JARI ROSENDAL, PRESIDENT AND CEO PETRI CASTRÉN, CFO FEBRUARY 11, 2020 Strong profitability and cash flow in 2019 JANUARY-DECEMBER 2019
Selected highlights in 2019 • Good global demand in 2019 although shale market softened towards the end of the year and some softness was visible in Pulp & Paper • Focus on value over volume clearly visible in financials, strong profitability improvement in 2019 with operative EBITDA margin reaching 15.4% • Investments starting to gradually contribute to EBITDA from Q1 2020 onwards: AKD-wax production facility in China • CEOR polymer capacity addition in the Netherlands • • Bleaching capacity expansion in North America • Smooth operational performance; improved customer and employee satisfaction FEBRUARY 11, 2020 Q4 2019 RESULTS 2
Financial highlights of 2019 EUR million Q4 Q4 Δ% FY FY Δ% Focus on value over volume 2019 2018 2019 2018 (except ratios) Our pricing management was successful in driving • higher profitability despite some loss of volume Revenue 657.7 661.8 -1% 2,658.8 2,592.8 3% • Oil & Gas growth in shale, CEOR* and tailings Operative EBITDA 90.1 84.5 7% 410.0 323.1 27% water treatment of which margin 13.7% 12.8% - 15.4% 12.5% - Operative EBITDA +27% to margin of 15.4% • Effective price and cost management Operative EBIT 42.4 44.8 -5% 224.0 173.8 29% Turnaround in water treatment in North America • of which margin 6.4% 6.8% - 8.4% 6.7% - Q4 negatively impacted by softer shale and new • plant start-up costs Net profit 26.5 -68% 95.2 22% 8.6 116.5 Earnings per share +24% to EUR 0.72 EPS diluted, EUR 0.05 0.17 -72% 0.72 0.58 24% Increase driven by higher operative EBITDA • Cash flow from Strong cash flow from operating activities operating activities 142.5 88.2 62% 386.2 210.2 84% Dividend proposed to be increased by 6% Dividend per share, following strong cash flow proposal by the BoD, 0.56 0.53 6% EUR** *CEOR, chemical enhanced oil recovery **Board of Director’s proposal to the AGM 2020 FEBRUARY 11, 2020 Q4 2019 RESULTS 3
Pulp & Paper – profitability improved in 2019 Market environment REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) Some softness in near-term market demand; long- • EUR million term growth drivers solid 390 385 386 383 381 376 373 373 372 369 369 363 Organic growth -3% in Q4; -2% in 2019 +7% +6% • Intentional focus to improve product mix +5% +5% +4% +2% +1% 0% +0% Exit of ECOX business and lower caustic soda • -3% -3% -3% market prices (mainly trading product) impacted organic growth – underlying development positive Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2019 Operative EBITDA margin 13.6% in Q4, 14.3% in 2019 OPERATIVE EBITDA AND OPERATIVE EBITDA-% EUR million 16.0% • Value over volume visible in EBITDA and EBIT 12.4% 13.0% 13.4% 14.9% 11.6% 12.1% 13.6% 13.1% 13.3% 14.4% 13.6% combined with cost savings resulting in improved 61.3 55.4 profitability 53.7 52.6 52.3 51.2 50.7 48.5 47.8 46.0 45.4 42.7 Q4 negatively impacted by new plant start-up costs in • China *IFRS 16 impact EUR +3.8 million in Q4 and EUR • Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2* Q3* Q4* +14.1 million in 2019 2017 2018 2019 FEBRUARY 11, 2020 Q4 2019 RESULTS 4
Industry & Water – profitability improved clearly in 2019 Market environment REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million Water treatment market solid • 307 290 284 272 271 272 267 264 259 248 245 238 • Shale market slowed down during Q4 +15% +20% +14% Organic growth -1% in Q4, +4% in 2019 +11% +11% +9% +6% +6% +5% Improved pricing in water treatment +4% • +2% -1% Oil & Gas: slight revenue growth in Q4; strong • Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 revenue growth in 2019 2017 2018 2019 Operative EBITDA margin 13.8% in Q4, 16.9% in OPERATIVE EBITDA AND OPERATIVE EBITDA-% 2019 EUR million • Profitability improvement due to active price 16.8%18.1%18.5% management with turnaround in water treatment in 13.9% 13.8% 56.8 9.6% 10.9%12.8%12.9%12.3% 52.4 11.8% North America and Oil & Gas-business 45.0 9.6% 37.5 36.7 36.0 34.8 33.3 Q4 impacted by different Oil & Gas mix and new 29.3 • 26.6 25.3 22.9 plant start-up costs in the Netherlands *IFRS 16 impact EUR +5.3 million in Q4 and EUR • +20.2 million in 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1* Q2* Q3* Q4* 2017 2018 2019 FEBRUARY 11, 2020 Q4 2019 RESULTS 5
Oil & Gas – slight revenue growth in Q4 despite market softness Market environment REVENUE DEVELOPMENT • Shale market slowed down during Q4 partly due to year- EUR million end de-stocking; market expectation is that shale market will recover towards the summer 87 77 • Oil-field services* customers continued to show good 73 demand in 2019, solid demand expected to continue in 66 66 62 57 57 2020 56 46 45 Q4 slight revenue growth, strong revenue growth in 38 2019 Shale market softness visible in shale revenue • Strong growth in CEOR** polymer sales, oil sands • seasonally lower Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Capacity investments 2017 2018 2019 Polymer facility expansion in the Netherlands to facilitate • growth in CEOR** • Expansion of Oil & Gas polymer facility in Mobile USA in *Oilfield services: Canadian Oil Sands and CEOR commercial operation in 2021 **CEOR, chemical enhanced oil recovery FEBRUARY 11, 2020 Q4 2019 RESULTS 6
We invest in core products globally KEY INVESTMENT FOCUS ON CORE PRODUCT GROUPS SINCE 2016 PRODUCTS Bleaching chemicals • New chlorate plant in Brazil • ◼ 20% Other: ◼ 25% Bleaching • New chlorate line in the U.S. e.g. defoamers, and pulping dispersants, New chlorate line and peroxide capacity in Finland • and biocides Freed peroxide capacity from ECOX closure in • Sweden Revenue • Polymer capacity additions EUR 2,659 Italy • ◼ 15% UK million • Sizing* • Aberdeen, USA (2019) and Netherlands • strength South Korea (start 2021) • • Mobile, USA (start 2021) • Sizing chemicals – capacity additions due to ◼ 20% ◼ 20% Coagulants integration of acquisitions (Akzo Nobel and China AKD Polymers wax) Coagulants • *Sizing = Resistance against water absorption • Goole, UK (start 2022) Note: Revenue by product rounded to the nearest 5%. FEBRUARY 11, 2020 Q4 2019 RESULTS 7
Our strategic focus areas CUSTOMER PRODUCT & SERVICE OPERATIONAL MARGIN EXCELLENCE EXCELLENCE EXCELLENCE EXCELLENCE Customer intimacy and Best suited products Safe, sustainable and efficient Improvement of profitability ability to capture value in terms of performance, production, operations and across all products and resource efficiency and cost processes regions Optimized service levels Complemented with service Reliable deliveries Optimized output from and application knowledge the assets Efficient sourcing FEBRUARY 11, 2020 Q4 2019 RESULTS 8
CUSTOMER SATISFACTION Customer satisfaction NET PROMOTER SCORE* 36** improved 33 30 28 Kemira’s strengths: Delivery accuracy 1 Service level 2 2016 2017 2018 2019 Ease of doing business 3 * Promoter customers (very loyal) – Detractor customers (unhappy), Scale: 0-19 Satisfactory, 20-39 Good, 40+ Excellent. 1,024 customer interviews in 2018 ** New rolling process implemented in 2019 FEBRUARY 11, 2020 Q4 2019 RESULTS 9
EMPLOYEE SURVEY RESULTS Strong results EMPLOYEE ENGAGEMENT SAFETY CLIMATE 79 88 in employee engagement and 6 PTS ABOVE MANUFACTURING THE HIGHEST SCORE safety climate INDUSTRY BENCHMARK IN THE SURVEY Strong engagement TRIF* Good culture 2.1 Efficient employee communications (2018: 3.5) *Total recordable injury frequency per million working hours FEBRUARY 11, 2020 Q4 2019 RESULTS 10
Updated climate 2030 climate change target introduced change target 30% reduction in combined scope 1 and 2 • greenhouse gas emissions by 2030 (baseline introduced year 2018, 0.93 Mt) – Kemira Scope 1 absolute emissions 2018: 0.15 Mt – Kemira Scope 2 absolute emissions 2018: 0.78 Mt Kemira working with suppliers to decrease • carbon footprint of purchased goods and services (scope 3 emissions) Our purpose: We enable our customers to • improve their water, energy and raw material efficiency • Kemira fully supports UNFCCC Paris Agreement Long-term ambition B 75/100 Carbon neutrality by 2045 for combined scope • TOP QUARTILE TOP 1% 1 and scope 2 emissions FEBRUARY 11, 2020 Q4 2019 RESULTS 11
Key operative focus areas in 2020 1. Continue active price management and improve capacity utilization 2. Continue to improve customer satisfaction scores (NPS) 3. Modify product & service offering to cater better profitable growth 4. Improve operational excellence and reduce complexity 5. Realize benefits of added capacity in China, the Netherlands and the U.S. 6. Construction of polymer capacity in the U.S. and South Korea 7. Prudent cost-control in all areas FEBRUARY 11, 2020 Q4 2019 RESULTS 12
PETRI CASTRÉN, CFO FEBRUARY 11, 2019 Financials Q4 2019 FEBRUARY 11, 2020 Q4 2019 RESULTS 13
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