Delivering a profitable water pure-play 3% organic growth with - PowerPoint PPT Presentation

Wolfgang Büchele, President and CEO | March 24, 2014 Kemira’s Annual General Meeting 2014 Delivering a profitable water pure-play

3% organic growth with improved profitability January-December 2013 • Revenue EUR 2,229.1 million (2,240.9) – Organic revenue growth 3%, driven by increased sales volumes – Currency exchange -2% – Divestments -2% • Operative EBIT increased 6% to EUR 164.2 million (155.5) – Operative EBIT margin improved to 7.4% (6.9%) • Operative ROCE* increased to 11.9% (10.0%) • Cash flow after investing activities EUR 196 million (72) • Net debt reduced to EUR 456 million (532) *) 12 month rolling average 2

Kemira – global EUR 2.2 billion chemicals company (2013) South America Manufacturing Revenue: footprint globally EUR 160 million (7%) (59 sites): Personnel: 237 20 multipurpose, 30 coagulants, 9 commodity chemicals Multipurpose Coagulants Commodity chemicals Yanzhou North America EMEA APAC Revenue: EUR 670 million (30%) Revenue: EUR 1,270 million (57%) Revenue: Personnel: 1,281 Personnel: 2,595 EUR 135 million (6%) Personnel: 340 3

Transformation into a water pure-play is now accomplished New Performance Acquisition of Sharpened 3F and organization management BASF’s AKD strategy Soto structure system emulsion acquisition business Fit for Growth Q2 2012 AGM 2014 Result JV Sachtleben Coagulants Formic Divestments business in Brazil acid business Food and pharmaceuticals Danish distribution business business 4

Profitability and balance sheet have been the main focus in the strategy implementation until the end of 2013 2.8 Revenue, EUR billion 2.2 4.3 Net debt / EBITDA 1.8 2008 2009 2010 2011 2012 2013 5

Strategy sharpened in four key areas in April 2013 We focus on We target 1 2 pulp & paper, above-the-market oil & gas, mining and growth water treatment BUSINESS GROWTH We leverage mature We invest in 3 4 markets and expand innovation, in selected emerging expertise markets (knowledge) and GEOGRAPHY INNOVATION competencies (behaviour) 6

Focus on paper, oil & gas, mining and water Kemira in the value chain of WQQM* treatment Expertise and tailored combinations of chemicals for water- intensive industries Improving our customers’ water, energy and raw material efficiency *) Water Quality and Quantity Management 7

Managing businesses from their regions of growth Oil & Mining Kemira head office in management based Helsinki, Finland in Houston, US Paper management Municipal & Industrial based in management based in Hong Kong, China Frankfurt, Germany 8

Revenue growth accelerated in Paper Sales volumes growth in all regions Margin improved to 8.7% (7.7%) in 2013 Paper revenue growth trend year-on-year and operative EBIT EUR million % 25 12% 20 8% 8% 7% 15 6% 6% 4% 5% 5% 10 3% 0% 5 -3% 0 -4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 9

Oil & Mining revenue recovering 3F acquisition and higher polymer sales volumes, especially in the NAFTA region Oil, gas and mining customer destocking as well as low 3F result were reasons for decreased operative EBIT in Q4 2013 Oil & Mining revenue growth trend year-on-year and operative EBIT EUR million % 9 10% 8 9% 5% 7 2% 6 0% 0% 5 4 -5% -3% -9% 3 -5% -10% -10% 2 -10% 1 0 -15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 10

Strategic initiatives impacting revenue in Municipal & Industrial Operative EBIT margin improved each quarter in 2013 compared to 2012 Improved product mix in EMEA and NAFTA Profitability Aluminum and iron coagulant businesses in Brazil divested in Q4 2013 Municipal & Industrial revenue growth trend year-on-year and operative EBIT % EUR million M&I 18 8% EMEA 16 4% 4% 2% 2% 14 5% M&I 2% 12 0% 2% NAFTA 10 M&I -4% -7% 8 APAC 6 -8% Revenue M&I SA 4 -13% growth -12% 2 Polymers and other 0 -16% process chemicals Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Coagulants 2012 2013 11

Leverage mature markets and expand selectively in emerging markets 57% 30% Paper, M&I, O&M Paper, O&M and M&I 6% Paper (China and Indonesia) 7% O&M O&M and Pulp (Middle East and Africa) 12

Capital allocation focusing on high growth product lines 3F and Soto acquisitions Nanjing process chemicals site for fast growing markets in China Innovation driven revenue* increased to approximately EUR 160 million (106) in 2013 Capex split average R&D projects in scale up phase Capex split in 2013 2010-2012 Differentiated products Commodity products Oil & Mining 35% 50% 65% 50% Paper *) Revenue from new products or from products into new applications launched within the past five years 13

Innovation revenue target EUR 250 million in 2016 Targeting to double innovation revenue from 5% in 2012 to ~10% of total sales in 2016 Kemira innovation revenue*, EUR million New innovation areas 180 160 160 Next Fennobind generation 140 Tagged antiscalants 106 120 100 Guar replacement 80 Green friction reducer 60 40 Rheology modifiers 20 Microbial fuel cell 0 2012 2013 *) Revenue from new products or from products into new applications launched within the past five years 14

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 15

Divested businesses impacting revenue by approximately EUR 200 million in 2014 In total, divested businesses had a dilutive impact on Kemira’s operative EBIT in 2013 • Organic acids for food and pharmaceuticals industries in Netherlands • The marginal product lines in Denmark and Romania • Iron and aluminium coagulants in Brazil • Commodity chemicals distribution business in Denmark (closed in January, 2014) • Formic acid and its derivatives in Finland (closed in March, 2014) 16

Acquisitions expected to contribute to growth target • 41% gearing in 2013 means over EUR 200 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) 17

Outlook for 2014 Financial targets for 2016 unchanged 2013 2014 2016 Revenue EUR 2,229 million 0%-5% organic growth* Operative EBIT EUR 164.2 million increase 5%-15% Revenue EUR 2,229 million EUR 2.6 – 2.7 billion Operative EBITDA margin 11.3% 15% below 60% Gearing 41% *) Revenue growth in local currencies, excluding the impact of acquisitions and divestments 18

Board of Directors proposes EUR 0.53 (0.53) dividend to shareholders at the AGM Dividend amounts to EUR 81 million, 76% of the operative net profit Kemira’s dividend policy is to pay out 40%-60% of the operative net profit 0.60 8.0% 0.53 0.50 6.0% 0.40 4.4% 0.30 4.0% 0.20 2.0% 0.10 0.00 0.0% 2006 2007 2008 2009 2010 2011 2012 2013* Dividend Dividend yield *) Dividend proposal to the Annual General Meeting 2014 19

Key enablers for performance culture in place Be recognized as industry and technology 2017-2020 Best-in-class in its ability to leader in selected target markets Expand leverage global performance culture, talents and operations 2015-2017 Build a strong employer brand to attract Grow through new products & services Accelerate and retain leadership and expert talents and accelerate expansion in emerging markets 2013-2015 Establish a performance and innovation driven Achieve a sustainable position Focus culture that fosters collaboration, learning and in all target markets organizational agility 2012-2013 Building blocks for a high performing organization in Reach target profitability Redesign place: Clear accountabilities, performance by implementing “Fit for management system, process architecture Growth” 20