Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q2 2008 Earnings Presentation
40 slides from Kemira Oyj's earnings presentation, Jul 30, 2008
Slide 1: Interim Report January-June 2008
Interim Report January-June 2008 Harri Kerminen, President & CEO IR: Andreas Langhoff, tel +358 10 862 1140 July 30, 2008 1
Slide 2: Contents
Contents Operating Environment Kemira Group – Q2 Highlights Business Areas – Q2 Highlights Outlook 2008 New Structure and Strategy Implementation New Management 2
Slide 3: Operating Environment
Operating Environment Kemira
Slide 4: Oil and Propylene price development January 2007 – July 2008
Oil and Propylene price development January 2007 – July 2008 Crude Oil Propylene Source: Energy Information Administration Source: ICIS 4
Slide 5: Price and variable costs development 2005 - Q2/2008
Price and variable costs development 2005 - Q2/2008 M€ 40 35 30 25 20 15 10 5 0 06 05 05 05 05 06 06 06 07 07 07 07 08 08 2/ 1/ 2/ 3/ 4/ 1/ 3/ 4/ 1/ 2/ 3/ 4/ 1/ 2/ Q Q Q Q Q Q Q Q Q Q Q Q Q Q Price increase Q vs Q previous year Variable costs increase Q vs Q previous year 5
Slide 6: Kemira Group – Q2 Highlights
Kemira Group – Q2 Highlights 6
Slide 7: Key Figures for Q2
Key Figures for Q2 (M€) Q2/08 Q2/07 H1/2008 H1/2007 2007 Revenue 741.5 753.0 1,425.1 1,426.3 2,810.2 Operative EBIT 37.2 56.6 64.4 104.7 174.6 Operative EBIT, % 5.0 7.5 4.5 7.3 6.2 EBIT 39.3 57.6 72.3 106.5 143.1 EBIT, % 5.3 7.6 5.1 7.5 5.1 EPS (EUR) 0.15 0.27 0.27 0.48 0.53 ROCE, % 5.4 10.3 5.4 10.
Slide 8: Revenue Development and Capital turnover 2004-2008
Revenue Development and Capital turnover 2004-2008 Q2/08: 741.5 M€ (Q2/07: 753.0 M€) M€ 3000 2 2400 1,5 1800 1 1200 0,5 600 0 0 04* 05 06 07 08 Q1 Q2 Q3 Q4 Capital turnover *Continuing operations 8
Slide 9: Revenue Q2 2008 vs. Q2 2007
Revenue Q2 2008 vs. Q2 2007 M€ MEUR 9 -29 26 7 -2 -23 753 741 2007 Price Volume Currency Acquisitions Divestments Other 2008 9
Slide 10: Operative EBIT by Quarter
Operative EBIT by Quarter Q2/08: 37.2 M€ (Q2/07: 56.6 M€) M€ 12 200 10 150 8 6% 100 4 50 2 0 0 04 05 06 07 08 EBIT % 10
Slide 11: Operating Profit Q2 2008 vs. Q2 2007
M€ 20 07 58 Pr ic e 26 Vo lu m e 2 Cu r re n cy -4 Va ria bl e co st s -34 Fi xe d co st s -7 No n -r Operating Profit Q2 2008 vs. Q2 2007 ec ur rin g ite m s 1 11 O th e r -3 20 08 39
Slide 12: Operative EPS by Quarter
Operative EPS by Quarter EUR % 1 12 0,8 10 0,6 8 0,4 6 0,2 4 0 2 04 05 06 07 08 -0,2 0 ROCE, 12-month rolling average (operative) 12
Slide 13: Balance Sheet
Balance Sheet 30 Jun 08 31 Dec 07 Net debt (M€) 1,113.5 1,003.4 Equity (M€) 1,120.5 1,087.3 Equity ratio, % 37 39 Gearing, % 99 92 Capital employed (M€) 2,041.3 2,035.8 Personnel 10,673 10,588* * 30 Jun 2007 13
Slide 14: Cash Flows
Cash Flows M€ H1/2008 H1/2007 Funds from operations 72.9 131.6 Change in net working capital -58.3 -108.5 Cash flows from operations 14.6 23.1 Acquisitions -3.9 -44.6 CapEx excl. acquisitions -87.5 -121.1 Sale of assets 11.1 -26.0* Cash flows from investing activities -80.3 -191.7 Free cash flow -65
Slide 15: CapEx excluding Acquisitions
CapEx exluding Acquisitions CapEx in H1/2008: 87.5 M€ (121.1) Depreciation in H1/2008: 67.0 M€ (66.0) Maintenance Improvement 23 % 32 % Expansion 45 % 15
Slide 16: Business Areas
Business Areas Kemira
Slide 17: Revenue
Revenue M€ Q2/08 Q2/07 H1/08 H1/07 2007 Kemira Pulp&Paper 253.6 267.0 517.5 529.7 1,043.0 Kemira Water 187.6 173.2 367.1 331.1 686.4 Kemira Specialty 108.8 110.6 215.8 214.1 425.9 Kemira Coatings 205.7 188.7 350.9 324.5 625.2 Other -14.2 13.5 -26.2 26.9 29.7 Kemira Group 741.5 753.0 1,425.1 1,426.3
Slide 18: Operating profit, excluding non-recurring items
Operating profit, excluding non-recurring items M€ Q2/08 Q2/07 H1/08 H1/07 2007 Kemira Pulp&Paper 10.1 23.3 25.7 44.9 79.8 Kemira Water 5.5 13.1 12.3 25.1 46.7 Kemira Specialty 1.6 7.1 5.4 17.4 24.1 Kemira Coatings 29.7 27.3 41.4 40.1 64.3 Other -9.7 -14.2 -20.4 -22.8 -40.3 Kemira Group 37.2 56.6 64
Slide 19: Kemira Pulp&Paper
Kemira Pulp&Paper Kemira 19
Slide 20: Pulp&Paper in Q2
Kemira Pulp&Paper in Q2 Organic revenue growth in local currencies 1% Revenue depressed by weak USD and lower volumes Operative EBIT 10.1 M€ (23.3) High raw material and energy prices and lower volumes, variable cost increase of 11 M€ or ~7% vs Q2/07 Achieved sales price increases did not
Slide 21: Kemira Pulp&Paper
Kemira Pulp&Paper Revenue & Capital turnover Operative EBIT & ROCE M€ M€ % 100 15 1200 2 90 1000 80 1,5 70 10 800 60 50 600 1 40 400 5 30 0,5 20 200 10 0 0 0 0 04 05 06 07 08 04 05 06 07 08 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE The figures are not fully comparable. 21
Slide 22: Kemira Water
Kemira Water Kemira —_ 22
Slide 23: Water in Q2
Kemira Water in Q2 Revenue up 8% Organic growth 10% in local currencies Currency effect -6% Acquisitions +7 M€ Operative EBIT 5.5 M€ (13.1) High raw material prices and transportation costs Variable cost increase in Q2/08 was 14 M€ or ~12%, compared to Q2/07 Achieved price increases
Slide 24: Kemira Water
Kemira Water Revenue & Capital turnover Operative EBIT & ROCE M€ M€ % 800 2 50 20 700 40 600 1,5 15 500 30 400 1 10 20 300 200 0,5 5 10 100 0 0 0 0 04 05 06 07 08 04 05 06 07 08 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE The figures are not fully comparable. 24
Slide 25: Kemira Specialty
Kemira Specialty Kemira LFLAAS ES | \ ee
Slide 26: Specialty in Q2
Kemira Specialty in Q2 Organic revenue growth in local currencies 2% Weak USD dollar Low euro prices in TiO2 Operative EBIT 1.6 M€ (7.1) Raw material and energy prices, variable cost up by 4 M€ or 7% vs. Q2/07 Negative impact from USD, -3 M€ Low euro sales prices in Ti02 Agreement to
Slide 27: Kemira Specialty
Kemira Specialty Revenue & Capital turnover Operative EBIT & ROCE M€ M€ % 500 2 50 15 400 40 1,5 10 30 300 1 20 5 200 10 0,5 100 0 0 04 05 06 07 08 0 0 -10 -5 04 05 06 07 08 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE The figures are not fully comparable. 27
Slide 28: Kemira Coatings
Kemira Coatings Kemira
Slide 29: Coatings in Q2
Kemira Coatings in Q2 Revenue up 9% High sales in most markets Operative EBIT 29.7 M€ (27.3) EBIT-% on previous year level, 14.4% Sales price increase 9 M€ or 5% vs Q2/07 Variable costs up by 5 M€ or 5% vs Q2/07 New logistics and customer service center is being built in Moscow. Openin
Slide 30: Kemira Coatings
Kemira Coatings Revenue & Capital turnover Operative EBIT & ROCE M€ M€ % 700 80 25 2 600 70 20 60 500 1,5 50 15 400 40 1 10 300 30 20 5 200 0,5 10 0 100 0 0 0 -10 -5 04 05 06 07 08 04 05 06 07 08 Q1 Q2 Q3 Q4 Capital turnover EBIT % ROCE 30
Slide 31: Group's Outlook
Kemira Group’s Outlook Growth is expected to continue moderately Mainly through organic growth Operating profit and EPS are expected to remain below last year’s level (excluding non-recurring items) Increase in raw material prices and energy-related costs and weakened USD Rationalization o
Slide 32: Strategy Update
Strategy Update Kemira
Slide 33: Kemira's Vision
Kemira´s Vision Kemira will be a focused company, the best in water and fiber management chemistry 33
Slide 34: New Kemira Focuses on Water
New Kemira Focuses on Water Kemira Customer Customer Competences benefits segments Municipal Raw water drinking and Water intake Availability waste water Pulp and paper Industrial Processes Water and fiber in use Performance Oil and Gas Mining Waste water Minimisation Water output Industrial water t
Slide 35: Kemira's Strategy is to Address Profitability then Growth
Kemira’s Strategy is to Address Profitability then Growth Strenghten Balance Sheet Portfolio changes Disposal of non-core assets Improve Cash flow and Profitability Over 50 M€ fixed cost savings targeted for 2009 – 2010 Streamlining of production network, logistics and R&D, global support fu
Slide 36: Restructuring Continues towards Focused Kemira
Restructuring Continues towards Focused Kemira Kemira Group Kemira Kemira Kemira Kemira Pulp & Paper + Water Coatings Specialty Industrial Logic Financial Logic Kemira Coatings New Kemira Spin-off (2009) Kemira Specialty Pigments: JV with Rockwood, closing Q3/2008 Chemidet: Integrate to Pulp s
Slide 37: Customer Segments, Leveraging our common competences
Customer Segments, Leveraging our common competences Kemira’s segment focus: Kemira has attained an extensive product portfolio and broad competence base in water treatment for different customer segments Kemira’s water and fiber competencies add value to our customers through: Better use of s
Slide 38: New Management
New Management New organisation from October 1, 2008 Segments Regions Global functions Competencies and Experience from a wide variety of industries Committed to new strategy and efficiency improvements Eager to deliver shareholder value 38
Slide 39: Several Trends are Creating Opportunities for Growth
Several Trends are Creating Opportunities for Growth Global water shortages create pressure for Recycling imperatives efficient use and regulations affecting our customers in water and fibre Corporate environmental and sustainability efforts Increasing urbanization and wealth in emerging markets •Ex
Slide 40: Thank You
Thank You IR: Andreas Langhoff, tel +358 10 862 1140 July 30, 2008 40