Published on October 15, 2007
Kemira Continues Strong GrowthLasse Kurkilahti, President & CEOJune 2006: Kemira Continues Strong Growth Lasse Kurkilahti, President & CEO June 2006 Investor Relations: Päivi Antola, tel. +358 1086 21140 Contents: Strategy Strategies of the Business Areas Q1 Group Highlights Contents Slide3: Strategy Business Areas: Business Areas Pulp & Paper Chemicals Water Treatment Chemicals Performance Chemicals Paints & Coatings Revenue 2005, Pro Forma ~ EUR 2.5 Billion : Revenue 2005, Pro Forma ~ EUR 2.5 Billion Including Lanxess paper chemicals, Kraski Teks, Finnish Chemicals and Verdugt for the whole year Goal: Goal A global group of leading chemicals businesses with unique positions and high mutual synergy Great profitability, continuous improvement Continuous growth: organic and through M&A Participative, entrepreneurial company culture → More ambition, more dynamics Kemira - #1 in the World: Kemira - #1 in the World *Management estimates Building Blocks: Building Blocks Divestments − Biolchim (2006) − Coil coating (2005) − UK industrial coatings business (2004) − GrowHow (2004) − Fine Chemicals (2004) − Calcium Chloride business (2004) − Ecocat (2004) − Kemira Engineering (2004) − Polargas (2003) Acquisitions Pulp & Paper Chemicals + Lanxess paper chemicals (2006) + Finnish Chemicals (2005) + E.QU.I.P (2004) + Rhodia (2003) + Vulcan (2003) Kemwater + Eaglebrook (2004) + Zlotniki (2004) + Belinka (2004) + Kemiron (2003) Performance Chemicals + IFAC (2006) + Verdugt (2005) Paints & Coatings + Kraski Teks (2006) + Kolorit paints (2004) Opportunities for Improved Profitability: Opportunities for Improved Profitability Streamlining the production network Professional attitude towards customers and suppliers Economies of scale, utilizing the leading position Internal synergies to use New Sales Ratio up Idle / low productive capital out → World class internal efficiency Opportunities for Growth: Opportunities for Growth Organic growth Extended sales New products Opportunity 5% / year Mergers and acquisitions Opportunities within the Business Areas: Opportunities within the Business Areas Pulp & Paper Chemicals Implementing consolidation in selected areas Efficiency programs Global market EUR 20 billion, growth 700 MEUR/a Performance Chemicals Applications Customer orientation Global niche market EUR 1.4 billion, growth 100 MEUR/a Kemwater Implement coagulant strategy with more speed Widen the product portfolio Global target market EUR 8 billion, growth 600 MEUR/a Paints & Coatings Eastern Europe Geographical target market EUR 4 billion, growth 250 MEUR/a M&A Activities Continue: M&A Activities Continue Strategic fit Must increase EPS from year one Significant synergies Long-term gearing below 100% Financed with Cash / debt Share issues Divestment of non-core businesses Research & Development: Research & Development Total spend 2.2% of revenue Varies between BAs and SBUs New sales ratio ~ 20% R&D personnel ~ 650 Co-operation with universities and research institutes Customer-oriented product development and service 39% Business-specific research projects 37% Group-wide research projects 24% R&D expenditure breakdown in 2005: New Sales Ratio: New Sales Ratio □ New □ NA □ Old Financial Benchmarks: Financial Benchmarks Earnings / share Continuous improvement Growth: organic and through M&A Cash flow after capital expenditure (excl. acquisitions) Positive Return on capital employed > 20% Great 15 − 20% Good 10 − 15% Acceptable < 10% Not acceptable → Basis for incentive systems Shareholder Value: Shareholder Value Kemira from Good to Great: Kemira from Good to Great We have a strong, participative and entrepreneurial culture. We create it through an open dialogue. Everyone can influence their work and get rewarded for good performance. People enjoy their work at Kemira. We are regarded as the leading expert in chemical solutions. The strong brand increases our competitiveness. All our actions lead towards World Class Operational Efficiency. Our strategy is unique, sharp and clear. Our work is based on our strategy every day. Brand Promises: Reliable Cooperative Responsible Proactive Slide18: Strategies of the Business Areas Pulp & Paper Chemicals : Pulp & Paper Chemicals No 1 pulp & paper chemicals supplier in the world Revenue 2005, pro forma ~ 1,050 MEUR (incl. Lanxess paper chemicals & Finnish Chemicals for the whole year) Good market position Globally No 1 Europe No 2 North America No 2 Nordic No 1 Kemira’s Pulp and Paper Chemicals Offering: Paper making Coating Pulping & Bleaching • Hydrogen Peroxide • Sodium Chlorate • Chlorine Dioxide • Sodium Borohydride • Caustic • Sulphur Products • Peracetic Acid • Bleaching Additives • Defoamers • Deposit Control • Water Treatment • Retention • Deposit Control • Defoamers • Water Treatment • Deinking • Sizing • Wet & Dry Strength • Optical Brighteners * • Colourants * • Calcium Sulphate • Titanium Dioxide • Dispersing Agents • Deposit Control Bleaching Chemicals Specialty Chemicals Pigments & Additives Kemira’s Pulp and Paper Chemicals Offering Lanxess contribution: *Complementing / Strengthening Slide21: Pulp and Paper Chemicals Market is Growing Coating Growth 4%/a Bleaching Growth 2%/a Specialty Chemicals Growth 5%/a EUR 5.5 billion EUR 6.8 billion EUR 7.7 billion Total Market EUR 20 billion Kemira’s share*: Bleaching 8% Specialty 8% Coating <1% *Management estimates Fragmented Market Giving Opportunities for Growth: Company Fragmented Market Giving Opportunities for Growth Pulp & Paper Chemicals: Pulp & Paper Chemicals EBIT & ROCE The figures are not fully comparable. Revenue MEUR MEUR % Kemwater: Kemwater The leading global supplier of coagulation chemicals to municipal waterworks; solutions for industrial waste water and sludge treatment Revenue 2005: 353 MEUR Leading market position (coagulants) Global No 1 North America No 1 Europe No 1 Nordic No 1 Coagulant Consumption: Coagulant Consumption South America 1,5 kg/p Australia 1,4 kg/p Africa 0,6 kg/p Mid East 0,7 kg/p Central America 1,5 kg/p Asia 1,4 kg/p Europe 5,3kg/p North America 5 kg/p Scandinavia 18 kg/p Russia 1,5 kg/p Kilos/Person Differentiation Drivers / Total Business Potential: Differentiation Drivers / Total Business Potential Coagulants (organic/acquisitions) R&D focus (Disinfection, Odour and toxic removal) Polymers/specialities Sludge management (organic) Industrial outsourcing (organic/acquisitions) EUR 2 billion Growth rate 15%/a SNF Buchman Cytec Degussa Ondeo Veolia Remondis Marketing leverage Raw materials/metals Package deals Package deals EUR 2 billion Growth rate 4%/a Main Coagulant Players: Main Coagulant Players Europe North America (Management estimates) Kemwater: Kemwater EBIT & ROCE Revenue Q4/04 excluding extra write-downs and costs of 11 MEUR. MEUR MEUR % The figures are not fully comparable. Performance Chemicals: Performance Chemicals Leading position in growing specialty chemicals markets Revenue 2005: 408 MEUR Good market position TiO2 Pigments: Leading producer of TiO2 for printing inks ChemSolutions: No 1 globally in selected customer segments Chemidet: No 3 globally Global Market Potential: Global Market Potential TiO2 Pigments 7,000 MEUR GDP 7 TiO2 pigments for printing ink 200 MEUR 2−5% 1 FDC (Food, Drugs, Cosmetics, UV-Titan) 200 MEUR 2−10% 2−3 ChemSolutions Organic Salts 150 MEUR 2−3% 1 Organic Derivatives 20 MEUR 3−10% 1 Acidifiers & Preservatives 150 MEUR 5−10% 1 Formic Acid 250 MEUR 3−4% 2 Chemidet Detergent bleaching solutions 300 MEUR 0−10% 3 (sodium percarbonate) Growth/a Kemira’s position Market size ChemSolutionsSegments and Market Positions: ChemSolutions Segments and Market Positions *Management estimates Performance Chemicals: Performance Chemicals Net sales Revenue EBIT & ROCE *Continuing operations MEUR MEUR % The figures are not fully comparable. Paints & Coatings: Paints & Coatings Leading player in North and East Europe with strong local brands (Tikkurila, Alcro, Beckers, Vivacolor, Teks, etc.) Revenue 2005: 458 MEUR Leading market positions in decorative paints Finland No 1 * Sweden No 1 Baltic No 1 * Poland No 3 Russia No 1 * and industrial paints Paint Consumption andPaints & Coatings’ Production Sites: Paint Consumption and Paints & Coatings’ Production Sites 20 < liters/person 10 < liters/person 5 < liters/person Production site 5 Growing Decorative Paint Market in Russia: Significant growth potential in Russia Population of 145 million people Decorative paint consumption < 4 litres per capita (over 15 litres in Scandinavia) Total size of the Russian paint market approximately 450 million litres Low Medium Top Tikkurila, Akzo Nobel, Caparol, ICI Düfa, Finncolor Yaroslavskie Kraski, Empils, Teks, Cherkessk, Zagorsky, Pigment, Odilak, Kotovsky, Raduga Source: Management estimates Growing Decorative Paint Market in Russia Brands by price segment: Slide36: Paints & Coatings’ Market Position in Decorative Paints Management estimates Paints & Coatings: Paints & Coatings EBIT & ROCE Revenue ------ ------ ------ MEUR MEUR % Slide38: Q1 Group Highlights Strong Growth Continues: Strong Growth Continues Revenue up 37% Organic growth 11% Acquisitions 26% / EUR 105 million Finnish Chemicals Verdugt Kraski Teks EPS up 40% Continuous improvement of performance and efficiency Increases in raw material and energy prices were for a large part passed on into selling prices Growth Boosted by Acquisitions: Growth Boosted by Acquisitions Organic growth Revenue up 37%: Revenue up 37% MEUR Revenue Development 2002-2006: Revenue Development 2002-2006 *Continuing operations MEUR Q1/2006: 552.9 MEUR, +37% (Q1/2005: 403.7 MEUR) EBIT up 50%: EBIT up 50% MEUR EBIT Development 2002-2006: EBIT Development 2002-2006 *Continuing operations. Excluding a write-down of 78 MEUR in Q4/02 MEUR EPS by QuarterROCE: EPS by Quarter ROCE * Continuing operations excluding a non-recurring charge of 44.2 MEUR in Q4/04. Q4/02 exludes a write-down of 78 MEUR. EUR % Shareholders 28 April 2006: Shareholders 28 April 2006 Minimum state ownership 15% (29 April 2005) Outlook for 2006 – Kemira Group: Outlook for 2006 – Kemira Group Kemira Group’s growth is expected to continue strongly during Q2 Organic growth Acquisitions of Lanxess and Kraski Teks Raw material and energy prices are projected to remain high, putting pressure on business profitability Kemira’s revenue, EBIT and EPS for 2006 are expected to increase from 2005 levels All forward-looking statements in this report are based on the management’s present expectations and beliefs about future events, and the actual results may differ materially from the expectations and beliefs contained in the forward-looking statements.
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