Post on 18-Nov-2014
description
Harri Kerminen, President & CEO October 27, 2011
KemiraJanuary - September 2011
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DISCLAIMER
This presentation contains, or may be deemed to contain, forward-looking statements. These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expenditures and future cash sources and requirements, that involve known and unknown risks, uncertainties and other factors that may cause Kemira Oyj’s or its businesses’ actual results of operations, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, such forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of those terms or other comparable terminology.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the forward-looking statements contained in this presentation, possibly to a material degree. All forward-looking statements made in this presentation are based on information presently available to management and Kemira Oyj assumes no obligation to update any forward-looking statements, unless obligated to do so under applicable law or regulation.
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Revenue EUR 558.3 million (554.4 in Q3 2010)• Organic growth +6%
• Currency exchange and divestments -5%
Operative EBIT EUR 40.8 million (42.5)• Volumes and prices EUR +22 million
• Variable and fixed costs EUR -20 million
• Divestments and currency EUR -3 million
• Operative EBIT margin was 7.3% (7.7%)
Profit before taxes EUR 42.1 million (46.0)• Q3 2010 comparable profit before taxes EUR 42.5 million
• Financial expenses EUR -7.7 million (-3.0)
• Profit from the associated companies EUR 9.0 million (3.0)
Cash flow after investments EUR 56.7 million (6.6)• Change in net working capital EUR 33 million (-23)
Q3 2011 Highlights
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Q3/11 vs Q3/10:• +5.6% organic growth• +0.5% acquisitions• -5.4% divestments and currency exchange
Kemira Group revenue growth trend
Volume and price
Currency
Acquisitions
Divestments-15%
-10%
-5%
0%
5%
10%
15%
20%
Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311
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Kemira Group revenue trend
440
460
480
500
520
540
560
580
Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311
MEUR
• +2% growth from Q2 2011
• Higher sales prices
• Stable volumes
Q3 2011 revenue of EUR 558.3 million is the highest quarterly revenue with current Kemira company structure to date
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Kemira Group operative EBIT trend
MEUR
15
20
25
30
35
40
45
50
Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311
• 9% improvement from Q2 2011
• Sales price increases clearlyoffset higher costs
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Revenue EUR 1,663.9 million (1,614.3 in 1-9/2010)• Increase of 3%
• Organic growth 6%
Operative EBIT EUR 123.0 million (122.1)• Increase of 1%
• Operative EBIT margin was 7.4% (7.6%)
• Raw material prices increased substantially
Profit before tax EUR 131.4 million (115.0)• Increase of 14%
• 1-9/2010 comparable profit before taxes EUR 108 million
• Financial expenses EUR -15 million (-21)
• Income from the JV Sachtleben EUR 24 million (7)
January-September 2011 highlights
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0
2
4
6
8
10
12
FY 2008 FY 2009 FY 2010 YTD 2011
7.4%
4.1%3.3%
8.3%
4.3%
7.6%
3.1%
10.8%
%
Group Paper Municipal & Industrial
Oil & Mining
Kemira operative EBIT margin 7.4% in January-September 2011
Kemira operative EBIT 1-9/2011 vs 1-9/2010
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• Volume and price increase offset higher variable and fixed costs
Jan-Sep 2010 Sales volumesand prices
Variable costs Fixed costs Currencyimpact
Others, incl.acquisitions
anddivestments
Jan-Sep 2011
122.1
73.1 -61.7
-9.3-3.6 2.4 123.0
MEUR
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Outlook 2011
We expect that the volume recoverythat was seen in 2010 will continue in 2011
Kemira expects revenueto be slightly higher in 2011 than in 2010
Despite rising raw material prices,Kemira’s operative EBIT in 2011 is expected to be higher than in 2010
Kemira expects capital expenditure to be between EUR 100-110 million in 2011
Segment highlights of Q3/2011
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Paper in Q3/2011Revenue decreased to EUR 243.4 million (259.9 in Q3 2010)
• Divestment and currency exchange had EUR 21 million negative effect
• Organic revenue growth 2%, sales price increases had a positive effect
• Pulp demand was stable, slightly lower compared to Q2 2011
• Sales volumes to Packaging board increased
• Stable demand within most paper grades
Operative EBIT decreased 10%• Operative EBIT margin 7.6% (7.9%)
• Currency exchange and divestment had a negative effect
Strong cash flowChemical solutions for the water-intensivepulp and paperindustry to improvethe profitability as wellas water, raw materialand energy efficiency
(EUR million) Q3/11 Q3/10 1-9/11 1-9/10 FY10Revenue 243.4 259.9 738.8 741.3 984.3
Operative EBIT 18.5 20.5 61.2 54.0 75.6
Operative EBIT, % 7.6 7.9 8.3 7.3 7.7
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Municipal & Industrial in Q3/2011
Revenue increased 6% vs Q3/2010• Sales volumes to municipal and industrial customers increased
• Increased average sales prices
• Effect from currency exchange -3%
Operative EBIT EUR 15.4 million (14.5)• Higher sales prices and volumes
• Operative EBIT margin improved significantly from Q2 2011
Strong cash flow
Water treatment, waterpurification and sludgetreatment solutions for municipalities and industries
(EUR million) Q3/11 Q3/10 1-9/11 1-9/10 FY10Revenue 173.7 164.0 498.1 476.1 643.6
Operative EBIT 15.4 14.5 37.9 46.8 59.0
Operative EBIT, % 8.9 8.8 7.6 9.8 9.2
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Municipal & Industrial sales prices and variable costs
Variable costs*
Sales prices*
• A lag between variable cost change vs sales prices• A marginal effect to operative EBIT on average
*rolling 12-months change vs previous year
Q4/
05Q
1/06
Q2/
06Q
3/06
Q4/
06Q
1/07
Q2/
07Q
3/07
Q4/
07Q
1/08
Q2/
08Q
3/08
Q4/
08Q
1/09
Q2/
09Q
3/09
Q4/
09Q
1/10
Q2/
10Q
3/10
Q4/
10Q
1/11
Q2/
11Q
3/11
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Oil & Mining in Q3/2011
Revenue increased 9% vs Q3/2010• Favorable pricing and higher sales volumes
• Organic growth 11%
• Currency exchange had a negative effect
Operative EBIT increased 16%• EBIT margin improved to 11.7% (11.0%)
• Highest margin to date for Oil & Mining segment
• Price increases and higher sales volumes had a positive effect
Strong cash flow
Chemical solutions for the oil and miningindustries, where waterplays a central role.
(EUR million) Q3/11 Q3/10 1-9/11 1-9/10 FY10Revenue 87.2 80.2 255.7 224.9 297.5
Operative EBIT 10.2 8.8 27.7 22.1 28.6
Operative EBIT, % 11.7 11.0 10.8 9.8 9.6
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Other (Specialty chemicals and Group expenses)
Specialty chemicals (ChemSolutions)• Customers in the food, feed, and pharmaceutical
industries and airports runway de-icing
• EBIT margin decreased to 8.1% (12.7%)
• Significantly higher variable costs
Group expenses• Q3 2011 at the same level as in Q3 2010
Incl. other and eliminations
(EUR million) Q3/11 Q3/10 1-9/11 1-9/10 FY10Revenue 54.0 50.3 171.3 172.0 235.5
Operative EBIT -3.3 -1.3 -3.8 -0.8 -0.9
JV Sachtleben (Kemira ownership 39%)
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TiO2 pricing environment has been favorable driven by strong demand. Capacity utilization rates have been restored to sound basis after someplant closures during recent years.
Income from JV Sachtleben over tripled to EUR 23.8 million (EUR 6.8 million in 1-9/2010) in 1-9/2011.
Main reasons for this: 1) Supply/demand balance has been extremely tight in 2011 enabling price increases2) Kemira made in 2008 a strategic decision to combine its TiO2 business together with
Rockwood. The combination resulted in significant synergies that are now reflected in the results.
In the past few years both Kemira and Rockwood have stated that they do not consider TiO2 to be a long-term core business.
Therefore, although we are currently happy with the performance of this business, we continue to consider and evaluate strategic options for this business for the long-term.
TiO2
TiO2 = titanium dioxide
Strong execution in tough market conditions
Alternative GDP growth scenarios• Back-on-track• U-shape low growth period• Second dip of W-downturn
Global economic outlook with uncertainty and low visibility
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Source: IMF Statistics /Global Economic Outlook 2011• World GDP, constant prices Percent change• Crude Oil (petroleum), Simple average of three spot prices (APSP); Dated Brent, West Texas Intermediate,
and the Dubai Fateh Dollars per barrel
Implications to Kemira in case of U-shape scenario• Paper: low visibility, declining demand
• M&I: lower raw material prices, stabledemand
• O&M: minor impact to current business, delay of some future growth projects
• ChemSolutions: non-cyclical food&feed, very good market position in pharma
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20
40
60
80
100
120
‐1
0
1
2
3
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5
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Crud
e oil price, USD
per barrel
GDP
growth % yoy
GDP Oil Price
-150
-100
-50
0
50
100
150
200
Q4/
2007
Q1/
2008
Q2/
2008
Q3/
2008
Q4/
2008
Q1/
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Q2/
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Q3/
2009
Q4/
2009
Q1/
2010
Q2/
2010
Q3/
2010
Q4/
2010
Q1/
2011
Q2/
2011
Q3/
2011
Sales price* Variable costs*
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Raw material cost management has improved since 2008
*12-month rolling change vs previous yearExcl. Tikkurila and Pigments
Source
Deliver
Truly global supply chain organization with tight integration to sales
Time lag “reaction time” between pricing and costs have been reduced since 2008
EUR million
Plan
Strong and resilient financial position in uncertain times
‐100 %
‐75 %
‐50 %
‐25 %
0 %
25 %
50 %
75 %
100 %
125 %
‐200
‐150
‐100
‐50
0
50
100
150
200
250
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 YTD 2011Free cash flow Gearing
M€
Addressing water related megatrends
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Efficient and advancedprocessing of
biomasses
Clean water –cities, industries, water systems
Sustainableextraction of natural
resources
Waterefficiencyand reuse
Paper: EUR 10 billion market• Increased recycling, new products, emerging markets• #1-3 in nearly all markets we address by region
Oil & Mining: EUR 8 billion market• Role of water continuously rising• #1-4 market position
Municipal & Industrial: EUR 10 billion market• Rising environmental regulation/awareness• #1 position in coagulants
Recognized leader in our main target markets
Brand profile Customer-driven innovator
Customer loyalty Industry-leading
Investor perception strong profit X premium multiple
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Water chemistry strategy – value creation
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Leading marketpositions
Broad and differentiated
offering
Strong balancesheet
Engaged and dedicatedemployees
Business opportunities driven by growingdemand for efficient use of water
Growth• SWEET – new waterchemistry applications
• Emerging markets withsignificant opportunities
• Mature markets withspecial growth niches
• Strenghtening of localizedproduction capability
Profitability• Pricing management• Raw material costmanagement
• Product-customer mix optimization
• Productivityimprovement projects