Kemira Oyj · OMXHEX:KEMIRA
Kemira Oyj — Q2 2002 Earnings Presentation
34 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 rim base Pulp & Kemwater Paper C. Paints and Coatings Growth World-scale ambitions performer Industrial To be separated Chemicals Agro Low Average High Competitiveness www.kemira.com 1
Slide 2: Pulp and Paper Chemicals
Pulp and Paper Chemicals Mergers & acquisitions Global number 6 as paper chemical 1200 Net sales € mill. supplier Acquistions 800 Complete solutions from pulping to paper production 400 Latest acquisition: excellent match 0 Organic Net sales acquisition growth technologically, geographically a
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 400 200 Target to become a leading (1-5) 0 paint company in Eur
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 <5 l / person 62 8 26 5 82 39 Total market 15 51 5,700,000 58 11 22 tonnes 22 15 58 9 62 49 11 9 www.kemira.com
Slide 10: Agro Separation
Agro Separation Agro to be separated from the rest of Kemira Strategic partner for Agro sought for the development and further strengthening of Agro The Government has given its support to the new strategy and has expressed its readiness to participate as a partial owner in Agro after the sepa
Slide 11: Kemira Group's Growth Strategy until 2004
Kemira Group´s Growth Strategy until 2004 4000 Mergers & acquisitions 3500 Net sales, € m illion 3000 2500 2000 Agro 1500 1000 500 0 Net sales 2001 Organic growth www.kemira.com 11
Slide 12: Highlights 1-2Q 2002
Highlights 1-2Q 2002 Sales € 1 364 million, growth 6% Operating income € 79 million (€ 111 million), 6% of net sales EPS € 0.36 (€ 0.52) Equity / share € 9.31 Cash flow / share € 1.10 Extraordinary items (one-time items, pension costs, accounting of hedging operations) decreased operatin
Slide 13: Kemira Group 1-2Q 2002
Kemira Group 1-2Q 2002 50 40 Chemicals € million 38 % Agro 30 1-2Q 02 43 % 1-2Q 01 20 10 Other 0 2% Agro Chemicals Coatings Paints & Paints & Coatings 17 % Net sales 1-2Q 2002: € 1 364 m Operating income 1-2Q 2002: € 79 m www.kemira.com 13
Slide 14: Growth Potential
Growth Potential Acquisitions Other Agro 1% -specialty paper chemicals company 20 % (Vinings) in North America Organic growth - Pulp & Paper Chemicals: calcium sulphate, specialty paper chemicals in Brazil Paints - Industrial Chemicals: TiO2, formics, and sodium percarbonate Coatings 5% - Paints
Slide 15: 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 15
Slide 16: Chemicals
Chemicals Industrial Pulp and Pulp and Chemicals Industrial Paper C. Paper C. 39% Chemicals 44% 38 % 44 % Kemwater Kemwater 18 % 17% Net sales 2001: € 901 m Net sales 1-2Q 2002: € 535 m www.kemira.com 16
Slide 17: Pulp & Paper Chemicals
Pulp & Paper Chemicals Sales 35% over 2001 y-o-y Sulphur Bleaching Strong growth in specialty paper chemicals chemicals chemicals due to North American acquisiton Pulp&paper production still on a low level, especially fine papers Bleaching and sulphur chemicals suffered from low capacity uti
Slide 18: Kemwater
Kemwater Sales growth 11% over 2001 y-o-y Vision of emistry Year has started well St. Petersburg project advancing according to plan Strong growth potential in Eastern Europe and Russia Net sales 1-2Q 2002: € 91 m www.kemira.com 18
Slide 19: Industrial Chemicals
Industrial Chemicals Sales up by 9% y-o-y TiO2 volumes on the same level Fine Chemicals as last year, prices down by 15% y-o-y TiO2 also suffered from production Chemidet problems and strikes Demand and profitability of calcium CC-products chloride improved Formics sales increased Pigments
Slide 20: 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 20
Slide 21: Paints and Coatings
Paints and Coatings Coatings 30% Coatings 27% Deco 73% Deco 70% Net sales 2001: € 445 m Net sales 1-2Q 2002: € 236 m www.kemira.com 21
Slide 22: Paints and Coatings
Paints and Coatings Deco Sales 2% over 2001 y-o-y Improvement in all main markets; strong growth especially in Russia Integration of Alcro-Beckers came off well One time charges relating to closing of the Benetton business Coatings Sales 7% below 2001 y-o-y Customer industry depressed in
Slide 23: 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 23
Slide 24: Agro
Agro Food Chain Food Chain Partner Partner 28% Agro 30% Nitrogen Agro 34 % Nitrogen 42 % Specialty Crop Care 11% Specialty Intermediates 12% Crop Care Intermediates Animal 16% Nutrition Animal 12% Nutrition 7% 8% Net sales 2001: € 1 158 m Net sales 1-2Q 2002: € 626 m www.kemira.com 24
Slide 25: Agro Specialties
Agro Specialties Sales 5% over 2001 y-o-y, volumes up by 9% Prices down by nearly 5%, partly offset by low ammonia prices and lower fixed costs Building of potassium nitrate and feed phosphate plant continues in Jordan Mykora Oy sold in Finland Objective to close the liquid fertilizer plan
Slide 26: Agro Nitrogen
Agro Nitrogen Sales 10% below 2001 y-o-y Prices down by more than 10%, volumes 4% higher than last year Gas price lower than last year Part of the equipment of the closed fertilizer plant and storage space sold in the Netherlands Operating income lower than last year www.kemira.com 26
Slide 27: 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 27
Slide 28: 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 28
Slide 29: 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 29
Slide 30: Cash Flow
Cash Flow 550 450 350 € million 250 150 50 -50 -150 97 98 99 00 01 1-2Q 02 Cash flow from operations Cash flow after investments and disposals www.kemira.com 30
Slide 31: 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 0.36 CFPS 2.00 0.96 1.41 1.69 1.03 1.10 *) excluding non-recurring items 2000 www.kemira.com 31
Slide 32: Valuation / Ownership
Valuation / Ownership Market capitalisation / equity Ownership 28 June 2002 1500 Finnish 1200 instit. Public 29.4 % 6.6 % 900 € million Kemira 600 3.4 % Int. instit. 300 4.4 % Finnish 0 State 95 96 97 98 99 00 01 02 56.2 % Equity / share € 9.31 State’s minimum 15% Option programme until No o
Slide 33: Outlook for the Year 2002 (1)
Outlook for the Year 2002 (1) Chemicals – Pulp & paper chemicals influenced by weak demand of pulp & paper industry – Due to the North American specialty paper chemicals acquisition sales is expected to grow – Market outlook for Kemwater is good – Outlook is good for formics, calcium chloride, det
Slide 34: Outlook for the Year 2002 (2)
Outlook for the Year 2002 (2) Agro – Uncertainty due to high inventory levels caused by low deliveries last year – New fertilizer season starts with lower prices – Due to improved cost structure Agro’s operating income is expected to improve – Kemira aims to separate Agro into a new company, where