JARI ROSENDAL, PRESIDENT AND CEO PETRI CASTRÉN, CFO APRIL 27, Good organic growth JANUARY-MARCH 2018

Transcription

1 JARI ROSENDAL, PRESIDENT AND CEO PETRI CASTRÉN, CFO APRIL 27, 2018 Good organic growth JANUARY-MARCH 2018

2 Key financial highlights Q Organic growth +7% Demand is growing in every market we serve Strong momentum continued especially in Oil & Gas Operative EBITDA flat at reported figures, underlying development better Positive impact of organic growth was offset by increased variable costs and currency headwind Currencies EUR -7 million on EBITDA level Q1 was below our expectations but we expect better performance in the coming quarters Earnings per share +17% Finance costs were lower due to EUR 3.6 million gain from the sale of shares in power plant companies EUR million (except ratios) Q Q Δ% FY 2017 Revenue ,486.0 Operative EBITDA of which margin 11.3% 11.3% % Operative EBIT of which margin 5.5% 5.7% - 6.9% Net profit EPS, EUR APRIL 27, 2018 Q RESULT S 2

3 Positive long-term operative EBITDA trend In big picture, operative EBITDA on positive trend Profitability improvement measures overshadowed by pressure from raw material prices During the last year market has moved from deflatory to inflatory environment ROLLING 12-MONTH OPERATIVE EBITDA AND OPERATIVE EBITDA-% % % % % % 12.8% 12.5% 12.4% 12.3% 12.1% 12.1% 12.2% 12.4% 12.5% 12.5% 12.3% 12.3% 12% % 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q % APRIL 27, 2018 Q RESULT S 3

4 Pulp & Paper good underlying market with major regional differences Market environment and performance EMEA strong and South America solid North America battles with shrinking market in process and functional chemicals In APAC growth continues but profitability a challenge Q1 organic growth +5% FX offsetting reported revenue growth Profitability drivers Profitability improvement to continue when price increases go through - current sales prices were not yet sufficient to cover increase in raw material prices In addition to sales prices, new capacity at Joutseno and Chinese acquisition are expected to improve profitability in mid-term ROLLING 12-MONTH OPERATIVE EBITDA AND EBITDA-% EUR million % % % 13.4% 13.2% 13.0% 12.8% 13.4% 194 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 27, 2018 Q RESULT S %

5 Megatrend e-commerce drives need for packaging material Megatrend Retail e-commerce grew +25% globally in 2017 led by Amazon, ebay, Alibaba, etc. Growth in e-commerce drives packaging material production volumes Impact on pulp and paper producers New board capacity regularly announced, especially in APAC and EMEA, e.g. Chinese Nine Dragon to add 3 million tons of packaging paper capacity by June 2019 APP to expand Guangxi (CN) mill by 2 new board machines with production of 1.8 Mton/a Hamburger Rieger (DE) to invest in new 500 kt/a containerboard machine Impact on Kemira Kemira serves board producers with process and functional chemicals Kemira has strong references in conversions and new start-ups Also beneficial for Kemira s pulp bleaching business as pulp is the intermediate product for board APRIL 27, 2018 Q RESULT S 5

6 Industry & Water growth driven by Oil & Gas Market demand drivers Fracking activity continued to grow in shale oil & gas industry ROLLING 12-MONTH REVENUE EUR million 1,009 1, Underlying economic growth increasing demand in industrial water treatment Municipal water treatment growing with the help of tighter regulation Revenue and operative EBITDA trend improving In Q1, strong +11% organic growth Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q ROLLING 12-MONTH OPERATIVE EBITDA AND EBITDA-% EUR million % 11.6% 11.5% 11.8% 11.4% 11.1% 11.5% 11.2% 11.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 27, 2018 Q RESULT S 6

7 CEOR deal signed with Chevron Strategically important multi-year Chemical Enhanced Oil Recovery deal signed with Chevron EUR 30 million capacity addition, announced in October 2017, progressing well CEOR market size approximately EUR 1 billion of which EUR 500 million accessible to Kemira Market growth estimated to be 5% driven by enhanced production from existing fields Kemira is committed to provide enhanced solutions for challenging water intensive environments and technologies that can enable CEOR Our offering provides enhanced and improved oil recovery with focus around polymer injectivity, chemical stability, shear tolerance, thermal stability and efficacy APRIL 27, 2018 Q RESULT S 7

8 Progressing our strategy for profitable growth Balanced cash flow and capex Increase efficiency Grow by investing, innovating and capturing market opportunities GROUP S MID- TO LONG-TERM TARGETS Above-the-market growth Operative EBITDA 14-16% Gearing below 60% Dividend policy: stable and competitive dividend APRIL 27, 2018 Q RESULT S 8

9 PETRI CASTRÉN, CFO APRIL 27, 2018 Financials Q APRIL 27, 2018 Q RESULT S 9

10 Group s organic revenue growth continued Q Group s organic growth +7% Pulp & Paper +5% Industry & Water +11% REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million Operative EBITDA margin 11.3% Flat compared to prior year Good revenue growth was offset by raw material prices and FX Fixed costs slightly below prior-year level OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million % +4% -7% 0% % 13.4% 13.6% 11.7% 11.3% 12.5% 13.6% 12.7% 11.3% Q Sales volumes Sales prices Currency impact Acquisitions Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 27, 2018 Q RESULT S 10

11 Currencies are currently headwind due to translation, transactional risk limited Currency exchange rates had EUR -41 million impact on revenue and EUR -7 million impact on the operative EBITDA in Q Guidance: 10% change in our main foreign currencies would approximately have EUR 15 million impact on operative EBITDA on an annualized basis KEMIRA REVENUE DISTRIBUTION Q KEMIRA COST DISTRIBUTION Q % Others 2% BRL 46% EUR 10% Others 45% EUR 3% SEK 4% CNY 3% CNY 5% CAD 4% CAD 8% SEK 33% USD 28% USD APRIL 27, 2018 Q RESULT S 11

12 Variable costs spiked in Q1, sales prices following SALES PRICE VS VARIABLE COST TREND 200 SALES PRICES AND VARIABLE COSTS (CHANGE Y-O-Y) Brent oil, USD Sales prices* Variable costs* Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Net impact on EBITDA (sales prices-variable costs) Sales prices Variable costs * 12-month rolling change vs previous year in EUR million APRIL 27, 2018 Q RESULT S 12

13 Pulp & Paper good organic growth but profitability disappointed Organic growth continued with volume growth at +3%, driven by chlorate capacity addition in Finland and good underlying demand, especially in Europe FX headwind had -6% impact on revenue Profitability hampered by FX and sharp variable cost increases EMEA performing well but North America and China were behind REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million 13.2% 13.7% 14.2% 12.6% 12.4% 13.0% 13.4% 14.9% 11.6% % +1% -4% -2% 0% +1% +2% +5% +5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 27, 2018 Q RESULT S 13

14 Industry & Water strong growth continued Strong organic growth, heavy FX headwind from USD Oil & Gas +21% to EUR 46 million in Q1 2018, organic growth in O&G over 30% Profitability improving in Oil & Gas driven by sales price increases and volume growth Newer growth areas, such as water treatment for oil sands and CEOR, continue to be margin-dilutive until fully scaled up and optimized REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y) EUR million % -5% -5% 0% +6% +9% +15% +20% +11% OPERATIVE EBITDA AND OPERATIVE EBITDA MARGIN EUR million 11.3% % 12.5% 10.4% % % % % 10.9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q APRIL 27, 2018 Q RESULT S 14

15 Development of selected key figures ALL KEY FIGURES IN EUR MILLION EXCEPT RATIOS CASH FLOW FROM OPERATIONS Q Q CAPITAL EXPENDITURE EXCL. ACQUISITIONS Growth capex Q Q RETURN ON CAPITAL EMPLOYED 9.9% 9.8% 9.7% 9.7% NET DEBT AND LEVERAGE RATIO % Q Q Q Q APRIL 27, 2018 Q RESULT S 15

16 Outlook for 2018 Kemira expects its operative EBITDA to increase from the prior year (2017: EUR million). EUR million Operative EBITDA outlook Increase APRIL 27, 2018 Q RESULT S 16

17 JANUARY-MARCH 2018 Appendix APRIL 27, 2018 Q RESULT S 17

18 Revenue and operative EBITDA split REVENUE SPLIT OPERATIVE EBITDA EUR 614 million EUR 2,486 million EUR 69 million EUR 311 million 40% 40% 38% 36% Q Q % 60% 62% 64% Pulp & Paper Industry & Water APRIL 27, 2018 Q RESULT S 18

19 Pulp & Paper FY2017: REVENUE EUR 1,477 MILLION, OPERATIVE EBITDA EUR 198 MILL ION, MARGIN 13.4% 40% Pulp production CUSTOMER MILLS 40% Board & tissue production CUSTOMERS, examples 20% Paper production GEOGRAPHIES 35% Americas 50% EMEA 15% APAC 10% Other 10% Polymers 20% Defoamers, dispersants, biocides and other process chemicals PRODUCTS 35% Bleaching and pulping 25% Sizing & strength Note: Revenue by industry, product and geography rounded to the nearest 5% APRIL 27, 2018 Q RESULT S 19

20 Industry & Water FY2017: REVENUE EUR 1,009 MILLION, OPERATIVE EBITDA EUR 114 MILLION, MARGIN 11.3% 10% Other applications 20% Oil & Gas APPLICATION SPLIT 70% Water treatment MUNICIPAL (40%), Customer examples London New York City Shanghai Montreal Toronto Los Angeles Stockholm Las Vegas Oslo Barcelona Miami Melbourne Berlin Amsterdam Paris Washington DC INDUSTRIAL (60%), Customer examples GEOGRAPHIES 45% Americas 50% EMEA 5% APAC 20% Other products such as defoamers and biocides PRODUCTS 40% Coagulants 40% Polymers Note: Revenue by industry, product and geography rounded to the nearest 5% APRIL 27, 2018 Q RESULT S 20

21 Key figures EUR million Q Q Δ% Δ% Revenue , , Operative EBITDA margin 11.3% 11.3% % 12.8% - Operative EBIT margin 5.5% 5.7% - 6.9% 7.2% - Net profit Earnings per share, EUR Cash flow from operations Capex excl. acquisitions Net debt NWC ratio 9.5% 9.8% - 9.4% 10.2% - Operative ROCE (rolling 12 months) 9.7% 9.5% - 9.7% 9.9% - Personnel at period-end 4,740 4, ,732 4,818-2 APRIL 27, 2018 Q RESULT S 21

22 Pulp & Paper KEY FINANCIALS EUR million Q Q Δ% Δ% Revenue , , Operative EBITDA margin 11.6% 12.4% % 13.4% - Operative EBIT margin 5.1% 6.4% - 7.1% 7.7% - Operative ROCE*, % 8.6% 9.5% - 9.0% 10.0% - Capital expenditure Cash flow after investing activities *12-month rolling average APRIL 27, 2018 Q RESULT S 22

23 Industry & Water KEY FINANCIALS EUR million Q Q Δ% Δ% Revenue , Operative EBITDA margin 10.9% 9.6% % 11.8% - Operative EBIT margin 6.1% 4.7% - 6.5% 6.5% - Operative ROCE*, % 11.8% 9.4% % 9.7% - Capital expenditure Cash flow after investing activities *12-month rolling average APRIL 27, 2018 Q RESULT S 23

24 Cash flow EUR million Q Q Net profit for the period Total adjustments Change in net working capital Finance expenses Income taxes paid Net cash gen. from operating activities Purchases of subsidiaries and acquisit Capital expenditure Proceeds from sale of assets Change in long-term loan receivables Cash flow after investing activities APRIL 27, 2018 Q RESULT S 24

25 Revenue split by country FY 2017 Other APAC 4% Korea 1% China 4% Other EMEA 9% Norway 2% Netherlands 2% France 2% Italy 2% Russia 2% Spain 2% UK 3% Poland 3% Germany 5% Sweden 6% USA 27% Canada 6% Brazil 3% Uruguay 2% Other Americas 1% Finland 14% APRIL 27, 2018 Q RESULT S 25

26 Important information about financial figures Kemira provides certain financial performance measures (alternative performance measures) on non-gaap basis. Kemira believes that alternative performance measures, such as organic growth*, EBITDA, operative EBITDA, cash flow after investing activities, and gearing followed by capital markets and Kemira management, provide useful information of its comparable business performance and financial position. Selected alternative performance measures are also used as performance criteria in remuneration. Kemira s alternative performance measures should not be viewed in isolation to the equivalent IFRS measures and alternative performance measures should be read in conjunction with the most directly comparable IFRS measures. Definitions of the alternative performance measures can be found in the Definitions of the key figures in this report, as well as at > Investors > Financial information. All the figures in this interim report have been individually rounded and consequently the sum of individual figures may deviate slightly from the sum figure presented. * Revenue growth in local currencies, excluding acquisitions and divestments APRIL 27, 2018 Q RESULT S 26

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