Kemira Q1 2013 result presentation

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Q1 2013 results and sharpened strategy

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Kemira Q1 2013 result presentation

  1. 1. 1Kemira InterimreportJanuary-March 2013Wolfgang Büchele, President and CEO | April 23, 2013
  2. 2. 2Improved profitability supported by organic growthRevenue EUR 560.9 million (552.9 in Q1 2012), +1%• Organic revenue growth +3%, driven by increased sales volumesOperative EBIT EUR 42.2 million (38.6), +9%• Operative EBIT margin 7.5% (7.0%)• ”Fit for Growth” savings EUR 9 millionOperative earnings per share EUR 0.17 (0.19)• Excluding EUR 12 million negative impact of the lower income from the associatedcompanies, operative EPS would be 33% higher at EUR 0.25Net working capital (ratio) of revenue reduced to 12.1% (12.8% in 2012)With a net debt of EUR 357 million (532), the gearing fell to 30% (42% inthe end of December, 2012)• EUR 178 million proceeds received from the divestments of food and pharmaceuticalsbusinesses and Kemira’s shares in JV SachtlebenQ1 2013 Interim report | Wolfgang Büchele | April 23, 2013 |
  3. 3. 3Revenue 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 Q12009 2010 2011 2012 2013Organic growth Currency Acquisitions Divestments Total growthQ1 2013 Interim report | Wolfgang Büchele | April 23, 2013 |
  4. 4. 4Paper – sales volume growth in EMEA and APACRevenue increased by 5% to EUR 259million (248)• Increased sales volumes of polymersand sizing in EMEA and APAC• Currency exchange -1%Operative EBIT increased 5%to EUR 19.7 million (18.8)• Organic revenue growth• ”Fit for Growth”• Higher raw material prices• Operative EBIT margin was 7.6% (7.6%)Cash flow was strong due to changes innet working capitalEUR million Q1/13 Q1/12 % 2012Revenue 259.1 247.9 5 1,005.6Operative EBIT 19.7 18.8 5 75.3Operative EBIT, % 7.6 7.6 - 7.5Cash flow* 29.9 -0.9 - 8.1*After investing activities, excluding interest and taxesQ1 2013 Interim report | Wolfgang Büchele | April 23, 2013 |
  5. 5. 5Municipal & Industrial – profitability improvedRevenue increased 2% toEUR 165 million (161)• Organic growth 4%, all regions, except NAFTA,contributed to the growth• Sales prices slightly lower than in Q1 2012Operative EBIT increased 51% toEUR 8.6 million (5.7)• Organic growth• ”Fit for Growth” savings• Higher raw material prices• Operative EBIT margin increased to 5.2% (3.5%)EUR million Q1/13 Q1/12 % 2012Revenue 164.8 161.0 2 686.6Operative EBIT 8.6 5.7 51 39.2Operative EBIT, % 5.2 3.5 - 5.7Cash flow* 0.0 6.8 - 39.2*After investing activities, excluding interest and taxesQ1 2013 Interim report | Wolfgang Büchele | April 23, 2013 |
  6. 6. 6Oil & Mining – Sales volumes grew inOil & Gas in North AmericaRevenue decreased 10% toEUR 76 million (85)• -4% impact related to exiting from low marginproducts as communicated earlier (full impact of EUR10 million will be realized by the end of 2013)• Pressure on sales volumes due to market softness inthe mining industry globally• Polymer sales volumes in Oil & Gas grew 8%in North AmericaOperative EBIT decreased toEUR 5.1 million (8.3)• Lower sales volumes and prices• Higher propylene and ethylene based raw materialprices• Operative EBIT margin was 6.7% (9.8%)EUR million Q1/13 Q1/12 % 2012Revenue 76.3 85.1 -10 321.1Operative EBIT 5.1 8.3 -39 25.9Operative EBIT, % 6.7 9.8 - 8.1Cash flow* -2.0 -18.7 - -5.3*After investing activities, excluding interest and taxesQ1 2013 Interim report | Wolfgang Büchele | April 23, 2013 |
  7. 7. 7ChemSolutions – operative EBIT marginimproved to 14.5% (9.8%)Revenue increased 3% toEUR 61 million (59)• Organic growth 10%, sales volumes grewin all the main product lines• Divestment of food and pharmaceuticalsbusinesses had -7% impactOperative EBIT increased 52% toEUR 8.8 million (5.8)• Higher sales volumes• Lower fixed costsEUR million Q1/13 Q1/12 % 2012Revenue 60.7 58.9 3 227.6Operative EBIT 8.8 5.8 52 15.1Operative EBIT, % 14.5 9.8 - 6.6Cash flow* 81.1 14.2 - 23.6*After investing activities, excluding interest and taxesQ1 2013 Interim report | Wolfgang Büchele | April 23, 2013 |
  8. 8. 810% EBIT margin achieved in 2014 through ”Fit forGrowth” restructuring• ”Fit for Growth” cost savings impact was EUR 9 million in Q1 2013(full run rate EUR 15 million per quarter)• 85% of the cost savings measures related to ”Fit for Growth” underimplementationEUR 60 million costsavingsRestructuring chargesof EUR 85 million1. Redundancies and leaner organization: EUR 30 million2. Manufacturing network consolidation: EUR 21 million3. Leaner operation: EUR 9 millionReported between Q3 2012 – Q2 2013:• EUR 45 million cash cost, mainly for severance payments,EUR 43 million to date• EUR 40 million, asset write-downs, EUR 30 million to dateQ1 2013 Interim report | Wolfgang Büchele | April 23, 2013 |
  9. 9. 9From redesignto expansion
  10. 10. 10Strategy sharpened in four key areas4321We focus onpulp & paper,oil & gas, mining andwater treatment BUSINESSINNOVATIONGEOGRAPHYGROWTHWe leverage maturemarkets and expandin selected emergingmarketsWe targetabove-the-marketgrowthWe invest ininnovation,expertise(knowledge) andcompetencies(behaviour)From redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  11. 11. Kemira: Where watermeets chemistryStrategy: Kemira provides expertise and tailoredcombinations of chemicals for water-intensiveindustries. We innovate together with our customersfor sustainable solutions where water meetschemistry.We focus on pulp & paper, oil & gas, mining and watertreatment to best improve our customers’ water,energy and raw material efficiency.We drive to achieve above-the-market growth throughour competent people, high-performing organization,product and service innovations, and a strengthenedpresence in selected emerging markets.Purpose: We enable our customers to improve theirwater, energy and raw material efficiencyVision: We provide the most valuable expertise andchemicals for water-intensive industries
  12. 12. 122013-2015FocusKemira – From redesign to expansion2017-2020ExpandBecome industry and technology leader inchosen target markets2015-2017AccelerateGrow through new products & services andexpanding in emerging marketsAchieve a sustainable positionin all target markets2012-2013RedesignReach target profitability byimplementing “Fit for Growth”From redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  13. 13. 13New financial targets - outlook for 2013 unchanged2013Revenue (local currenciesand excl. divestments)2014 2016Operative EBIT0%-5% growth vs 2012increase >15% vs 2012EBIT margin 10%RevenueEBITDA marginGearingEUR 2.6 – 2.7 billion15%below 60%From redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  14. 14. 141 | Focus on paper,oil & gas, mining andwater treatmentImproving ourcustomers’ water,energy and rawmaterial efficiencyKemira in the valuechain of WQQM**Water Quality and Quantity ManagementFrom redesing to expansion | Wolfgang Büchele | April 23, 2013 |Expertise and tailoredcombinations ofchemicals for water-intensive industries
  15. 15. 152 | Paper and Oil & Mining driving growthKemira’s relevant market (EUR 27 billionin 2012) will grow to EUR 34 billion in2020 (CAGR 3.3%)Paper: Growing above market,targeting wet-end chemistrymarket leadershipO&M: Growing above marketM&I: Improving profitability,maximizing cashChemSolutions: Maximizing cashby a product driven business modelSource: Management estimation based on various sources7,79,37,79,59,413,22,02,32012 2020 2012 2020O&MPaper2.4%ChemSolutionsM&I4.3%2.7%1.8%From redesing to expansion | Wolfgang Büchele | April 23, 2013 |Business focus
  16. 16. 16Shifting focus to fast growing differentiated products*) Mainly sodium percarbonate, colorants, acrylamide, inorganic salts and acids as well as caustic sodaDifferentiated product lines Commodity product lines%-of totalrevenuePolymers Sizing andstrengthDefoamers,dispersants,biocides andother processchemicalsCoagulants BleachingchemicalsFormic acidand derivativesMiscellaneouscommodityproducts*Paper 10% 20% 20% 5% 25% - 20%M&I 20% - 5% 65% - - 10%O&M 50% - 20% 5% - - 25%Chem-Solutions- - - - - 80% 20%Kemira 20% 10% 10% 25% 10% 10% 15%*) Mainly sodium percarbonate, colorants, acrylamide, inorganic salts and acids as well as caustic sodaFrom redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  17. 17. 17Differentiated products expected to grow substantially above themarket, commodity products focusing on efficiency improvementsDifferentiated products• Growth target substantially above the market• Driven by innovation and expertise• Higher margins due to higher value to thecustomer• Flexible manufacturing capabilities withsufficient scale• Higher barriers to entry (technology)7007508008509002010 2011 2012Commodity products• Targeting growth, but slightly lower thanthe market• Maximizing profitability and cash flow byleveraging existing capacityRevenue, EUR million0500100015002010 2011 2012EUR millionCAGR:+7%From redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  18. 18. 18Capital allocation focused on differentiatedproducts and increased efficiency• Payback time for new greenfield investments max. 7 years and max. 5 years for capacity additions forexisting products• Focus on Paper in China• Strengthening Oil & Mining market position in mature markets, South America, Middle East and Africa6,0 %5,0 %2012 2016eCapex split in average2010-2012Targeted capex split2016Capex-to-sales ratio30 % 70 %Commodity productsDifferentiated productsFrom redesing to expansion | Wolfgang Büchele | April 23, 2013 |65 % 35 %
  19. 19. 193 | Leverage mature markets and expand selectively inemerging marketsPaper, M&I, O&M, ChemSolutionsO&M and PulpPaper (China and Indonesia)Paper, O&M and M&IO&M(Middle Eastand Africa)• Innovation driven growth in mature markets• Emerging market revenue expected to grow from 14% to 16% in 2016From redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  20. 20. 20Mature markets continue to stay important in allsegments1 253 1 2332011 2012EMEA (55% of total revenue)Revenue, EUR million662 6892011 2012NAFTA (31% of total revenue)Revenue, EUR million39% 40%2011 2012GM %38% 40%2011 2012GM %From redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  21. 21. 214 | Investing in innovation, technical expertise (knowledge)and competencies (behavior)100 most innovative companies,2011 by industry, %7%9%11%13%14%0% 5% 10% 15%TelecommunicationequipmentConsumer productsComputer hardwareChemicalsSemiconductors & electroniccomponentsKemira innovation success stories• Higher packaging quality with reduced rawmaterial consumption through Kemira’sFennobind and Fennobond• Kemira’s friction reducers enable thesame amount of shale gas production withless pumping horsepower involvedSource: ForbesAiming to become one of the most innovative companies in the worldFrom redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  22. 22. 22Increasing R&D spend ondifferentiated products• Targeting to double innovation drivensales* from 5% in 2012 to ~10% oftotal sales in 2016• R&D expenses-to-sales fordifferentiated products increasing toover 4% (Kemira total 1.7% in 2012)• 70% of the patent portfolio hasbeen renewed since 2008*Sales from new products or existing products for newapplications launched within the previous 5 yearsFrom redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  23. 23. 23Delivering EUR 2.6 – 2.7 billion revenuewith EBITDA margin of 15% in 2016We will focus onpaper, oil & gas,mining and watertreatmentWe leverage maturemarkets and expandin selected emergingmarketsWe targetabove-the-marketgrowthWe invest ininnovation,expertise andcompetencies4321BUSINESSINNOVATIONGEOGRAPHYGROWTHFrom redesing to expansion | Wolfgang Büchele | April 23, 2013 |
  24. 24. 24Petri Helsky, President | Paper segmentThe marketleader getsstrongerThe market leader gets stronger | Petri Helsky | April 23, 2013 |
  25. 25. 254321Targeting above-the-market growth in wet-endchemistryThe only global playerdedicated to pulp andpaperMature marketsremain important– increasing focus onChina, Indonesia andBrazilGrowing in packaging &board and tissue – the mostattractive long-termprospectsImproving customers’raw material utilization,end-product quality andprocess efficiencyBUSINESSINNOVATIONGEOGRAPHYGROWTHThe market leader gets stronger | Petri Helsky | April 23, 2013 |
  26. 26. 26Global leader in wet-end chemistry, witha strong position in pulp#1 Paper & Pulp in EMEA#2 Pulp in South America#2 Paper in Chinaand Indonesia#2 Paper & Pulp in NAFTA• Innovation driven growth in mature markets (R&D hubs in EMEA and NA)• Superior technical know how and local investments driving growth in China andIndonesia (R&D hub in China)• Strong position in pulp further supported by project specific investments• Paper management relocating to Hong Kong as of September 1, 2013The market leader gets stronger | Petri Helsky | April 23, 2013 |
  27. 27. 271,5 1,7 1,9 2,0 2,1 2,20,91,01,11,82,02,31,51,61,82012 2016 2020 2012 2016 2020Defoamers, biocides and other wet-end process chemicalsDemand for sizing and strengthchemicals is growing fastest globallyPulp and paper industry trendsincreasing chemical demand:• Increased use of recycled fibres• Hardwood replacing softwood in virginpulp• Lightweighting of packaging andboard grades• Higher filler loads in graphic papers• New digital printing methods• Lower water / energy consumptionMarket size, EUR billion (CAGR: 2.4%)GAGRSizing and strengthMiscellaneous commodity chemicals3.5%2.0%3.0%1.3%2.0%Bleaching chemicalsPolymersThe market leader gets stronger | Petri Helsky | April 23, 2013 |
  28. 28. 28Differentiated products expected to growsubstantially above the marketDifferentiated products (sizing, strength andwet-end process chemicals)• Technology leader in sizing and strengthchemicals• Backward integration in all relevant sizingtechnologies (AKD, ASA, rosin)• Broad know how and expertise in the applicationof retention and water treatment chemicals• Innovation partner for paper producersCommodity products (mainly bleaching chemicals)• Focus on key customers and pulp mills wherechemical supply is fully integrated(Chemical island)• Dedicated manufacturing facilities that operate atcapacity3804104404705002010 2011 2012Revenue, EUR million1002003004005006002010 2011 2012Revenue*, EUR million*) Including EUR -54 million impact of divestmentsCAGR:+7%The market leader gets stronger | Petri Helsky | April 23, 2013 |
  29. 29. 29Technology and market leader in paper wet-endchemistryElectricitySodium chloride(salt)Crude tall oilCationic monomerAcrylonitrileAcrylic acidOlefinsFatty acidsMaleic anhydrideSulfurTall oil rosinAKD WaxIsomerized olefinsAcrylamideSodium chlorateHydrogenperoxidePolymersDefoamersCoagulantsBiocidesSizingStrength AdditivesSurface additivesColorantsSulfuric acidPulpingBleachingRetentionWet-end processcontrolWQQMSizingStrengthSurface treatmentColoringPulpPackaging andboardPrinting andwritingTissueAll the majorglobal paperand pulpproducersValue chain part covered by KemiraRAWMATERIALSINTERMEDIATES PRODUCTS APPLICATIONSCUSTOMERINDUSTRIES CUSTOMERSThe market leader gets stronger | Petri Helsky | April 23, 2013 |
  30. 30. 30Our innovations enable pulp &paper producers to improveoperational efficiency andproduct qualityTargeting innovation driven sales of EUR 150million in 2016FennoBind (surface additive): Innovative alternative tosynthetic binders for cost savings, better printability and lessdependency on oil based chemistryFennoclean PFA: Chlorine and bromine free microbialcontrol program for tissue productionFennoBond: Reduced raw material spend by improvingperformance of packaging material …10,000miles later
  31. 31. 31Targeting above-the-market growth in wet-end chemistryThe only global playerdedicated to pulp andpaperMature markets remainimportant – increasingfocus on China,Indonesia and BrazilGrowing in packaging &board and tissue – themost attractive long-termprospectsImproving customers’raw material utilization,end-product quality andprocess efficiency4321BUSINESSINNOVATIONGEOGRAPHYGROWTHThe market leader gets stronger | Petri Helsky | April 23, 2013 |
  32. 32. 32Randy Owens, President | Oil & Mining segmentA growingtechnologyleaderA growing technology leader | Randy Owens | April 23, 2013 |
  33. 33. 334321Targeting above-the-market growthExtracting & ProcessingApplication knowledgeDeclining reserves &increasing water usageMature markets,Middle East,Africa and South AmericaDrilling, stimulation,cementing (upstream)Selected core oresOrganic growth supportedby selective M&AinvestmentsShorten innovation cycleto meet most urgentcustomer challengesDriving yield & processefficiencyBUSINESSINNOVATIONGEOGRAPHYGROWTHA growing technology leader | Randy Owens | April 23, 2013 |
  34. 34. 34Strong market growth across all product lines• High oil price spurs demand for identifyingnew sources• Global growth of shale gas and wet shale• Declining ore assays require improvedprocessing• Increasing environmental pressure whichincreases demand for waste watertreatment3,1 3,64,32,0 2,4 2,94,35,16,12012 2016 2020 2012 2016 2020Market size, EUR billion (CAGR: 4.7%)Polymers Defoamers, biocidesand other processchemicalsMiscellaneouscommodityproductsA growing technology leader | Randy Owens | April 23, 2013 |
  35. 35. 35Application knowledge drives faster than market growth• Proven track record of substantiallyexceeding market growth• Succesful transition from productdriven to applications drivenbusiness model• Innovation driving growth andenabling entry to new applications• Fast entry into shale gas – leadingposition in North America• Expanding position in wet shale andEORDifferentiated product linesRevenue, EUR million1501701902102302502010 2011 2012A growing technology leader | Randy Owens | April 23, 2013 | 35CAGR:9%
  36. 36. 36Focusing on the mature markets as well as fast growingMiddle East, Africa and South AmericaEMEAEU, North Sea,Africa & Middle EastUpstream and EOR*Copper, gold, nickel &iron oreNAFTAUS & CanadaUpstream, EOR* and unconventional sourcesIron ore & mineralsSouth AmericaBrazil, Chile, Peru & ArgentinaUpstream, deep water and EOR*Iron ore, copper & goldAPACSelective approachin China andIndonesiaUpstreamCopper & iron oreSelected M&A to support growthA growing technology leader | Randy Owens | April 23, 2013 | 36*Enhanced oil recovery
  37. 37. 37AcrylonitrileAcrylic acidVarious monomersMiscellaneousspecialty chemicalsand commoditiesAcrylamide PolymersDispersants &AntiscalantsBiocidesEmulsifiersDefoamersCoagulantsFormulationsFriction ReductionFormation & WellScale ControlAsset integrityMicrobial InducedCorrosionEnhanced OilRecoveryDrilling mudsConcentratethickeningMineral slurrypreservationMining processesScale ControlPumpersOil & Gas operatorsService companiesMine operatorsWinning market share with competitive combination ofinnovation chemicals and application knowledgeValue chain part covered by KemiraRAW MATERIALS INTERMEDIATES APPLICATIONS CUSTOMERSPRODUCTSA growing technology leader | Randy Owens | April 23, 2013 | 37
  38. 38. 38KemGuard® Detectable ScaleInhibitor:Squeeze life optimization in NorthSea operation providing:• cost reduction to operationassociated with re-squeezing• reduction of scale inhibitor requiredKemFlow® Friction Reducer:Cost savings and reducing wateruse in hydraulic fracturing.• savings of EUR 1.2 million per wellin trucking & disposal costs• reduced the amount of fresh waterrequired at the siteKemPel™ Organic Binder:Lowers silica content in iron orepellets• custom formulated to fit tocustomer’s iron ore and pelletizationprocess• increased throughput achieved withlower silica and moisture in pelletTargeting innovation driven sales of EUR 100 million in 2016Stimulation & ProductionTagged AntiscalantsBiodegradable AntiscalantsHydraulic fracturingHigh performance polymers forharsh conditionsMetals mining processingPolymers as pelletizing aidsPolymers as rheology modifiersA growing technology leader | Randy Owens | April 23, 2013 | 38
  39. 39. 39Ongoing efficiencyimprovements safeguardingprofitability• Increasing plant utilization and timelycapacity expansion• Increasing sales efficiency(sales per person)• Faster new product commercialization• Simplify work processes andorganizational design
  40. 40. 40Capturing above-the-market growth as a growingtechnology leaderExtracting & ProcessingApplication knowledgeDeclining reserves &increasing water usageMature markets,Middle East,Africa and South AmericaDrilling, stimulation,cementing (upstream)Selected core oresOrganic growth supportedby selective M&AinvestmentsShorten innovation cycleto meet most urgentcustomer challengesDriving yield & processefficiencyA growing technology leader | Randy Owens | April 23, 2013 | 404321BUSINESSINNOVATIONGEOGRAPHYGROWTH
  41. 41. 41Municipal &IndustrialturnaroundMunicipal & Industrial turnaround | Wolfgang Büchele | April 23, 2013 |
  42. 42. 42Continuous efficiency improvement in all segments is thekey enabler for successful strategy implementationAdditional efficiency improvement measuresinitiated to compensate for the cost inflation• Municipal & Industrial turnaround (Wegener)• Further optimization of production assets(Löffelmann)• Consolidation of European back-office functions(Salminen, Löffelmann)• Lean operation (Löffelmann)– Stringent complexity reduction and adequatemanagement10% EBIT marginachieved through”Fit for Growth”EUR 60 millionsavingsKemira total fixed costs approximately 25% of revenueMunicipal & Industrial turnaround | Wolfgang Büchele | April 23, 2013 |
  43. 43. 43Municipal & Industrial - improvingprofitability and maximizing cashBroad and proven portfolio ofcommodity products for basicmunicipal and industrial watertreatment and sludge treatmentOngoing structural profitabilityimprovement throughmanufacturing footprint, customerbase and process optimizationMunicipal & Industrial turnaround | Wolfgang Büchele | April 23, 2013 |
  44. 44. 44AcrylonitrileSulfuric acidHydrochloric acidAluminium hydrateIron orePickling liquorCopperasAcrylamide Polymers(EPAM, DPAM)Al CoagulantsFe CoagulantsAntiscalantsBiocidesDefoamersRaw watertreatmentWastewatertreatmentSludgetreatmentAdvancedwater treatmentDirect salesDistributor/resellerServicecompaniesMunicipalitiesPrivateoperatorsIndustrialcustomersTechnology and market leader in raw and wastewater as well as sludge treatment• The only major supplier producing major water treatment chemicals, polymers and coagulants – thereby enablingcomprehensive 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 anadditional cost advantageRAWMATERIALSINTERMEDIATES PRODUCTS APPLICATIONS SALESCHANNELValue chain part covered by KemiraCUSTOMERMunicipal & Industrial turnaround | Wolfgang Büchele | April 23, 2013 |
  45. 45. 45Commodity product lines expected to grow, but slightlyslower than the market2,6 3,0 3,41,6 1,8 1,93,43,84,42012 2016 20209,2%7,1%6,2%01503004506007502010 2011 2012Demand 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 demandMarket size, EUR billion (CAGR: 3.2%)GAGRCoagulantsOperative EBIT %Antiscalants, biocides, defoamers, miscellaneous commodity chemicals3.2%2.8%3.3%M&I revenue and operative EBIT-%EUR millionPolymers644665 687Municipal & Industrial turnaround | Wolfgang Büchele | April 23, 2013 |
  46. 46. 46Q1 operative EBIT following typical seasonality patternDuring summer season coagulants demand is higher than during winterProfitability turnaround aims to increase M&I cross-cycle operative EBIT-% to 10%3,5%6,9%8,6%3,6%5,2%Q112 Q212 Q312 Q412 Q113M&I’s business seasonality(operative EBIT, %)6,8%5,3%8,0%5,0%Q111 Q211 Q311 Q411Municipal & Industrial turnaround | Wolfgang Büchele | April 23, 2013 |
  47. 47. 47Additional cost savings measures have been initiated inline with M&I’s sharpened strategyTargeted M&I operative EBIT-% with“Fit for Growth”Operative EBIT-% target for the M&I withadditional measures9%Headcount reductionClosure of 9 sites and 2 production plants,1 site under reviewManufacturing cost and energy savingsDisposal of under performing businesses(e.g India)SKU reduction>10%Enhanced customer-to-plant allocationFixed cost savings and continued sitenetwork streamliningDisposal of underperforming miscellaneousproduct linesR&D focus in–line with strategyNew service levels by customer segmentationSales to new applications (e.g membranes)EUR 8 million of EUR 22 millionsavings target achievedMunicipal & Industrial turnaround | Wolfgang Büchele | April 23, 2013 |
  48. 48. 482016RevenueEBITDA marginGearingEUR 2.6 – 2.7 billion15%below 60%Becoming industry andtechnology leader inchosen target markets in 2020• Targeting above-the-market growth• Maximizing cash flow generation with continuousefficiency improvements
  49. 49. 49APPENDIXAppendix | April 23, 2013 |
  50. 50. 50Good balance between sales and raw material prices-150-100-50050100150200Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12007 2008 2009 2010 2011 2012 2013Brent oil, USD Sales price* Variable costs**) 12-month rolling change vs previous year, meur, excl. Tikkurila and PigmentsKemira sales prices vs variable costsAppendix | April 23, 2013 |
  51. 51. 51Operative EBIT Q1 2013 vs Q1 2012Q1 2012 SalesvolumesSales prices VariablecostsFixed costs CurrencyimpactOthers, incl.acquisitionsanddivestmentsQ1 2013-6.16.2 -4.2 4.0 -1.0 4.7 42.238.6Appendix | April 23, 2013 |
  52. 52. 52”Fit for Growth” will improve EBITby EUR 60 million in 2014• Cost savings impact in operativeEBIT in Q1 2013 was EUR 9 million– EUR 3 million impacted variable costs– EUR 6 million impacted fixed costs• Expected cost savings impact inoperative EBIT 2013 is EUR 50 million• Expected cost savings impact inoperative EBIT 2014 EUR 60 million”Fit for Growth” status Q1 2013, EUR million5060109010203040506070Savings impact2012Savings impact2013Savings impact2014Expected savings Realized savingsAppendix | April 23, 2013 |
  53. 53. 5341302 4100153045Severance payments andexternal services 2012Asset write-downs 2012 Severance payments andexternal services 2013Asset write-downs 2013Realized restructuring charges Expected restructuring charges”Fit for Growth” requires EUR 85 million inrestructuring costs• EUR 2 million booked in Q1 2013– In 2012, restructuring charges amounted to EUR 71 million, of which EUR 41 million related toseverance payments and external services and EUR 30 million to asset write-downs• Total non-recurring severance payments and external servicesapproximately EUR 45 million• Total non-recurring asset write-downs approximately EUR 40 millionEUR millionAppendix | April 23, 2013 |
  54. 54. 54Fixed costs are approximately 25% of revenues• Fixed costs includes personnelexpenses, maintenance cost and leases• Expected ”Fit for Growth” savingsEUR 50 million in 2013• Efficiency improvements and operatingleverage compensating the annual costinflation of around 3%• TOP 10* raw materials account for45% of raw material spendKemira cost breakdownEUR million02505007501 0001 2501 5001 7502 0002010 2011 2012Raw materials Logistics Energy Fixed costs*) From 1 to 10: Acrylic Acid, Cationic monomer, Acrylonitrile, Fatty acid, Petroleum solvents, Propionic acid, Aluminium Hydrate, Sodium hydroxide, Sulphuric acid, Hydrochloric acidAppendix | April 23, 2013 |
  55. 55. 55Key ratios• Net debt decreased due to EUR 178 million proceeds received from the divestments of food andpharmaceuticals businesses and Kemira’s shares in JV SachtlebenEUR million, except key ratios and personnel Mar, 31 2013 Dec, 31 2012Capital employed* 1,596 1,673ROCE, %* 2% 3%Equity ratio, % at period-end 50% 51%Gearing, % at period-end 30% 42%Net debt 357 532Number of personnel 4,662 4,857*12-month rolling average (ROCE, % based on the reported EBIT)Appendix | April 23, 2013 |
  56. 56. 56Cash flow statementEUR million Q1 2013 Q1 2012 FY 2012Operative EBITDA 63.5 62.8 249.4Change in net working capital -4.3 -42.6 -21.1Cash flow from operations 40.3 10.4 176.3Capital expenditure -29.0 -19.4 -134.1Other investing activities 178.6 0.9 29.6Cash flow after investing activities 189.9 -8.1 71.8Appendix | April 23, 2013 |
  57. 57. 57Creating shareholder value• ”Fit for Growth” program• New organization fosters growth in high margin businesses• Strict cash flow management• Leverage mature markets with existing strengths• Well established position in US Oil and Gas markets, especially in shale gas• Packaging and Board, as well as Tissue driving growth in Asia• Excellent funding position• Relevant financial assets• M&A possible also short term, if profitability and synergy criteria are all met• Strong focus on improving shareholder returns• Stable dividend yieldSubstantial earningsimprovement potentialOrganic growthStrong balance sheetAppendix | April 23, 2013 |
  58. 58. Where watermeets chemistry™

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