATIVE EBITDA REVENUE BY CUSTOMER REVENUE BY EUR million TYPE AND MARKET GROWTH PRODUCT CATEGORY 1,520 1,523 1,509 1,457 1,477 1,458 ◼ 40% ◼ 40% ◼ 20% ◼ 5% Other ◼ 40% 1,417 Pulp Board & Printing & Bleaching tissue writing papers
Slide 21: Industry & Water – strong positions in chosen categories
Industry & Water – strong positions in chosen categories REVENUE AND OPERATIVE EBITDA REVENUE BY APPLICATION REVENUE BY EUR million 1,136 TYPE AND MARKET GROWTH PRODUCT CATEGORY 1,073 1,053 1,009 970 956 906 ◼ 75% ◼ 15% ◼ 10% ◼ 15% ◼ 50% 192 Water treatment Oil & Gas Other Other Coagulants 175 183 p
Slide 22: Currencies had a negative impact on revenue and operative EBITDA
Currencies had a negative impact on revenue and operative EBITDA KEMIRA REVENUE DISTRIBUTION 1 -9 2021 • Main currency exposure comes via translation ◼ 8% Others impact ◼ 2% BRL ◼ 43% EUR • Transaction risk is limited as revenues and costs ◼ 2% SEK are typically in same currency due to local ◼ 2% GB
Slide 23: Key figures
Key figures EUR million Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 2020 2019 Revenue 692.7 657.5 606.1 605.6 596.7 2,427.2 2,658.8 Operative EBITDA 115.9 107.3 104.6 107.9 113.0 435.1 410.0 margin 16.7% 16.3% 17.3% 17.8% 18.9% 17.9% 15.4% Operative EBIT 64.5 58.2 55.7 57.0 62.3 237.7 224.0 margin 9.3%
Slide 24: Cash flow
Cash flow EUR million Q3 2021 Q3 2020 2020 2019 Net profit for the period 40 39 138 116 Total adjustments 53 77 298 302 Change in net working capital 8 8 -3 45 Finance expenses -8 -1 -22 -39 Income taxes paid -6 -6 -37 -39 Net cash generated from operating activities 87 117 375 386 Capital expenditu
Slide 25: Pulp & Paper
Pulp & Paper KEY FINANCIALS EUR million Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 2020 2019 Revenue 391.3 378.4 369.5 370.0 352.2 1,457.6 1,522.9 Operative EBITDA 63.5 57.8 62.9 68.9 65.5 260.2 218.3 margin 16.2% 15.3% 17.0% 18.6% 18.6% 17.9% 14.3% Operative EBIT 32.5 28.1 33.2 37.5 34.8 138.0 99.2 ma
Slide 26: Industry & Water
Industry & Water KEY FINANCIALS EUR million Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 2020 2019 Revenue 301.4 279.1 236.6 235.6 244.4 969.5 1,135.9 Operative EBITDA 52.3 49.5 41.7 39.0 47.6 174.8 191.7 margin 17.4% 17.7% 17.6% 16.6% 19.5% 18.0% 16.9% Operative EBIT 31.9 30.1 22.5 19.5 27.5 99.7 124.7
Slide 27: Revenue split by country
Revenue split by country FY 2020 Other APAC 6% China 5% Other EMEA 8% USA 24% Norway 2% Netherlands 2% France 2% Italy 2% Canada 6% Russia 3% Spain 3% Brazil 2% Uruguay 2% Poland 3% Other Americas 1% UK 4% Germany 4% Finland 15% Sweden 6% OCTOBER 26, 2021 Q3 2021 RESULT PRESENTATION 27
Slide 28: Important information about financial figures
Important information about financial figures Kemira provides certain financial performance measures (alternative performance measures) that are not defined by IFRS. Kemira believes that alternative performance measures followed by capital markets and management, such as organic growth (=revenue gro
Slide 29: WWW.KEMIRA.COM
WWW.KEMIRA.COM