jari rosendal, president and ceo petri castrÉn, cfo … · 2018-10-24 · • growth driven by...

JANUARY-SEPTEMBER 2018

Revenue and earnings growth continued

JARI ROSENDAL, PRESIDENT AND CEO PETRI CASTRÉN, CFOOCTOBER 24, 2018

Key financial highlights

Organic growth +9%

• Growth continued driven by higher sales prices

• Especially Oil & Gas was robust in seasonally strong Q3

• Global megatrends favor Kemira

Operative EBITDA +5%

• Passing on variable cost increases continues

• Profitability diluted by higher raw material prices and the start-up phase of oil sands and Chemical Enhanced Oil Recovery (CEOR) businesses

Earnings per share +12%

EUR million

(except ratios)

Q3

2018

Q3

2017

Δ% FY

2017

Revenue 669.6 622.2 +8 2,486.0

Operative EBITDA 89.0 84.5 +5 311.3

of which margin 13.3% 13.6% - 12.5%

Operative EBIT 50.0 47.7 +5 170.3

of which margin 7.5% 7.7% - 6.9%

Net profit 22.1 20.0 +10 85.2

EPS, EUR 0.14 0.12 +12 0.52

OCT OB E R 24 , 2018 Q3 2018 RE S ULT S 2

Q3 2018

Pulp & Paper – good organic growth, profitability impacted by currenciesOrganic growth +6% in the first nine months

• Higher sales prices main contributor to organic growth

• Good volume growth in bleaching and sizing

Operative EBITDA

• Sales price increases have started to compensate higher raw material prices

• Currencies were main headwind, impacted EBITDA by EUR -10 million YTD vs prior year

China AKD JV/acquisition

• Kemira agreed in Q3 2017 to form joint venture with Tiancheng

• Closing expected by the year end


REVENUE EUR million

OPERATIVE EBITDA AND EBITDA-% EUR million

1,104 1,130

9M 2017 9M 2018

142 140

9M 2017 9M 2018

12.4%12.9%

Industry & Water – profitable growth in water treatment and oil & gasOrganic growth +12% YTD

• Performance driven mainly by Oil & Gas

• Also water treatment demonstrated sales price and volume growth

Operative EBITDA increased

• EBITDA improvement driven mainly by higher sales prices

• Currency impact EUR -7 million vs 9M 2017

Update on Venator in Pori, Finland

• During Q3 Venator announced they will close their Pori TiO2 facility by 2021

• Venator is Kemira’s supplier and customer

• Insurance coverage has been consumed


REVENUE EUR million

OPERATIVE EBITDA AND EBITDA-% EUR million

745 801

9M 2017 9M 2018

8898

9M 2017 9M 2018

12.3%11.8%

Global megatrends favor Kemira


REGULATION

Safe drinking

water

More stringent

discharge limits

GROWING MIDDLE

CLASS &

URBANIZATION

E-commerce /

online shopping

Higher use of

water, energy,

tissue and board

SCARCITY

OF RESOURCES

Material and

resource

efficiency

Alternative

materials for

single-use plastic

products

Global trends favor Pulp & Paper –capacity additions in bleaching chemicals


Pulp, board and tissue markets

• Growth driven by e-commerce and growing middle class in APAC

• Above mentioned trends have fueled growth in pulp bleaching, Kemira’s CAGR +6% since 2014

Bleaching chemical capacity additions

• During 2018, we have done debottlenecking in Finland

• In Q3 announced decision to direct bleachingchemical capacity to pulp customers resulting in closure of sodium percarbonate production line in Sweden by the year end

Global regulation trends favorable to demand of water treatment chemicals


Water

reuse

Emerging

contaminants

(pharma,

microplastics)

More stringent

discharge

limits

Better

dewatering of

sludge and

phosphorus

recovery

Increasing

demand for

water

treatment

chemicals

Outlook for 2018

Kemira expects its operative EBITDA to increase from the prior year(2017: EUR 311.3 million).


EUR

million

2015 2016 2017 9M

2017

9M

2018

2018

outlook

Operative

EBITDA

287 303 311 230.6 238.6 Increase

PETRI CASTRÉN, CFO OCTOBER 24, 2018


Financials Q3 2018

Organic growth continued


Q3 2018

Group’s organic growth +9%

• Pulp & Paper +7%, Industry & Water +11%

Operative EBITDA +5%, margin 13.3%

• Good growth in absolute EBITDA, profitability diluted by new growth areas in Oil & Gas

72.878.9 80.8

70.0 69.077.1

84.5 80.769.4

80.289.0

12.5%13.4% 13.6%

11.7% 11.3%12.5%

13.6%12.7%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018

622+2%

-1% 0% 670

Q3 2017 Salesvolumes

Salesprices

Currencyimpact

Acquisitions Q3 2018

+7%

REVENUE AND ORGANIC REVENUE GROWTH

(Y-ON-Y) EUR million

OPERATIVE EBITDA AND OPERATIVE EBITDA

MARGIN EUR million

13.3%

11.3%

Earnings per share up by 12%

• Improvement driven by higher EBITDA

• Q3 2018 included EUR -14 million items affecting comparability (prior year also EUR -14 million)

– Consists of write-downs and restructuring costs, mainly reallocation of hydrogen peroxide and related closure of sodium percarbonate production line

12.4%

SALES PRICE VS VARIABLE COST TREND

-200

-150

-100

-50

0

50

100

150

200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Brent oil, USD Sales prices* Variable costs*

SALES PRICES AND VARIABLE COSTS(CHANGE Y-O-Y)

95

-3 -10

-16-20

-10

-2 -2

114

-9-18

-26 -23-16

-43

11

23

4742

-18-23

-23 -13

0

1613

13

2636

38

-40

-30

-20

-10

0

10

20

30

40

50

60

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018

Net impact on EBITDA (sales prices-variable costs)

Sales prices

Variable costs


Net impact of sales price & variable costs positive

* 12-month rolling change vs previous year in EUR million

Pulp & Paper – strong growth throughout the year• Organic growth continued – sales volumes grew 3% driven by bleaching and sizing chemicals

• Sales prices increasing and also slightly inflated by caustic soda market price

We need to continue sales price increases to offset continuously increasing raw material prices

APAC improved profitability mainly due to higher sales prices and better availability of key raw materials

362 361 365 369 372 369 363373 369 376

385

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018

47.9 49.3 51.846.3 46.0 47.8 48.5

55.4

42.7 45.452.3

13.2%13.7% 14.2%

12.6% 12.4% 13.0% 13.4%14.9%

11.6% 12.1%13.6%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018


+3% +1% -4% -2% 0% +1% +2% +5%




MARGIN EUR million

+5% +6% +7%

Industry & Water – strong growth continued

• Growth driven by sales prices and seasonally high deliveries to Canadian oil sands

• Profitability diluted by higher raw material prices and the start-up phase of oil sands and Chemical Enhanced Oil Recovery (CEOR) businesses

• Oil & Gas +28% to EUR 73 million, volume growth decelerating

220 227 231 228 238 248 259 264245

272 284

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018

24.929.6 29.0

23.7 22.929.3

36.0

25.3 26.6

34.8 36.7

11.3%13.1% 12.5%

10.4%9.6%

11.8%

13.9%

9.6%10.9%

12.8% 12.9%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018


-7% -5% 0% +9% +15%-5% +6% +20% +14%




MARGIN EUR million

+11% +11%

Development of selected key figures

9.8% 9.9% 9.7%9.2%

9.8%

2015 2016 2017 9M 2017 9M 2018

642 634694 701

744

2015 2016 2017 9M 2017 9M 2018


ALL KEY FIGURES IN EUR MILLION EXCEPT RATIOS

248271

205

134 122

2015 2016 2017 9M 2017 9M 2018

104 118 124 72 63

78 95 66

54 33

2015 2016 2017 9M 2017 9M 2018

CASH FLOW FROM OPERATIONS CAPITAL EXPENDITURE EXCL. ACQUISITIONS

NET DEBT AND LEVERAGE RATIOOPERATIVE RETURN ON CAPITAL EMPLOYED

2.32.12.2 2.32.2

◼ Growth capex

JANUARY-SEPTEMBER 2018


Appendix

SEGMENT SPLIT PRODUCTS


GEOGRAPHIES

Kemira in briefFY2017: REVENUE EUR 2,486 MILLION, OPERATIVE EBITDA EUR 311 MILLION, OPERATIVE EBITDA MARGIN 12.5%, OPERATIVE ROCE 9.7%

◼ 25% Bleaching

and pulping

◼ 20%

Polymers

◼ 20% Other:

e.g. defoamers,

dispersants,

and biocides

◼ 20%

Coagulants

◼ 15%

Sizing

and

strength

Revenue by product category rounded to the nearest 5%

39%

AMERICAS

1.USA

2.Canada

3.Brazil

52%

EMEA

1.Finland

2.Sweden

3.Germany

9%

APAC

1.China

2.South

Korea

3. Indonesia

◼ 59%Pulp & Paper

◼ 41%Industry & Water

CUSTOMERS

2,000 customers

TOP 10 customers are ~25% of revenue

TOP 50 customers are ~45% of revenue

EXAMPLES OF

LARGEST CUSTOMERS

Municipalities, e.g.

Frankfurt, London, New York,

Paris, Shanghai, Singapore

#1 in

water

treatment

in NA and

Europe

#2 in friction reduction in North

American shale oil & gas

#1 globally

1,0681,170

1,417 1,457 1,477

130137

171195

198

2013 2014 2015 2016 2017

REVENUE ANDOPERATIVE EBITDA

REVENUE BYPRODUCT CATEGORY

Q3 2018 RE S ULT S 18

REVENUE BY CUSTOMERTYPE AND MARKET GROWTH

Pulp & Paper – market leader with solid track record

MARKET ENVIRONMENT REVENUE BY GEOGRAPHIES AND

MARKET GROWTH BY REGION

CUSTOMER EXAMPLES

◼ 50%

EMEA

◼ 35%

Americas◼ 15% APAC

◼ 35%

Bleaching

& pulping

◼ 25%

Sizing &

strength

◼ 20%Defoamers,

dispersants,

biocides and

other process

chemicals

◼ 10%

Polymers

◼ 10% Other◼ 40%

Pulp

◼ 20%

Printing &

writing papers

◼ 40%

Board &

tissue

-1-2%2-3%1-2%Market

growth

2-3%0-1%0-1%Market

growth

AkzoNobel (pulp) #4

BASF (paper) #2

Solenis (paper) #3

Kemira (pulp and paper) m.s. ~16% #1

Ecolab (paper) #5

Note: Revenue by industry, product and geography rounded to the nearest 5%

OCT OB E R 24 , 2018

REVENUE BYPRODUCT CATEGORY

Q3 2018 RE S ULT S 19

REVENUE BY APPLICATIONTYPE AND MARKET GROWTH

Industry & Water – strong positions in chosen categories

REVENUE BY GEOGRAPHIES AND

MARKET GROWTH BY REGION

◼ 40%

Coagulants

◼ 40%

Polymers

◼ 20%

Other

products

such as

defoamers

and biocides

2-3%5-6%2-3%

◼ 50%

EMEA

◼ 45%

Americas

◼ 5%

APAC

◼ 70%

Water treatment◼ 10%

Other

◼ 20%

Oil & Gas

5-6%3-4%3-4%

WATER TREATMENT

Amsterdam

Barcelona

Frankfurt

London

Oslo

Paris

Stockholm

Los Angeles

Montreal

New York City

Toronto

Melbourne

Shanghai

Singapore

OIL & GAS

Note: Revenue by industry, product and geography rounded to the nearest 5%

Market

growth

Market

growth

CUSTOMER EXAMPLES

OCT OB E R 24 , 2018

906 906 924 945 973 1,009 1,016 1,040 1,065

105 107 105 105112 113 117

123 123

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018

REVENUE AND OPERATIVE EBITDA ROLLING 12 MONTHS

MARKET ENVIRONMENT

Market share

~30% in coagulants and

~20% in polymers

Main competitors in

coagulants:

• Feralco (Europe)

• Kronos (Europe)

• Chemtrade (US)

• USAlco (US)

Market share ~25% in

polymers used in shale

oil & gas

Main peers in polymers

(also in water treatment):

• SNF

• BASF

• Solenis

• Solvay (only O&G)

MUNICIPAL (40%),

customer examples

INDUSTRIAL (60%),

customer examples

Municipal Industrial

REVENUE EUR million

2,229

2,137

2,373 2,363

2,486

2013 2014 2015 2016 2017

OPERATIVE EBITDAOPERATIVE EBITDA MARGINEUR million

252 253

287

303311

11.3%

11.8%12.1%

12.8%

12.5%

2013 2014 2015 2016 2017

Q3 2018 RE S ULT S 20

Delivering profitable growth

OCT OB E R 24 , 2018

Kemira offers stable and competitive dividend• Cash flow from operations has been partly

invested into future growth and partly distributed to shareholders as dividends

• Kemira has paid dividend every year since listing of shares in 1994

• Kemira offers attractive dividend yield

0.53 0.53 0.53 0.53 0.53 0.53 0.53

0.13

0.37

0.470.44

0.51

0.61

0.43

5.8% 4.5% 4.4% 5.4% 4.9% 4.4% 4.6%

2011 2012 2013 2014 2015 2016 2017

Q3 2018 RE S ULT S 21

◼ Dividend per share

Dividend yield

OCT OB E R 24 , 2018

Kemira’s dividend yield calculated using the share price at year-end

◼ Growth investments per share

Key figures


EUR million

Q3

2018

Q3

2017 Δ%

1-9

2018

1-9

2017 Δ% 2017 2016 Δ%

Revenue 669.6 622.2 +8 1,931.0 1,849.4 +4 2,486.0 2,363.3 +5

Operative EBITDA 89.0 84.5 +5 238.6 230.6 +3 311.3 302.5 +3

margin 13.3% 13.6% - 12.4% 12.5% - 12.5% 12.8% -

Operative EBIT 50.0 47.7 +5 129.0 126.3 +2 170.3 170.1 0

margin 7.5% 7.7% - 6.7% 6.8% - 6.9% 7.2% -

Net profit 22.1 20.0 +10 68.7 59.5 +16 85.2 97.9 -13

Earnings per share, EUR 0.14 0.12 +12 0.42 0.36 +17 0.52 0.60 -13

Cash flow from operations 64.2 92.9 -31 122.1 133.7 -9 205.1 270.6 -24

Capex excl. acquisitions 34.3 43.8 -22 97.3 125.9 -23 190.1 212.6 -11

Net debt 744 701 +6 744 701 +6 694 634 +10

NWC ratio 9.8% 9.4% - 9.8% 9.4% - 9.4% 10.2% -

Operative ROCE (rolling

12 months), %9.8% 9.2% - 9.8% 9.2% - 9.7% 9.9% -

Personnel at period-end 4,798 4,749 +1 4,798 4,749 +1 4,732 4,818 -2

Currencies

Currency exchange rates had EUR -74 million impact on revenue andEUR -17 million impact on the operative EBITDA in Jan-Sep 2018 compared to Jan-Sep 2017

Guidance: 10% change in our main foreign currencies would approximately haveEUR 15 million impact on operative EBITDA on an annualized basis


◼ 44 % EUR

◼ 9 % Others

KEMIRA REVENUE DISTRIBUTION YTD 2018 KEMIRA COST DISTRIBUTION YTD 2018

◼ 2 % SEK

◼ 3 % CNY

◼ 4 % CAD

◼ 36 % USD

◼ 9 % Others

◼ 5 % CNY

◼ 5 % CAD

◼ 7 % SEK

◼ 30 % USD

◼ 44 % EUR◼ 2 % BRL

EUR million

Q3

2018

Q3

2017 Δ%

1-9

2018

1-9

2017

111111

Δ% 2017 2016 Δ%

Revenue 385.2 363.0 +6 1,129.8 1,104.1 +2 1,476.9 1,457.3 +1

Operative EBITDA 52.3 48.5 +8 140.5 142.4 -1 197.7 195.3 +1

margin 13.6% 13.4% - 12.4% 12.9% - 13.4% 13.4% -

Operative EBIT 26.6 24.4 +9 67.5 73.9 -9 104.8 111.6 -6

margin 6.9% 6.7% - 6.0% 6.7% - 7.1% 7.7% -

Operative ROCE*, % 8.5% 8.5% - 8.5% 8.5% - 9.0% 10.0% -

Capital expenditure 22.7 32.3 -30 55.2 97.3 -43 138.3 125.1 +11

Cash flow after investing

activities

20.6 25.3 -19 43.4 11.3 +284 15.7 105.7 -85

KEY FINANCIALS

Pulp & Paper


*12-month rolling average

EUR million

Q3

2018

Q3

2017 Δ%

1-9

2018

1-9

2017 Δ% 2017 2016 Δ%

Revenue 284.4 259.2 +10 801.1 745.3 +7 1,009.1 906.0 +11

Operative EBITDA 36.7 36.0 +2 98.1 88.3 +11 113.6 107.2 +6

margin 12.9% 13.9% - 12.3% 11.8% - 11.3% 11.8% -

Operative EBIT 23.4 23.4 0 61.4 52.4 +17 65.5 58.5 +12

margin 8.2% 9.0% - 7.7% 7.0% - 6.5% 6.5% -

Operative ROCE*, % 12.5% 10.6% - 12.5% 10.6% - 11.0% 9.7% -

Capital expenditure 13.6 11.5 +18 40.9 28.6 +43 51.7 85.5 -39

Cash flow after investing

activities

26.8 26.1 +2 28.8 38.6 -25 46.9 35.6 +32

KEY FINANCIALS

Industry & Water


*12-month rolling average

EUR million Q3 2018 Q3 2017

1-9

2018

1-9

2017 2017 2016

Net profit for the period 22 20 69 60 85 98

Total adjustments 66 61 161 167 204 187

Change in net working capital -5 13 -68 -52 -34 29

Finance expenses -11 2 -24 -19 -25 -20

Income taxes paid -7 -3 -16 -21 -25 -23

Net cash gen. from operating activities 64 93 122 134 205 271

Purchases of subsidiaries and acquisit. -2 0 1 0 0 2

Capital expenditure -34 -44 -97 -126 -190 -213

Proceeds from sale of assets 1 1 6 1 3 37

Change in long-term loan receivables 0 0 0 0 -5 1

Cash flow after investing activities 29 50 32 9 13 98

Cash flow


FY 2017

Revenue split by country


USA 27%

Canada 6%

Brazil 3%

Uruguay 2%

Other Americas 1%

Finland 14%Sweden 6%

Germany 5%

Poland 3%

UK 3%

Spain 2%

Other APAC 4%

South Korea 1%

China 4%

Russia 2%

Netherlands 2%

France 2%

Italy 2%

Other EMEA 9%

Norway 2%

Important information about financial figuresKemira 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 www.kemira.com > 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

jari rosendal, president and ceo petri castrÉn, cfo … · 2018-10-24 · • growth driven by...

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