Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q1 2003 Earnings Presentation
38 slides from Kemira Oyj's earnings presentation, 2003
Slide 1: Kemira Group
Kemira Group Pulp&Paper Kemwater Paints and Industrial GrowHow Chemicals Coatings Chemicals Net Sales 2002, € 2 612 million Other Pulp & Asia Other 2% Paper 6% 2% Finland Chemicals America 18 % 18 % 9% Kemwater Eastern GrowHow 43 % 6% Europe 12 % Paints and Other Coatings Euro area 16 % Other 26 % W
Slide 2: Growth Ambitions
Growth Ambitions Among top 3 Leading in Europe High with a strong Baltic Pulp & rim base Paper Paints and Kemwater Chemicals Coatings Growth ambitions World-scale performers Industrial GrowHow Chemicals Low Average High Competitiveness (relative to industry) 2
Slide 3: Growth Strategy
Growth Strategy Dimensions for Growth Serving Global Leveraging the Growth Customers Potential in Europe Leading Innovations in Demanding Technologies 3
Slide 4: Growth Strategy – Innovation and New Technologies
Growth Strategy – Innovation and New Technologies Competence Centres – core technology platforms enhancing synergies Modern sludge management technologies Water Quality for environmental Wood Fibre Line Management protection and recycling Process solutions for minimum environmental impact pulp an
Slide 5: Pulp & Paper Chemicals – Growth through Partnerships
Pulp & Paper Chemicals – Growth through Partnerships Global number 6 as paper chemical Mergers & acquisitions supplier 1000 Acquistions Net sales, € mill. Complete solutions from pulping to 800 paper 600 Strong synergies between 400 geographical areas 200 Application development driven by 0 customer
Slide 6: 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 BASF 780 M€ Process chemicals 2.8 Eka Chemicals 750 M€ alum, retention, deposit control, ONDEO Na
Slide 7: Kemwater – Growth Potential in Chemical Water Purification
Kemwater – Growth Potential in Chemical Water Purification World leader in coagulants 400 Mergers & acquisitions Acquisition based growth and Net sales, € mill. 300 stable profitability 200 Local/regional business based on low cost raw material 100 sourcing and logistics 0 Differentiated products/se
Slide 8: Kemwater Strategy
Kemwater Strategy Geographical expansion in Americas/Asia Mergers & Market restructuring acquisitions Product Cost and service efficiency differentiation Recycled raw materials Sludge management Production technology Service concepts Overall manufacturing structure Complete water sol
Slide 9: 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 9
Slide 10: Paints and Coatings – Growth Based on Strong Baltic Rim Presence
Paints and Coatings – Growth Based on Strong Baltic Rim Presence Decorative paints ~70 % Mergers & Coatings ~30 % of sales 1000 acquisitions Net sales, € mill. (paints and coatings for the metal and 800 wood industry, coil coatings) 600 Biggest decorative paint company 400 in Nordic countries 200 Ta
Slide 11: 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 59 5 145 64 < 5 l / person 7 26 5 10 17 Western European 83 39 market € 16 billion 16 48 60 11 22 31 16 15 58 8 67 50 11 Source: Industry sources 11
Slide 12: Industrial Chemicals – Growth through Innovation and Excellent Business Practices
Industrial Chemicals – Growth through Innovation and Excellent Business Practices Benefits from Kemira’s Mergers & synergistic competencies 800 acquisitions Platform for organic growth with Net sales, € mill. 600 high profitability and strong cash-flow 400 Differentiation into specialty 200 pr
Slide 13: Industrial Chemicals Market Segments
Industrial Chemicals Market Segments Business Offer Application Area Position Unit Calcium Dust binding Road maintenance Leading in De-icing Europe Chloride Drilling fluids Oil fields De-humidifiers Different industrial areas Chemidet Bleaching agents Detergent industry Among top three percarbonate
Slide 14: GrowHow – the Partner in Food Chain
GrowHow – the Partner in Food Chain Balanced portfolio with differentiated products All crop nutrients and 1500 integrated services Net sales, € mill. 1200 Animal nutrients 900 Process chemicals 600 Specialty products 300 Excellence in all 0 operations Net sales 2002 Organic growth Sales by area 200
Slide 15: World Grain Stocks Drive Fertilizer Demand
World Grain Stocks Drive Fertilizer Demand World wheat stocks vs. price Long-term growth of 39 fertilizer demand 180 37 World population 160 continues to grow 35 140 Decreasing arable 33 USD/t 120 land/capita % 31 100 Dietary changes 29 80 Fertilizer demand and 27 60 prices historically 25 40 correl
Slide 16: Highlights Q1 2003
Highlights Q1 2003 Sales € 700 million, growth 7% Operating income € 31 million (€ 53 million) EPS € 0.14 (€ 0.26) Equity / share € 8.96 (€ 8.94 end 2002) AGM Dividend € 0.30, 49% payout ratio of net result excluding impairment loss New board with international experience 16
Slide 17: Kemira Group Q1 2003
Kemira Group Q1 2003 Pulp & 30 Q1 2003 Other Paper 25 Q1 2002 2% Chemicals 17 % 20 € million Kemwater 15 6% 10 GrowHow 46 % Paints 5 and Coatings 15 % 0 Pulp&Paper Chemicals Paints and Kemwater GrowHow Industrial Coatings Chemicals Industrial Chemicals 14 % Net sales Q1 2003: € 700 m Operating incom
Slide 18: Capital Expenditure – Source of Growth
Capital Expenditure – Source of Growth Acquisitions Pulp & 100% of Kemwater (Yixing) Co. Ltd, Other Paper Kemwater Services Oy and Pigment Chemicals 2% 16 % Corporation, St. Petersburg, to Kemira GrowHow Kemwater Akzo Nobel Coatings´ Nordic 7% 31 % general industrial liquid coatings activities Paint
Slide 19: Pulp & Paper Chemicals
Pulp & Paper Chemicals Sales 11% over 2002 y-o-y, Sulphur operating income better than chemicals Bleaching previous year chemicals North American acquisition included for the full quarter (two months in 2002) Specialty paper chemicals business and hydrogen peroxide prices developing favourably Expan
Slide 20: Pulp & Paper Chemicals
Pulp & Paper Chemicals Net sales Operating income 500 Net sales % 50 16 400 14 40 12 € million 300 10 30 € million 8 200 20 6 100 4 10 2 0 0 0 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 Figures are not fully comparable due to changes in business structure 20
Slide 21: Kemwater
Kemwater Sales down by 4% partly due to dry weather in Nordic countries Operating income close to previous year Kemwater (Yixing) Co. Ltd in China and Kemwater Services Oy entirely to Kemira´s ownership Water treatment chemical company in St. Petersburg in Kemira’s ownership Net sales Q1 2003: € 43
Slide 22: Kemwater
Kemwater Net sales Operating income 200 Net sales % 20 14 12 150 15 10 € million € million 100 8 10 6 50 4 5 2 0 0 0 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 Figures are not fully comparable due to changes in business structure 22
Slide 23: Paints and Coatings
Paints and Coatings Deco 69% of sales Sales 2% higher y-o-y Strong growth in Russia Coatings 31% of sales Sales 14% higher y-o-y mostly due to acquisition of Akzo Nobel’s Nordic industrial coatings Good development in the Nordic countries and Poland Market continued weak in Great Britain Net sales Q
Slide 24: Paints and Coatings
Paints and Coatings Net sales Operating income 500 % 40 400 10 30 300 20 6 € million € million 10 200 2 0 100 -2 -10 0 -20 -6 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 24
Slide 25: Industrial Chemicals
Industrial Chemicals Sales down by 2%, operating income below previous year TiO2 prices bottomed out last Fine Chemicals summer; average prices in the first quarter 2% higher Chemidet TiO2 unit suffered from fire, damages about € 2 million Demand for calcium chloride and Calcium formic acid remained
Slide 26: Industrial Chemicals
Industrial Chemicals Net sales Operating income 500 60 16 % Net sales 14 400 50 12 40 € million 300 10 € million 30 8 200 6 20 4 100 10 2 0 0 0 00 01 02 03 00 01 02 03 Q1 Q2 Q3 Q4 Figures are not fully comparable due to changes in business structure 26
Slide 27: GrowHow
GrowHow Food Chain Partner 26% Food Chain Agro Partner Agro 32% Nitrogen Nitrogen 38% 34% Specialty Crop Care Specialty 15% Crop Care Intermediates 9% 11% Animal Intermediates Animal Nutrition 16% Nutrition 10% 9% Net sales 2002: € 1 165 m Net sales Q1 2003: € 343 m 27
Slide 28: GrowHow
GrowHow Sales up by 10% Operating income hurt by lower prices, ammonia production problems and a bad debt provision Compound fertilizer prices stable in the Nordic markets, market prices up by nearly 10% towards end of quarter in some European markets Old nitric acid plant in Uusikaupunki will be re
Slide 29: GrowHow
GrowHow Net sales Operating income *) % 1 200 60 6 1 000 40 4 800 € million € million 600 20 2 400 0 0 200 0 -20 -2 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 *) excluding € 78 m impairment loss in 2002 29
Slide 30: Kemira Group
Kemira Group Net sales Operating income *) 2800 180 10 % 2400 160 140 8 2000 120 € million 1600 6 € million 100 1200 80 4 60 800 40 2 400 20 0 0 0 98 99 00 01 02 03 98 99 00 01 02 03 Q1 Q2 Q3 Q4 *) excluding € 78 m impairment loss in 2002 30
Slide 31: Net Debt
Net Debt 1 050 100 900 80 750 Gearing % 60 € million 600 450 40 300 20 150 0 0 98 99 00 01 02 Q1 03 31
Slide 32: Net Financing Expenses
Net Financing Expenses 60 7 50 6 5 40 Average cost € million 4 30 3 20 2 10 1 0 0 98 99 00 01 02 03 Q1 Q2 Q3 Q4 Average cost 32
Slide 33: Cash Flow
Cash Flow 550 450 350 € million 250 150 50 -50 -150 98 99 00 01 02 Q1 03 Cash flow from operations Cash flow after investments and disposals 33
Slide 34: Net Income and CFROI
Net Income and CFROI 100 16 90 14 80 12 70 60 10 € million CFROI % 50 8 40 6 30 4 20 10 2 0 0 98 99 00 01 02 Q1 03 Net income and EPS excluding non-recurring items EPS 0.61 0.53 0.73 0.58 0.61 0.14 CFPS 0.96 1.41 1.69 1.03 2.45 - 0.37 34
Slide 35: Valuation / Ownership
Valuation / Ownership Market capitalisation / equity Ownership 31 March 2003 1500 Finnish instit. Public 1200 28.1 % 6.8 % 900 Kemira € million 3.4 % 600 Int. instit. 5.5 % 300 Finnish State 0 56.2 % 95 96 97 98 99 00 01 02 03 Equity / share € 8.96 State’s minimum ownership 15% Option programm
Slide 36: Outlook for the Year 2003
Outlook for the Year 2003 Pulp & Paper Chemicals Depressed phase in cycle is expected to continue US acquisition provides further opportunities Despite the challenging industry outlook, operating income is expected to improve Kemwater Developing favourably, profitability is expected to continue on a
Slide 37: Outlook for the Year 2003
Outlook for the Year 2003 Paints and Coatings Demand for paints remains good Synergies from combining Alcro-Beckers and Tikkurila continue to improve the result Operating income is expected to be higher than last year due to synergies and growing demand in Russia and Baltics Industrial Chemicals Out
Slide 38: Outlook for the Year 2003
Outlook for the Year 2003 GrowHow Product prices have improved fast as the season has progressed World grain stocks on exceptionally low level, supporting prices Restructuring of European fertilizer industry stabilizing the business Operating income expected to be close to last year’s level Kemira G