Kemira's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Kemira Oyj (
)
Q4 2011 Earnings Call
February 08, 2012 03:00 AM ET
Executives
Tero Huovinen – IR
Harri Kerminen – President and CEO
Jyrki Mäki-Kala – CFO
Analysts
Mikael Doepel – Svenska Handelsbanken
Peter Mackey – Morgan Stanley & Co.
Presentation
Operator
(Operator Instructions). Just to advise you, there will be a question-and-answer session after the presentation today.
(Operator Instructions)
Unidentified Company Representative
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So good morning and welcome to Kemira Oyj's presentation for fourth quarter and full year 2011. My name is Tero Huovinen, responsible for Investor Relations. With me today I have Kemira' President and CEO, Harri Kerminen and CFO Jyrki Mäki-Kala. And we will start with presentation and then open up for questions from the floor and from the conference call. So let's start with Harri.
Harri Kerminen
Good morning everybody. I am the CEO. Again here, so other than to a brief day last year 2011, (inaudible) than we really as always can have a discussion section. So headline is growth in the water chemistry business in 2011 and let's go right away to this big picture of what happened last year and looking at from Kemira Group point of view. So we had to first of all slight revenue increase where our real water business grew anyway by 6%. Of this I am personally happy about that and that we need to understand that currencies and divestments especially in the bank business had a negative impact in revenue growth. If it planted above 158 million euros slight improvement from year 2010 and what was typical for last year almost in any industry for this specially in chemical industry, in the beginning of the year we really have the tendencies of what quickly increased raw material prices and cost that finally looking at the full year we had an 88 billion euros increase from their cost that basically from a full a fully compensate it by own price in itself, it's an increase that I am also happy with.
Then we have this 6 million euros currency exchange and divestments that have a negative impact in our EBIT and our operative EBIT percentage went down a bit to 7.1%. I rather comeback later on a little bit explaining that than what we are going to do to increase that to a (inaudible) level.
Earnings per share increased by 22% to a record high level gaining to a share upon 9 euros per share. We have very good cash flow operation of cash flow again as a third year in row so that is increased by 34% to a level of 177 million euros.
And finally a report of a director proposed to the annual general meeting that dividend will be share upon 53 euros per share that this record in Kemira's history as well. So net income earnings per share dividend at the record high level.
So looking at the operational highlights in 2011 by segment starting with paper, we more and more are focusing on serving packaging board and tissue industries and especially tissue customers are relative to new customers settling for Kemira that we successfully had a transit here in 2011 and we certainly compensate it increase on their cost by own price initiatives and price increases. That's roughly the picture of paper. We have the demand drop in here in Q4 but I will compact it later on, that we recorded in somewhere in the mid of November.
In most experienced industrial part where about 50% is serving cities and municipalities and 50% are serving different industries outside oil and mining and paper industry actually remember. We have also here with challenges raw material cost, cost of the especially in industry are partly compensated very well and we had also some growth in industrial part. We have challenges in municipal serving municipalities especially in during Q4 that I can come back again later on.
We have had and we are going to do site consolidation in North America in Europe that will help in the Q3 to grow profitability and increase our cost deficiency as well and we are more and more using recycle geometry real and we are looking at more longer term and cost effective raw material contacts especially North American and Europe there are our main businesses.
On a mining business process it’s a success story. So we started the business in 2008 and we have every year improved profitability, improved net profit and EBIT and also we have been growing every year and especially last year we had a good penetration so call in unconventional all our cash business, especially North America for this insane cash. So that every financial ratio was very good in 2011 and I believe that will continue also in the future.
Finally, and this is very important. Personally extremely habit that when we start it, our so called speed programming in spring 2010 and at this focusing on building quarter competencies in Kemira with our boldness but also of course the final aim is to develop new applications and new products that in 2011 we have more than 40 million euros yield sales based on this speed program with good marching. And so every segment has better outcome that was our internal target in 2010 and this is the area where we can really differentiate ourselves in the future and building a unique position in water business. There by the way I personally calculate that we have the second biggest n the world at the moment and then we can differentiate our self-having a wide product pallet focusing on application and solving really customer problems. I really see that this is the key element to be successful in the future also in long-term in this growing quarter business. It has to be remembered is 500 billion euros business we are relevant market product Kemira is close to 30 million euros and we have now about 2 billion euros business, so there is lot of growth for themselves for Kemira.
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