Download - Kemira cmd-2013-presentation
Delivering a profitable water pure-play
Kemira Capital Markets Day 2013, September 10
Wolfgang Büchele, President and CEO
Structural changes starting to deliver results
Food and pharmaceuticals
business divestment
Sachtleben
divestment
Stringent
capital allocation
LEAN
manufacturing
3F acquisition
New organization
structure
Fit for Growth
Segment roles:
growth and/or cash focus
-28%
+35%
Net
debt
Equity
value
Kemira Capital Markets Day 2013 2
Performance
management
system
Compensation
structure
Process
architecture
Lean
operation
Q2 2012
Result
CMD
2013
Managing businesses from their growth regions
Oil & Mining
management based
in Atlanta, US
Municipal & Industrial
management relocating
from Helsinki to Frankfurt
Paper management
relocating from Helsinki
to Hong Kong
EMEA Paper management
relocating from Helsinki to
Frankfurt
Kemira Capital Markets Day 2013 3
68
70
72
74
76
78
80
82
2012 Q4 2012 Q1 2013 Q2 2013
0
200
400
600
800
1,000
1,200
1,400
1,600
Jan 2012 Jun 2012 Dec 2012 Mar 2013 Jun 2013
Differentiated products together with balanced wet and dry shale portfolio driving revenue recovery in Oil & Mining 15% reduction in total number of US oil (+17%) and gas
(-56%) rigs in 2013 compared to January 2012
Oil & Mining revenue increasing sequentially
despite decreased oil and gas drilling activity
Differentiated products share of revenue
increasing to 82%
+6%
+5%
# of Oil rigs
in the US*
EUR
million
82%
# of Gas rigs
in the US*
*) Source: Baker Hughes International
Kemira Capital Markets Day 2013 4
Restructuring initiatives improving profitability in Municipal & Industrial
0
100
200
300
400
500
600
700
800
2010 2011 2012 1-6 2013
7.1%
5.7%
7.1%
9.2%
644 665
687
343 Others
Polymers
Coagulants
Operative
EBIT margin
Revenue,
EUR million
Kemira Capital Markets Day 2013 5
2013
Revenue (local currencies
and excl. divestments)
2014 2016
Operative EBIT
0%-5% growth vs 2012
EBIT margin 10%
Revenue
EBITDA margin
Gearing
EUR 2.6 – 2.7 billion
15%
below 60%
increase >15% vs 2012
No change in outlook for 2013 or financial targets for 2014 and 2016
Kemira Capital Markets Day 2013 6
Fit for Growth helping to deliver 2013 profit target*
Fit for Growth savings
expected to be EUR
15-20 million higher in
H2 2013 vs H2 2012
Input prices
trending up
*) Revenue in local currencies, excl. divestments 0%-5% growth vs 2012, Operative EBIT +15% vs 2012
2012-2013
Propylene price trend
Kemira Capital Markets Day 2013 7
0.40
0.50
0.60
0.70
0.80
850
1000
1150
1300
1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/1211/1212/12 1/13 2/13 3/13 4/13 5/13 6/13
EU (EUR/MT, ICIS) NA (USD/pound, CMAI)
3
7 9 10
0
5
10
15
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
Fit for Growth savings, EUR million
External indicators show stable economic development in EMEA and NAFTA, uncertainty in emerging markets Kemira early warning dashboard
Kemira Capital Markets Day 2013 8
1. Lead time is the estimated time (months) between movement of indicator vs. resultant 2. Average new order value (3 months rolling)
Indicators Status Trend Change Lead1
Overall WTI crude oil futures (9/13) 6
OECD + Emerging market bus. confidence index (6/13) 4
FOEX China BHKP pulp (9/13) 4
Chicago fed nat. activity (7/13) 8
EMEA IFO manufacturing business expectations (8/13) 6
Eurozone PMI survey (8/13) 6
NA S&P 500 index (9/13) 4
ISM business supplier deliveries (8/13) 6
SA Brazil industry production % growth (6/13) 6
Brazil company leading indicator (6/13) 6
APAC Major 5 Asia companies leading indicator (6/13) 8
China containerized freight index (8/13) 2
Contracting: indicator has decreased for at least 3 consecutive months
Expanding: indicator has increased for at least 3 consecutive months
Normal: indicator moves within standard deviation corridor
Above: indicator moves above standard deviation corridor
Below: indicator moves below standard deviation corridor
Trend
Operative EBIT margin target of 10% in 2014
Fixed cost inflation is expected to be compensated through additional benefits from
LEAN manufacturing roll-out, further M&I turnaround measures and growth
Q2 operative EBIT 2013 Excluding one offexpenses in
Q2 2013
Fit for Growthfull run rate
M&I restructuring Additional efficiencymeasures
(Vaasa, BSC,3F synergies)
Average quarterly EBIT,including all the
announced efficiencymeasures
2013-2015
40
55 4 1 5
5
Kemira Capital Markets Day 2013 9
10% Quarterly operative EBIT bridge, EUR million
7%
Capital allocation focusing on growth markets and product lines
Targeted payback time for new greenfield investments is max. 7 years and max. 5 years
for capacity additions on existing products
Focus on Paper in China, strengthening Oil & Mining in mature markets,
South America, Middle East and Africa
65% 35%
6.0% 5.0%
2012 2016e
Capex split average
2010-2012
Targeted capex split
2016
Capex-to-sales ratio
30% 70%
Kemira Capital Markets Day 2013 10
2013-2015
Differentiated products
Commodity products
• Current 36% gearing means EUR 280 million
headroom against the targeted <60% gearing
• Strict M&A criteria for focused growth
– Must strengthen our market position and/or our
technologies/competencies
– EBIT accretive in second full year after closing
• 3F acquisition demonstrates Kemira’s M&A strategy
– Accessing technologies lacking in the portfolio (e.g. monomers)
– Accelerating geographical expansion in order to shorten
the strategic path (e.g. dry polyacrylamides in the US)
Acquisitions expected to contribute to growth target 2013-2015
Kemira Capital Markets Day 2013 11
Positioning based on 2 years performance
Portfolio focus shifting from commodity to differentiated business
Kemira Capital Markets Day 2013 12
2013-2015
Revenue growth
Profitability
O&M SA O&M
APAC
M&I SA
M&I
APAC
M&I
NAFTA
O&M
EMEA
Paper
SA
O&M
NAFTA
Paper
NAFTA
Paper
EMEA Paper
APAC CS Evaluating exit
options
M&I
EMEA
Portfolio restructuring improving return on capital employed
June
2013
Ambition
in 2016
Goodwill 520m Lower
Other intangible assets* 58m Unchanged
Property, plant and equipment* 650m >30%
higher
Investment in associates 2 Unchanged
NWC 11.3% 11%-11.5%
Operative EBIT margin 1-6 2013 7.3% ~11%
Operative ROCE,
rolling 12 months 10.4% >15%
5% capex to sales target in 2016
LEAN manufacturing and SKU
reduction
Fit for Growth and continuous
efficiency measures
*) Prepayments (see note 13 in the Financial Statements 2012) of EUR 111 million are excluded from Kemira operative ROCE.
13
2013-2015
Kemira Capital Markets Day 2013
Innovation focusing on Paper and Oil & Mining
Technology Management
Board targeting 50%
reduction in development
times for ”R” and ”D”
projects
Dedicated global team
and structured process
to drive ideation
R&D projects per New
Product Development stage
Development
Scale-up
Kemira Capital Markets Day 2013 14
2015-2017
Paper
Oil &
Mining
Municipal
& Industrial
ChemSolutions
Paper Oil &
Mining
Municipal
& Industrial
ChemSolutions
Heading towards remote control and combining waste water treatment with energy generation
Remote control and monitoring of water management:
serving industries from a central location
Kemira Capital Markets Day 2013 15
Energy and clean water from waste by Microbial
Fuel Cell assisted water treatment
2017-2020
Renewed revolving credit facility further improves financial position and secures future growth financially
Debt per June, 2013
Gross debt:
EUR 565 million
Net Debt:
EUR 425 million
Net Debt/Annualized
operative EBITDA
YTD 2013: 1.7
Gross debt maturing in
2013 relates mainly to
commercial papers
issued on the Finnish
markets
4.3%
1.7% 2.0% 2.0% 1.6%
1.7%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2008 2009 2010 2011 2012 6/2013
-500
-400
-300
-200
-100
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 >2022
Gross debt Undrawn EUR 400 million 5+1+1 year Revolving Credit Facility
Debt maturity profile, EUR million
Kemira average interest rate (at the end of the period)
Kemira Capital Markets Day 2013 16
Dividend policy remains unchanged
Dividend policy is to distribute a dividend that is 40%-60% of Kemira’s operative net
profit
Dividend yield has on average been over 4% in 2005-2012
(leading yield in the European chemical sector)
Kemira Capital Markets Day 2013 17
*) In addition in March, 86% of Tikkurila shares were distributed as dividend to Kemira shareholders (Tikkurila market capitalization was EUR 600 million after its listing)
**) Gearing at the end of June, 2013
53%
39% 38%
42% 36%
37%
61% 60% 59% 69%
2009 2010* 2011 2012 2013**
Gearing Payout ratio
Cultural change supporting Kemira’s transformation into water quality and quantity management pure-play
2013-2015
Focus
2017-2020
Expand
Be recognized industry and technology leader in chosen target markets
2015-2017
Accelerate
Grow through new products & services
and accelerate expansion in emerging
markets
Achieve a sustainable position
in all target markets
2012-2013
Redesign
Reach target profitability
by implementing “Fit for
Growth”
Best-in-class in its ability to
leverage global performance
culture, talents and operations
Build a strong employer brand to attract
and retain leadership and expert talents
Establish a performance and innovation driven
culture that fosters collaboration, learning and
organizational agility
Building blocks for a high performing organization in
place: Clear accountabilities, performance
management system, process architecture
Kemira Capital Markets Day 2013 18
Increased focus on efficiency and savings
Kemira Capital Markets Day 2013, September 10
Michael Löffelmann, SVP restructuring
EUR 60 million Fit for Growth savings in 2014
>45
60
10
19
Savings impact 2012 Savings impact 2013 Savings impact 2014
Expected savings Realized savings
Zero loss of identified Fit for Growth savings,
implementation timeline sharpened
EUR million
Kemira Capital Markets Day 2013 20
Offsetting
Kemira’s fixed
cost inflation
through ongoing
cost savings driven
by continuous
improvement
process
Implementing LEAN to continue focus on cost efficiencies Why is LEAN important for Kemira?
Reduce complexity
Reduce costs
Increase competitiveness
Kemira Capital Markets Day 2013 21
LEAN savings of EUR 6 million already implemented
Kemira Capital Markets Day 2013 22
5
0.5
0.5
6
Helsingborg Botlek Bradford Total
EUR million
5. Remote
operators
4.
Self-loading
3.
LEAN lab &
in-process
analysis
Global roll-out of standardized LEAN savings modules
Kemira Capital Markets Day 2013 23
2.
Material handling
benchmark
1.
Weighing
& filling
Strong focus on implementation discipline
Kemira Capital Markets Day 2013 24
Enhanced implementation • Higher and constant drive to achieve results
• Continuous identification of savings
• Greater sense of urgency
Resources
• Closer interaction and follow-up
• Full time LEAN resources
• Dedicated manufacturing
optimization resources
Tools
• Action based with financial tracking
• Standardized LEAN tools
• Additional training for sites
Delivering high performance driven culture
Accelerating the turnaround in Municipal & Industrial
Kemira Capital Markets Day 2013, September 10
Frank Wegener, President, Municipal & Industrial
Fit for Growth has started to improve profitability
Revenue EUR million
Operative EBIT %
Municipal & Industrial targets cross-the-cycle operative EBIT margin of 10% in 2014
1) Targeted Fit for Growth savings above EUR 20 million
2) New organization and customer segmentation leading to more than EUR 5 million
additional savings
3) Further benefits from manufacturing network optimization, SKU reduction and R&D portfolio
improvements
161
165
174
178
150
155
160
165
170
175
180
Q1 2012 Q1 2013 Q2 2012 Q2 2013
3.5%
5.2%
6.9%
8.9%
0%
2%
4%
6%
8%
10%
Q1 2012 Q1 2013 Q2 2012 Q2 2013
+2%
+2%
+49%
+29%
Kemira Capital Markets Day 2013 26
Municipal & Industrial faces challenges
• Municipal business under
margin pressure in emerging
markets
• Coagulant business facing local
competition - players of very
different sizes and business
drivers
608
644
665
687 11%
9%
7%
6%
0%
2%
4%
6%
8%
10%
12%
560
580
600
620
640
660
680
700
2009 2010 2011 2012
Revenue Operative EBIT margin
EUR million
Kemira Capital Markets Day 2013 27
Historic business model New business model
New business model and organization to address the challenging business environment
Kemira Capital Markets Day 2013 28
• Sales model with simplified organization
and channel strategy
• Headcount reduction of ~50 employees
• R&D focus in line with strategy, portfolio reduced
by 40%
• Uniform service approach with limited
customer segmentation
• Sales force weighted more towards
direct sales vs. distribution sales
• Global geographical focus with scattered
manufacturing footprint
• Limited focus on production technology
• World class coagulant footprint focusing on
mature markets
• Over 1,000 SKU’s • Number of SKU’s reduced by 50%
Segmented customer business model increasing profitability
Historic model –
unsegmented
New model with two customer
segments
Kemira Capital Markets Day 2013 29
Kemira offering:
• Reliable delivery and effective treatment
• Tailor made solutions
• Fast time to resolution
• Technical support
Paying for:
Reliable delivery and effective treatment
Value and
performance
Price >9,000 municipal and industrial
customers buying coagulants and polymers >9000
customers
>4500
customers
>4500
customers
Paying for:
Effective treatment
Paying for:
Faster resolution
Some technical support
and
Tailored solutions with
immediate resolution,
tech support part of
offering
Securing competitive position through manufacturing network consolidation
Fit for Growth measures will be fully implemented by the end of Q2 2014 • 6 sites closed, closure of 2 sites and 2 production plants under implementation
• 2 sites to be closed only after new Tarragona coagulant site is on stream (delayed to Q1 2014)
Further manufacturing optimization through economies of scale and the use of industrial by-products
Additional rationalization expected in NAFTA
*) Europoort and Krems (production plants), Lauterburg, Sevilla, Flix, Tarragona old, St. Petersburg, Houston, Savannah, Xoxla, Camacari, Romania
Coagulants
New product sites
Sites and production plants
closed or decided to be
closed
Kemira Capital Markets Day 2013 30
Legislation and regulatory enforcement driving demand
• Sludge treatment (dewatering)
in Europe
• China expected to invest EUR 50
billion to water in the next 5 years
R&D to secure competitive offering and
meet long term growth opportunities
Positive regulatory developments
Market growth expected to
accelerate in 2016
2.6 3.0 3.4
1.6 1.8
1.9
3.4
3.8
4.4
2012 2016 2020
Coagulants
Others
Polymers
Kemira Capital Markets Day 2013 31
Accelerating the turnaround in Municipal & Industrial
Streamlined business
model focused on
maximizing cash flow
generation
Focus on mature
markets, capture
selected growth
opportunities in APAC
Structural profitability
improvement through
reduction of complexity,
customer segmentation and
organizational optimization
Selective application and
production process
development as well as
new products paving the
way to a sustainable future
4 3
2 1 BUSINESS
INNOVATION GEOGRAPHY
EFFICIENCY
Kemira Capital Markets Day 2013 32
Innovating for growth
Kemira Capital Markets Day 2013, September 10
Dr. Heidi Fagerholm, CTO
Research Center network focusing on competence development and regional business support
Shanghai,
China • Paper
applications
• Tissue
• TCS
Espoo, Finland • Fundamental
• Paper research
• M&I
• TCS
Sao Paolo, Brazil • Minerals & Metals
• TCS
Atlanta, GA, USA • Oil & Gas
• Minerals & Metals
• Paper
• TCS
TCS = Technical Customer Service & Production Support
Kemira Capital Markets Day 2013 34
Total personnel 250
Patent families ~350
• Increase in total portfolio value by
50% from 2013 to 2020
• Increase in cross-regional
participation across R&D projects
• Every second project has an external research
partner
• FTE per project growing more than 50% due to
increased focus
R&D portfolio aligned with strategy
Kemira Capital Markets Day 2013 35
Innovation focusing on Paper and Oil & Mining
Development Scale-up
Share of R&D projects in various NPD stages
Commercialization
Paper
O&M
M&I CS
M&I CS
Paper O&M
SWEET*
Other
*) Center of water efficiency excellence
Kemira Capital Markets Day 2013 36
40
106
140
0
20
40
60
80
100
120
140
160
2011 2012 2013**
Innovation sales target EUR 250 million in 2016
Kemira innovation sales*, EUR million
*) Sales from new products or existing products for new applications launched within the previous 5 years
**) Annualized Jan-Jun 2013 innovation sales
Fennobond
strength
Fennobind
binders Kemflite,
control & monitoring
KemFlow
friction
reducer
KemFlow
biocide
Kemira Capital Markets Day 2013 37
O&M
Paper
M&I
Tagged antiscalants
Guar replacement
Green friction
reducer
Rheology modifiers
Performic acid
Next Fennobind
generation
New innovation areas
Targeting to double innovation driven sales from 5% in 2012 to ~10% of total sales in 2016
Polymers account for 50% of Kemira’s differentiated product revenue
• Case study: Polymers in flocculation
and sludge dewatering
• Technical benefits for customer include
improved reject water quality and
increased solid content of sludge
• Global polymer market growing from
EUR 7 billion to EUR 10 billion in 2020
• Kemira targeting faster than market
growth
Kemira Capital Markets Day 2013 38
Benefits for customer:
• Significant cost savings via decreased binder
demand on coating application
• Increased sustainability through reduced
dependency on oil-based chemistry
Kemira:
• Creating innovative high performance binder
concept based on future chemistry and
application requirements
The global binder market for paper
and board is EUR 2.5 billion
Case Fennobind – For better printability in Paper & Board Innovative binder concept
Kemira Capital Markets Day 2013 39
Fennobind
Particle diameter 46 nm
Shale Gas & Oil Slick water and hybrid fracturing uses Kemira’s polymers
Kemira Capital Markets Day 2013 40
Dynamic Market
• Gas and oil rigs dependent on energy price
• Guar price volatility - key for gel fracturing (wet shale)
New fracturing technologies developing rapidly
to improve production rates
• Hybrid fracturing
• New and rapidly developing fracturing methods
Implications
• Increased water usage → water reuse → high brine
• Polymer usage increasing in wet shale
• Polymer as a co-treatment/replacement for gel fracturing
200
600
1,000
1,400
1/12 6/12 12/12 3/13 6/13
# of Oil rigs in the US*
# of Gas rigs in the US*
0
5
10
15
20
25
30
12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12
Guar price index India NCDEX guar split quotations
Removing volatility in shale gas and oil through technology
and applications
Kemira Capital Markets Day 2013 41
Innovation driven growth
• Customer focused
• New products wet and dry shale
• Portfolio of products for water management
Accomplishments
• New slick water friction reducers for high brines
• Products with improved handling → inversion, cold
temperature
• Guar replacement under development
• Growing multi-product patented portfolio
• Applications knowledge & partnerships with key
service companies
Relevant market size for polymers is
about EUR 1 billion
Gel Feature Guar Kemira
Proppant carrying capacity + +
Stability of gel + +
Gel formation/Breaking + +
Ease of hydration - +
Friction reduction properties - +
Reduction of number of products to
use for hybrid fracs
- +
Benefits for customer:
• Deeper water, more complex wells, and the optimization of mature
fields
• Scale risk minimization, differentiated detection, peace of mind &
production optimization.
• Lower costs (Capex flexibility, optimized chemical usage, lower
equipment & operational costs)
Kemira:
• New tagged antiscalant technology based on proven polymeric
scale inhibitor
Relevant market size for downhole scale squeeze
business is about EUR 100 million
Success Story Tagged antiscalants for Oil & Gas stimulation and production
Kemira Capital Markets Day 2013 42
Building a culture of innovation throughout the organization Innovation Community to inspire people,
to stimulate creativity and to create
enablers for an innovation culture
Training to enhance innovation
capabilities
Create measurable success criteria
for innovation work
”Innovate today for
a prosperous tomorrow”
Kemira Capital Markets Day 2013 43
44
Appendix
Kemira Capital Markets Day 2013, September 10
Kemira Capital Markets Day 2013
Kemira Group revenue growth trend
-15%
-10%
-5%
0%
5%
10%
15%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2009 2010 2011 2012 2013
Organic growth Currency Acquisitions Divestments Total growth
45 Kemira Capital Markets Day 2013
46
Differentiated products expected to grow substantially above the market, commodity products focusing on efficiency improvements Differentiated products
• Growth target substantially above the market
• Driven by innovation and expertise
• Higher margins due to higher value to the
customer
• Flexible manufacturing capabilities with
sufficient scale
• Higher barriers to entry (technology)
781 843 879
455
0
200
400
600
800
1000
2010 2011 2012 1-6 2013
Commodity products
• Targeting growth, but slightly lower than
the market
• Maximizing profitability and cash flow by
leveraging existing capacity
Differentiated products revenue, EUR million
1380 1365 1362
675
0
500
1000
1500
2010 2011 2012 1-6 2013
Commodity products revenue, EUR million
Kemira revenue split into differentiated and commodity products
Differentiated product lines Commodity product lines
%-of total
revenue in
1-6 2013
Polymers Sizing and
strength
Defoamers,
dispersants,
biocides and
other process
chemicals
Coagulants Bleaching
chemicals
Formic acid
and derivatives
Miscellaneous
commodity
products*
Paper 10% 20% 15% 5% 25% - 25%
M&I 20% - 5% 65% - - 10%
O&M 55% - 25% 5% - - 15%
Chem-
Solutions
- - - - - 80% 20%
Kemira 20% 10% 10% 25% 15% 5% 15%
47
*) Mainly sodium percarbonate, colorants, acrylamide, inorganic salts and acids as well as caustic soda
Kemira Capital Markets Day 2013
Mature markets continue to stay important in all segments
621 646
1-6 2012 1-6 2013
EMEA (57% of total revenue) Revenue, EUR million
345 333
1-6 2012 1-6 2013
NAFTA (29% of total revenue) Revenue, EUR million
38% 37%
1-6 2012 1-6 2013
GM %
39% 39%
1-6 2012 1-6 2013
GM %
Kemira Capital Markets Day 2013 48
Kemira Group operative EBIT bridge, EUR million
0
10
20
30
40
50
60
70
80
90
100
1-6 2012 Sales volumes Sales prices Variable costs Fixed costs Currency impact Others, incl.acquisitions and
divestments
1-6 2013
74.6 17.0 82.2 4.2 3.2 -9.1 -5.7 -2.0
49
EUR million
Kemira Capital Markets Day 2013
Good balance between sales and raw material prices Kemira sales prices vs variable costs
*) 12-month rolling change in EUR million vs corresponding period in previous year, excl. Tikkurila and Pigments
-150
-100
-50
0
50
100
150
200
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2007 2008 2009 2010 2011 2012 2013
Brent oil, USD Sales price* Variable costs*
50
EUR million
Kemira Capital Markets Day 2013
”Fit for Growth” full EUR 60 million impact in 2014
• Cost savings impact in operative
EBIT in Q2 2013 was EUR 10 million
– EUR 4 million impacted variable costs
– EUR 6 million impacted fixed costs
• Expected cost savings impact in
operative EBIT 2013 is > EUR 45 million
• Expected cost savings impact in
operative EBIT 2014 EUR 60 million
”Fit for Growth” status Q2 2013,
EUR million
>45
60
10
19
0
10
20
30
40
50
60
70
Savings impact2012
Savings impact2013
Savings impact2014
Expected savings Realized savings
Kemira Capital Markets Day 2013 51
”Fit for Growth” required EUR 76 million in restructuring costs
• EUR 5 million booked YTD 2013
• Total non-recurring severance payments and external services EUR 46 million
• Total non-recurring asset write-downs EUR 30 million
41
30
5
0
15
30
45
Severance payments and external services2012
Asset write-downs 2012 Severance payments and external services2013
Realized restructuring charges,
EUR million
Kemira Capital Markets Day 2013 52
Key figures and ratios
EUR million (except ratios) 4-6/2013 4-6/2012 % 1-6/2013 1-6/2012 % 2012
Revenue 569.3 562.3 1 1,130.2 1,115.2 1 2,240.9
Operative EBITDA 61.5 58.2 6 125.0 121.0 3 249.4
of which margin 10.8 10.3 - 11.1 10.8 - 11.1
Operative EBIT 40.0 36.0 11 82.2 74.6 10 155.5
of which margin 7.0 6.4 - 7.3 6.7 - 6.9
Share of profit or loss
of associates
0.1 5.8 - -1.1 16.6 - 11.2
Financing income and expenses -4.2 1.4 - -28.9 -8.9 - -15.7
Operative EPS, EUR 0.14 0.21 -33 0.31 0.41 -24 0.77
Operative ROCE* 10.4 10.5 - 10.4 10.5 - 10.0
Capital expenditure 30.9 51.0 -39 59.9 70.4 -15 134.1
Casf flow after investing
activities**
10.5 24.2 -57 200.4 16.1 - 71.8
Gearing, % at period-end 36 44 - 36 44 - 42
Personnel at period-end 4,664 5,181 -10 4,664 5,181 -10 4,857
*12-month rolling average
**2012 numbers include EUR 5.3 million dividends and EUR 27.3 million paid-in-capital from JV Sachtleben. 1-6/2013 numbers include EUR 97.5 million received from the
divestment of the JV Sachtleben shares and EUR 80.6 million from the divestment of the food and pharmaceuticals businesses.
Kemira Capital Markets Day 2013 53
Profitable growth accelerated in Paper April-June 2013
Revenue increased by 6% to
EUR 265 million (249) • EMEA revenue increased more than 10% driven by
sales volume growth in all main product lines
• Sales prices decreased slightly
• Currency exchange -1%
EUR million Q2/2013 Q2/2012 % 1-6/2013 1-6/2012 % 2012
Revenue 265 249 6 524 497 5 1,006
Operative EBIT 19.5 16.1 21 39.2 34.9 12 75.3
Operative EBIT, % 7.4 6.5 - 7.5 7.0 - 7.5
Cash flow 18 10 80 48 9 433 8
Operative EBIT increased 21% to
EUR 19.5 million (16.1) • Organic revenue growth
• Higher sales and marketing expenses compensated by
”Fit for Growth” savings
• Operative EBIT margin increased to 7.4% (6.5%)
Strong cash flow
Kemira Capital Markets Day 2013 54
Profitable growth in Municipal & Industrial April-June 2013
Revenue increased 2% to
EUR 178 million (174) • Revenues increased in all regions, except APAC
• Currency exchange -1%
EUR million Q2/2013 Q2/2012 % 1-6/2013 1-6/2012 % 2012
Revenue 178 174 2 343 335 2 687
Operative EBIT 15.9 12.0 33 24.5 17.7 38 39.2
Operative EBIT, % 8.9 6.9 - 7.1 5.3 - 5.7
Cash flow 5 -3 - 5 4 25 39
Operative EBIT increased 33% to
EUR 15.9 million (12.0) • Increased sales prices and sales volumes, as well as
lower fixed costs
• Higher variable costs due to increased propylene
based raw material prices during Q1 2013
• Operative EBIT margin increased to 8.9% (6.9%)
Kemira Capital Markets Day 2013 55
Oil & Mining sales volume increase offset by sales price decline April-June 2013
Revenue decreased 5% to
EUR 79.9 million (84.5) • -4% impact related to exiting from low margin products
as communicated earlier (full impact of EUR 10 million
will be realized by the end of 2013, YTD 2013 impact
EUR 7 million)
• Sales volumes increased for the first time in
six quarters
• Sales prices declined
EUR million Q2/2013 Q2/2012 % 1-6/2013 1-6/2012 % 2012
Revenue 79.9 84.5 -5 156 170 -8 321
Operative EBIT 3.5 7.2 -51 8.6 15.5 -45 25.9
Operative EBIT, % 4.4 8.5 - 5.5 9.1 - 8.1
Cash flow -8 1 - -10 -18 - -5
Operative EBIT decreased to
EUR 3.5 million (7.2) • Price pressure in the market
• Increased R&D spend to accelerate
the differentiation
• Variable costs started to come down towards
the end of the quarter
Kemira Capital Markets Day 2013 56
ChemSolutions revenue was impacted by the food and pharmaceuticals businesses divestment
April-June 2013
Revenue decreased 16% to
EUR 46 million (55) • Organic growth 7%, continued strong sales volumes
growth of formic acid and derivatives product lines
• Divestment of food and pharmaceuticals businesses
had -22% impact
EUR million Q2/2013 Q2/2012 % 1-6/2013 1-6/2012 % 2012
Revenue 46 55 -16 107 114 -6 228
Operative EBIT 1.1 0.7 57 9.9 6.5 52 15.1
Operative EBIT, % 2.4 1.3 - 9.2 5.7 - 6.6
Cash flow -4 -2 - 77 13 - 24
Operative EBIT increased 57% to
EUR 1.1 million (0.7) • Higher sales volumes and lower variable costs
• Strong market pressure on Sodium Percarbonate
product line
Kemira Capital Markets Day 2013 57
Kemira capital expenditure
0
20
40
60
80
100
120
140
160
2008 2009 2010 2011 2012 1-6 2013
EUR million
Expansion
Maintenance and
improvement
134
56
98
76 69
109
Kemira Capital Markets Day 2013 58
Net working capital ratio Kemira ambition is to keep net working capital ratio* between 11%-11.5%
14.1%
13.3%
11.3%
13.4%
12.8%
11.3%
9%
11%
13%
15%
2008 2009 2010 2011 2012 1-6 2013
*) Rolling 12-month average
Kemira Capital Markets Day 2013 59
Cash flow statement
EUR million Q2 2013 Q2 2012 1-6/2013 1-6/2012 FY 2012
Operative EBITDA 61.5 58.2 125.0 121.0 249.4
Change in net working capital -6.8 -0.6 -11.1 -43.2 -21.1
Cash flow from operations* 38.6 47.5 78.9 57.9 176.3
Capital expenditure -30.9 -51.0 -59.9 -70.4 -134.1
Other investing activities 2.8 27.7 181.4 28.6 29.6
Cash flow after investing activities* 10.5 24.2 200.4 16.1 71.8
Kemira Capital Markets Day 2013 60
*2012 numbers include EUR 5.3 million dividends and EUR 27.3 million paid-in-capital from JV Sachtleben. 1-6/2013 numbers include EUR 97.5 million
received from the divestment of the JV Sachtleben shares and EUR 80.6 million from the divestment of the food and pharmaceuticals businesses.
Market and product specifications
61
Kemira Capital Markets Day 2013, September 10
Kemira Capital Markets Day 2013
62
Paper and Oil & Mining driving growth
Kemira’s relevant market (EUR 27 billion
in 2012) will grow to EUR 34 billion in
2020 (CAGR 3.3%)
Paper: Growing above market,
targeting wet-end chemistry
market leadership
O&M: Growing above market
M&I: Improving profitability,
maximizing cash
ChemSolutions: Maximizing cash
by a product driven business model
Source: Management estimation based on various sources
7.7 9.3
7.7 9.5
9.4
13.2
2.0
2.3
2012 2020 2012' 2020'
O&M Paper
2.4%
ChemSolutions M&I
4.3%
2.7%
1.8%
Business focus
1.5 1.7 1.9 2.0 2.1 2.2
0.9 1.0
1.1
1.8 2.0
2.3 1.5
1.6 1.8
2012 2016 2020 2012 2016 2020
Defoamers, biocides and other wet-end process chemicals
Paper segment - Demand for sizing and strength chemicals is growing fastest globally
Pulp and paper industry trends increasing
chemical demand:
• Increased use of recycled fibres
• Hardwood replacing softwood in virgin
pulp
• Lightweighting of packaging and board
grades
• Higher filler loads in graphic papers
• New digital printing methods
• Lower water / energy consumption
Market size,
EUR billion (CAGR: 2.4%)
GAGR
Sizing and strength
Miscellaneous commodity chemicals
Bleaching chemicals
Polymers
3.5%
2.0%
3.0%
1.3%
2.0%
Kemira Capital Markets Day 2013 63
Paper segment - Technology and market leader in paper wet-end chemistry
Value chain part covered by Kemira
RAW
MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS
CUSTOMER
IDUSTRIES CUSTOMERS
Electricity
Sodium chloride
(salt)
Crude tall oil
Cationic monomer
Acrylonitrile
Acrylic acid
Olefins
Fatty acids
Maleic anhydride
Sulfur
Tall oil rosin
AKD Wax
Isomerized olefins
Acrylamide
Sodium chlorate
Hydrogen peroxide
Polymers
Defoamers
Coagulants
Biocides
Sizing
Strength Additives
Surface additives
Colorants
Sulfuric acid
Pulping
Bleaching
Retention
Wet-end process
control
WQQM
Sizing
Strength
Surface treatment
Coloring
Pulp
Packaging
and board
Printing
and writing
Tissue
All the major
global paper
and pulp
producers
Kemira Capital Markets Day 2013 64
Oil & Mining segment - Strong market growth across all product lines
• High oil price spurs demand for
identifying new sources
• Global growth of shale gas and wet
shale
• Declining ore assays require improved
processing
• Increasing environmental pressure
which increases demand for waste
water treatment
Market size,
EUR billion (CAGR: 4.7%)
3.1 3.6 4.3
2.0 2.4 2.9
4.3
5.1
6.1
2012 2016 2020 2012 2016 2020
Polymers Defoamers, biocides
and other process
chemicals
Miscellaneous
commodity
products
Kemira Capital Markets Day 2013 65
Oil & Mining segment - Winning market share with competitive combination of innovation chemicals and application knowledge
Value chain part covered by Kemira
RAW
MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS CUSTOMERS
Acrylonitrile
Acrylic acid
Various monomers
Miscellaneous
specialty chemicals
and commodities
Acrylamide Polymers
Dispersants &
Antiscalants
Biocides
Emulsifiers
Defoamers
Coagulants
Formulations
Friction Reduction
Formation & Well Scale
Control
Asset integrity Microbial
Induced Corrosion
Enhanced Oil Recovery
Drilling muds
Concentrate thickening
Mineral slurry
preservation
Mining processes
Scale Control
Pumpers
Oil & Gas
operators
Service
companies
Mine operators
Kemira Capital Markets Day 2013 66
Municipal & Industrial - Commodity product lines expected to grow, but slightly slower than the market
Demand drivers for raw and waste water as well as sludge treatment chemicals:
• Legislation and regulatory enforcements determine required treated water and
sludge quality standards
• Water reuse is most cost efficient solution to meet the increasing water demand
2.6 3.0 3.4
1.6 1.8 1.9
3.4 3.8
4.4
2012 2016 2020 GAGR
Coagulants Antiscalants, biocides, defoamers, miscellaneous commodity chemicals
3.2%
2.8%
3.3%
Polymers
Realized restructuring charges,
EUR billion
Kemira Capital Markets Day 2013 67
Municipal & Industrial - Technology and market leader in raw and waste water as well as sludge treatment • Kemira is the only major supplier producing major water treatment chemicals, polymers and coagulants – thereby
enabling comprehensive application support
• Cost competitiveness through backward integration into virgin raw materials
• 60-70% of sourced raw materials are recycled utilizing waste streams from industrial producers, providing an
additional cost advantage
RAW
MATERIALS INTERMEDIATES PRODUCTS APPLICATIONS SALES CHANNEL CUSTOMERS
Acrylonitrile
Sulfuric acid
Hydrochloric acid
Aluminium hydrate
Iron ore
Pickling liquor
Copperas
Acrylamide Polymers (EPAM, DPAM)
Al Coagulants
Fe Coagulants
Antiscalants
Biocides
Defoamers
Raw water treatment
Wastewater treatment
Sludge treatment
Advanced water treatment
Direct sales
Distributor/reseller
Service companies
Municipalities
Private operators
Industrial customers
Value chain part covered by Kemira
Kemira Capital Markets Day 2013 68