Kemira Oyj · OMXHEX:KEMIRA

Kemira Oyj — Q3 2005 Earnings Presentation

36 slides from Kemira Oyj's earnings presentation, Nov 2, 2005

  1. Slide 1: 1

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  2. Slide 2: Kemira Reports Strong Earnings in July – September

    Kemira Reports Strong Earnings in July – September Transformation Continues Lasse Kurkilahti, President & CEO 2 November 2005 IR Contact: Päivi Antola, paivi.antola@kemira.com, tel. +358 1086 21140

  3. Slide 3: Contents

    Contents July – September Group Highlights January – September July – September Business Area Highlights Development of the Kemira Share Execution 3

  4. Slide 4: July – September Group Highlights

    July – September Group Highlights

  5. Slide 5: Strong Earnings in July – September

    Strong Earnings in July – September Revenue up 20% from Q3/2004 EBIT up 28% EPS up 65% to EUR 0.28 ROCE up to 9.3% from 8.2% 5

  6. Slide 6: Growth Boosted by Acquisitions

    Growth Boosted by Acquisitions Organic Q3/05 Q3/04* Change growth 2004* Revenue (MEUR) 543.0 453.4 20% 4% 1,695.1 EBIT (MEUR) 59.2 46.1 28% 111.6 EPS (EUR) 0.28 0.17 65% 0.50 ROCE, % 9.3 8.2 8.6 Free cash flow (MEUR) 71.9 78.7 107.6 *Continuing operations, pro forma 6

  7. Slide 7: Q3 Revenue up 20%, EBIT up 28%

    Q3 Revenue up 20%, EBIT up 28% Revenue EBIT + Price increases + Price increases + Volumes + Volumes + Acquisitions + Acquisitions − Divestments + Divestments − Water-soluble fertilizer + Currency impact restructuring + Depreciation − Raw material and energy prices 7

  8. Slide 8: January – September

    January - September © _ = ® x

  9. Slide 9: Revenue in January – September

    Revenue in January – September Other Paints & 1% 2800 Coatings 2400 25 % 2000 MEUR Pulp & Paper 35 % 1600 1200 800 Industrial 400 Chemicals 0 Kemwater 21 % 2001 2002 2003 2004* 2005 18 % Q1 Q2 Q3 Q4 Total in Q3/2005 YTD: 1,472.9 MEUR, +13% *Continuing operations (Q3/2004: 1,304.1 MEUR) 9

  10. Slide 10: EBIT in January – September

    EBIT in January – September Paints & 200 10 % Coatings Pulp & Paper 8 49.1 MEUR 150 Chemicals 41.8 MEUR 6 MEUR 100 4 50 2 Industrial Kemwater Chemicals 24.4 MEUR 0 0 04* 01 02 03 05 25.8 MEUR EBIT % Total in Q3/2005 YTD: 129.1 MEUR, +32% (Q3/2004: 97.9 MEUR) *Continuing operations. Excluding a The p

  11. Slide 11: Capital Employed by Business Area Sept 2005

    Capital Employed by Business Area 30 Sept 2005 30 September 2005: 1,795 MEUR (31 Dec 2004: 1,206 MEUR) Other Paints & 36.5 MEUR Coatings 2% 271 MEUR (32.9 MEUR) 15% (263.3 MEUR) Industrial Chemicals 444.7 MEUR 25% Pulp & Paper (289.0) Chemicals 812.4 MEUR Kemwater 45% 230.4 MEUR (432.2 MEUR) 13% 188

  12. Slide 12: EPS & ROCE

    EPS & ROCE 1 12 % 10 8 0,5 6 4 2 0 0 2001 2002 2003 2005 2004* ROCE * Continuing operations excluding a non-recurring charge of 44.2 MEUR in Q4/04. Q4/02 exludes a write-down of 78 MEUR. 12

  13. Slide 13: Balance Sheet

    Balance Sheet 30 Sept 05 31 Dec 04 Equity ratio, % 42 47 Gearing, % 73 21 Capital employed (MEUR) 1,794.5 1,205.9 Personnel 7,724 7,137 13

  14. Slide 14: Cash Flows in January – September

    Cash Flows in January – September MEUR Q1-Q3/05 Q1-Q3/04* 2004* Cash flows from operations 85.8 160.0 231.0 Acquisitions -285.5 -14.4 -47.8 CapEx excl. acquisitions -78.0 -74.9 -117.3 Sale of fixed assets 56.0 20.8 41.7 Cash flows from investing activities -307.5 -68.5 -123.4 Free cash flow -221.7 9

  15. Slide 15: CapEx Excluding Acquisitions

    CapEx Excluding Acquisitions Total in January – September 2005: 78.0 MEUR (Q1-Q3/2004: 63.8) Depreciation in January – September 2005: 88.1 MEUR (Q1-Q3/2004: 89.6) Paints & Coatings; Maintenance 13.9 22 % Pulp & Paper; 23.8 Improvement 47 % Expansion Kemwater; Industrial 31 % 11.5 Chemicals; 26.2 15

  16. Slide 16: July – September Business Area Highlights

    July – September Business Area Highlights

  17. Slide 17: Pulp & Paper Chemicals in Q3

    Pulp & Paper Chemicals in Q3 Revenue up by 43% to EUR 207.9 million Acquisitions of Finnish Chemicals and E.QU.I.P. Organic growth 4% EBIT up by 54% to EUR 23.5 million, ROCE 8.7% (8.8%) Efficiency measures Rise in raw material prices levelled off, price of energy rose markedly Higher raw material c

  18. Slide 18: Pulp & Paper Chemicals revenue and EBIT

    Pulp & Paper Chemicals Revenue EBIT & ROCE 600 50 12 % 500 10 40 400 8 30 € million 300 € million 6 200 20 4 100 10 2 0 0 0 01 02 03 04 05 01 02 03 04 05 Q1 Q2 Q3 Q4 EBIT % ROCE The figures are not fully comparable due to changes in the business structure. 18

  19. Slide 19: Pulp & Paper Chemicals' Outlook

    Pulp & Paper Chemicals’ Outlook Capacity utilization of the customer industry estimated to be good during the latter part of the year Price rises in raw materials and especially in energy putting pressure on earnings 2005 revenue and EBIT estimated to increase substantially on 2004, particularly tha

  20. Slide 20: Kemwater in Q3

    Kemwater in Q3 Revenue up by 34% to EUR 95.1 million Volumes and prices up Acquisition of Eaglebrook in November 2004 Organic growth 7% EBIT up by 43% to EUR 9.0 million, ROCE 14.7%* (16.9%) Raw material prices continued to grow in the US Higher raw material costs were partly passed along into selli

  21. Slide 21: Kemwater revenue and EBIT

    Kemwater 300 Revenue EBIT & ROCE 250 30 25 % 25 20 200 € million 20 150 15 € million 15 100 10 10 50 5 5 0 0 0 01 02 03 04 05 01 02 03 04 05 Q1 Q2 Q3 Q4 EBIT % ROCE The figures are not fully comparable Q4/04 excluding extra write-downs and due to changes in business structure. costs of 11 MEUR. 21

  22. Slide 22: Kemwater's Outlook

    Kemwater’s Outlook Demand for water treatment chemicals expected to remain good during the rest of the year Price increases in raw materials especially in the US putting earnings under pressure Full year revenue estimated to grow substantially thanks to the Eaglebrook acquisition and higher sales vo

  23. Slide 23: Industrial Chemicals in Q3

    Industrial Chemicals in Q3 Revenue up by 39% to EUR 111.6 million Organic growth 10% Average prices of TiO2 in euros up 7%, volumes on a par with Q3/04 Acquisition of Verdugt EBIT was EUR 11.0 million (EUR 9.6 million, excl. non-recurring income) ROCE 8.9% (11.6%) Target for the efficiency plan in t

  24. Slide 24: Industrial Chemicals revenue and EBIT

    Industrial Chemicals Revenue EBIT & ROCE 500 60 Net sales 18 % 400 50 16 14 40 € million 300 12 € million 30 10 200 8 20 6 100 4 10 2 0 0 0 01 02 03 05 04* 01 02 03 05 04* Q1 Q2 Q3 Q4 EBIT % ROCE The figures are not fully comparable *Continuing operations due to changes in the business structure. 24

  25. Slide 25: Industrial Chemicals' Outlook

    Industrial Chemicals’ Outlook No changes expected in TiO2 prices during Q4. Demand anticipated to hold steady and sales volumes estimated to grow slightly compared with Q4/04 Increases in the prices of raw materials and energy squeezing earnings Sales of organic acids, organic acid derivatives and s

  26. Slide 26: Paints & Coatings in Q3

    Paints & Coatings in Q3 Revenue up 6% to EUR 129.9 million Continuing operations +10% Good demand for paints in most of the main markets Growth in Russia continued EBIT up by 42% to EUR 20.6 million, ROCE 16.8% (12.5%) High raw material costs were factored into selling prices Coil coating business s

  27. Slide 27: Paints & Coatings revenue and EBIT

    Paints & Coatings Revenue EBIT & ROCE 500 60 50 16 % 400 40 ------ 12 300 30 ------ € million € million ------ 8 20 ------ 200 10 4 0 100 0 -10 0 -20 -4 01 02 03 04 05 01 02 03 04 05 Q1 Q2 Q3 Q4 EBIT % ROCE 27

  28. Slide 28: Paints & Coatings' Outlook

    Paints & Coatings’ Outlook Due to the divestments made in 2004 and 2005, full-year revenue expected to be on a par with 2004 EBIT estimated to increase substantially 28

  29. Slide 29: Outlook for 2005 – Kemira Group

    Outlook for 2005 – Kemira Group Kemira Group’s full-year revenue, EBIT and earnings per share in 2005 are estimated to increase strongly on the comparable figures for 2004 All forecasts and estimates mentioned in this report are based on the current judgement of the economic environment and the actu

  30. Slide 30: Development of the Kemira Share

    Development of the Kemira Share

  31. Slide 31: Shareholder Value

    Shareholder Value 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 31 Kemifra

  32. Slide 32: Shareholders October 2005

    Shareholders 28 October 2005 (29 October 2004) International Institutions 14.2% (10.8) Finnish Institutions Finnish State 25.1% (22.5) 48.7% (56.2) Households Kemira 8.7% (7.1) 3.3% (3.4) Minimum state ownership 15% 32

  33. Slide 33: Execution

    Execution © _ = ® x

  34. Slide 34: Goal

    Goal A global group of leading chemicals businesses with unique positions and high mutual synergy Great profitability, continuous improvement Continuous growth: organic and through M&A Participative, entrepreneurial company culture → More ambition, more dynamics 34

  35. Slide 35: Kemira from Good to Great

    Kemira from Good to Great Operatives Operatives && Culture Culture Brand Brand Strategy Strategy All our actions lead towards We have a strong, participative We are regarded as World Class Operative and entrepreneurial culture. the leading expert in Efficiency. Chemical Solutions. We will create it

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Kemira — Q3 2005 Earnings Presentation on 6ix