Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q3 2002 Earnings Presentation
33 slides from Kemira Oyj's earnings presentation, 2002
Slide 1: Growth Strategy
Growth Strategy World-scale leaders Leading in Europe High with a strong Baltic Pulp & rim base Paper Paints and Kemwater Chemicals Coatings Growth World-scale ambitions performer Industrial To be separated Chemicals Agro Low Average High Competitiveness www.kemira.com 1
Slide 2: Pulp & Paper Chemicals
Pulp & Paper Chemicals Mergers & acquisitions Global number 6 as paper chemical 1200 Net sales € mill. supplier Acquistions 800 Complete solutions from pulping to paper 400 Vinings acquisition: excellent 0 Organic Net sales acquisition growth match technologically, Vinings 2001 geographically
Slide 3: Pulp and Paper Chemicals Industry
Pulp and Paper Chemicals Industry Global market for pulp and paper chemicals est. 13.5 B€ Bleaching chemicals 3.0 B€ Major suppliers chloride dioxide, oxygen, ozone, peroxide, Hercules 900 M$ dithionite Eka Chemicals 750 M€ Process chemicals 2.8 alum, retention, BASF 700 M€ deposit control, Nalco 65
Slide 4: Kemwater - World Leader in Chemical Water Purification
Kemwater - World Leader in Chemical Water Purification 400 Mergers & World leader in coagulants 350 Net sales, € mill. acquisitions 300 Acquisition based growth and stable 250 profitability 200 150 Local/regional business based on 100 low cost raw material sourcing and 50 logistics 0 Differe
Slide 5: Kemwater Strategy
Kemwater Strategy Geographical expansion in Americas/Asia Mergers & Market restructuring acquisitions Cost Product efficiency and service differentiation Recycled raw materials Sludge management Production technology Service concepts Overall manufacturing structure Complete water sol
Slide 6: 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 www.kemira.com 6
Slide 7: Industrial Chemicals - Growth through Innovation and Excellent Business Practices
Industrial Chemicals - Growth through Innovation and Excellent Business Practices Mergers & Benefits from Kemira’s 600 acquisitions Net sales, € mill. synergistic competencies 500 Platform for organic growth with 400 300 high profitability and strong 200 cash-flow 100 Differentiation into spec
Slide 8: Paints and Coatings
Paints and Coatings Decorative paints ~70 % Mergers & coatings ~30 % of sales 1200 acquisitions Net Sales, € mill. (coatings: metal and coil coating, wood 1000 finishes) 800 Biggest decorative paint company 600 in Nordic countries 400 Target to become a leading (1-5) 200 paint company in Europ
Slide 9: 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 49 5 148 62 <5 l / person 8 26 5 82 39 15 51 Total market 58 11 22 5,700,000 22 tonnes 15 58 9 62 49 11 www.kemira.com 9
Slide 10: Highlights 1-3Q 2002
Highlights 1-3Q 2002 Sales € 1 975 million, growth 7% Operating income € 105 million (€ 127 million), 5% of net sales; Q3 operating income € 26 million (€ 16 million) EPS € 0.45 (€ 0.55) Equity / share € 9.40 (€ 9.35 year end 2001) Cash flow / share € 1.84 (€ 0.95) Additional pension cos
Slide 11: Kemira Group 1-3Q 2002
Kemira Group 1-3Q 2002 70 60 1-3Q 02 50 1-3Q 01 Chemicals € million 38 % Agro 40 42 % 30 20 10 Other 0 2% Agro Chemicals Coatings Paints & Paints & Coatings 18 % Net sales 1-3Q 2002: € 1 975 m Operating income 1-3Q 2002: € 105 m www.kemira.com 11
Slide 12: Growth Potential
Growth Potential Acquisitions Other -specialty paper chemicals company 1% (Vinings) in North America Agro - Kynoch Feeds feed phosphate company 24 % in South Africa - Akzo Nobel Coatings’ Nordic general industrial liquid coatings activities Organic growth - Pulp & Paper Chemicals: calcium sulpha
Slide 13: Chemicals
Chemicals Net sales Operating income 900 Net sales % 120 14 100 12 600 10 80 € million € million 8 60 6 300 40 4 20 2 0 0 0 97 98 99 00 01 02 97 98 99 00 01 02 Q1 Q2 Q3 Q4 www.kemira.com 13
Slide 14: Chemicals
Chemicals Pulp & Industrial Pulp & Paper Chemicals Paper Industrial Chemicals Chemicals 37% Chemicals 38 % 46% 44 % Kemwater Kemwater 18 % 17% Net sales 2001: € 901 m Net sales 1-3Q 2002: € 784 m www.kemira.com 14
Slide 15: Pulp & Paper Chemicals
Pulp & Paper Chemicals Sulphur Bleaching Sales 37% over 2001 y-t-d, chemicals chemicals operating income better than previous year Strong growth in specialty paper chemicals due to North American acquisition; integration proceeding well Pulp and paper production still on a low level, especiall
Slide 16: Kemwater
Kemwater Sales growth 11% over 2001 y-t-d Operating income close to previous year Strongest growth in Central and Southern Europe Floods in Europe had both negative and positive impact Dry weather in Nordic area affected sales St. Petersburg project proceeding Net sales 1-3Q 2002: € 134
Slide 17: Industrial Chemicals
Industrial Chemicals Sales up by 4% y-t-d, operating income below previous year TiO2 volumes up by 3%, prices down by Fine Chemicals 13%; prices started to increase clearly during the summer TiO2 suffered from maintenance/ Chemidet expansion shutdown; additional capacity by the year end Calc
Slide 18: Paints and Coatings
Paints and Coatings Net sales Operating income 500 50 % 14 400 40 10 30 300 € million € million 20 6 200 10 2 0 100 -2 -10 0 -20 -6 97 98 99 00 01 02 97 98 99 00 01 02 Q1 Q2 Q3 Q4 www.kemira.com 18
Slide 19: Paints and Coatings
Paints and Coatings Coatings 30% Coatings 27% Deco 73% Deco 70% Net sales 2001: € 445 m Net sales 1-3Q 2002: € 365 m www.kemira.com 19
Slide 20: Paints and Coatings
Paints and Coatings Deco Sales 3% over 2001 y-t-d Sales developing favourably in main markets Synergies of integration of Alcro-Beckers showing in operating income € 2.1 m one time restructuring charges Coatings Sales 5% below 2001 y-t-d Sales decreased in the Netherlands and U.K. Grow
Slide 21: Agro
Agro Net sales Operating income % 1 200 110 90 10 1 000 70 € million 800 50 6 € million 600 30 2 400 10 -10 -2 200 -30 0 -50 -6 97 98 99 00 01 02 97 98 99 00 01 02 Q1 Q2 Q3 Q4 www.kemira.com 21
Slide 22: Agro
Agro Food Chain Food Chain Partner Partner 28% 29% Agro Nitrogen Agro 35 % Nitrogen 42 % Specialty Crop Care 11% Specialty Intermediates Crop Care 12% 16% Intermediates Animal Nutrition Animal 12% Nutrition 7% 8% Net sales 2001: € 1 158 m Net sales 1-3Q 2002: € 871 m www.kemira.com 22
Slide 23: Agro Specialties
Agro Specialties Sales 7% over 2001 y-t-d, volumes up by 19%, especially in Baltics and overseas exports Prices down by 5%, partly offset by low ammonia prices Potassium nitrate and feed phosphate plant in Jordan will be started during fourth quarter Automation investment in Uusikaupunki, Fi
Slide 24: Agro Nitrogen
Agro Nitrogen Sales 11% below 2001 y-t-d Prices down by more than 10%, volumes on the same level as last year Operating income clearly lower than last year Nitric acid plant relocation completed in Tertre, Belgium Signs of continuing industry restructuring in Europe www.kemira.com 24
Slide 25: Kemira Group
Kemira Group Net sales Operating income % 2800 200 10 180 2400 160 8 2000 140 € million 1600 120 6 € million 100 1200 80 4 800 60 40 2 400 20 0 0 0 97 98 99 00 01 02 97 98 99 00 01 02 Q1 Q2 Q3 Q4 www.kemira.com 25
Slide 26: Net Debt and Gearing
Net Debt 1 050 100 900 80 750 60 € million Gearing 600 450 40 300 20 150 0 0 97 98 99 00 01 02 www.kemira.com 26
Slide 27: Net Financing Expenses
Net Financing Expenses 60 7 50 6 Average interest rate 5 40 € million 4 30 3 20 2 10 1 0 0 97 98 99 00 01 02 Q1 Q2 Q3 Q4 Average interest rate www.kemira.com 27
Slide 28: Cash Flow
Cash Flow 550 450 350 € million 250 150 50 -50 -150 97 98 99 00 01 1-3Q 02 Cash flow from operations Cash flow after investments and disposals www.kemira.com 28
Slide 29: Net Income and CFROI
Net Income and CFROI 250 16 14 200 12 10 € million CFROI % 150 8 100 6 4 50 2 0 0 97 98 99 00 01 02 Q1 Q2 Q3 Q4 CFROI % EPS* 0.81 0.61 0.23 0.73 0.58 0.45 CFPS 2.00 0.96 1.41 1.69 1.03 1.84 *) excluding non-recurring items 2000 www.kemira.com 29
Slide 30: Valuation / Ownership
Valuation / Ownership Market capitalisation / equity Ownership 31 October 2002 1500 Finnish instit. Public 1200 29.4 % 6.6 % 900 € million Kemira 3.4 % 600 Int. instit. 4.4 % 300 Finnish 0 State 95 96 97 98 99 00 01 02 56.2 % Equity / share € 9.40 State’s minimum 15% Option programme until N
Slide 31: Outlook for the Year 2002 (1)
Outlook for the Year 2002 (1) Chemicals – Pulp & Paper Chemicals will be influenced by weak demand – Sales are expected to grow and operating income to be better than last year excluding the additional pension costs – Kemwater result is expected to be close to 2001 result – Outlook for Industrial
Slide 32: Outlook for the Year 2002 (2)
Outlook for the Year 2002 (2) Paints and Coatings – Demand for paints remains good – Strong growth in demand in Baltics and Russia – Due to seasonality the operating income for the fourth quarter will be negative – Potential restructuring charges may further affect the operating income – Operating
Slide 33: Outlook for the Year 2002 (3)
Outlook for the Year 2002 (3) Agro – Uncertainty due to high inventory levels continues – Restructuring of European fertilizer industry likely to continue – New fertilizer season started with lower prices – Agro will start more independent operation from the beginning of 2003 – Process for bringin