Kemira Q1 net profit up 1,439.3% year-over-year to €43.1M while revenue down 5.5% to €529.9M, due to divestments, unfavorable currency exchange rates

HELSINKI, Finland , April 23, 2014 (press release) –
This is a summary of the January-March 2014 Interim report. The complete January - March 2014 Interim report with tables is attached to this release and available at www.kemira.com/investors.

  • Reported revenue decreased 6% to EUR 529.9 million (560.9), due to divestments and unfavorable currency exchange rates. Organic revenue growth reached 2%.
  • Operative EBIT decreased 14% to EUR 36.3 million (42.2) with a margin of 6.9% (7.5%), mainly due to decreased result in ChemSolutions.
  • Operative EBIT, excluding the impacts of food and pharmaceuticals business (divested on March 1, 2013) and formic acid business (divested on March 6, 2014), increased 12% to EUR 37.0 million (33.0) with a margin of 7.3% (6.5%). The corresponding  operative EBITDA improved to EUR 58.3 million (53.0) with a margin of 11.4% (10.4%).
  • The reported earnings per share increased to EUR 0.28 (0.01), mainly due to a capital gain related to the divestment of formic acid business. Comparable period was impacted by a write-down related to the divestment of shares in the Joint Venture Sachtleben.
  • Kemira maintains its outlook for 2014.

Kemira's President and CEO Wolfgang Büchele:

"Kemira's reported revenue declined due to the divestments announced in the fourth quarter of 2013 and due to continued unfavorable currency development. As a result of the divestments, Kemira continued to shift towards  businesses with a higher growth profile.

The financial performance of our core segments was solid with organic revenue growth of 4% and operative EBIT improvement of 12%. Stable profitable growth continued in Paper and organic growth accelerated in Oil & Mining. Municipal & Industrial reported a fifth consecutive quarter with improved operative EBIT margin (year-on-year comparison).

Group's operative EBIT was impacted by a very weak de-icing season, resulting in a reduced operative EBIT of ChemSolutions' formic acid business. The divestment of formic acid business was completed during the quarter, marking the last major step of our transformation into a company that focuses on water quality and quantity management. Going forward, Kemira's business portfolio will be based on three core segments; Paper, Oil & Mining and Municipal & Industrial.


Kemira is currently the only global chemical company committed to the water intensive pulp and paper industries. During the quarter, we further strengthened our position by announcing the acquisition of BASF's AKD emulsion business. The transaction will support our leading market position in sizing chemicals and enable an improved offering to our Paper customers on the continental European market. In addition, we are investing in the expansion of our sizing and strength chemicals production at our Telêmaco Borba plant in Paraná, Brazil.

As an important milestone of our continuous efficiency measures, we inaugurated in March our Business Service Center in Gdansk, an excellent example of the process optimization and cross-functional collaboration.

Looking ahead, we are confident that we will reach the set organic revenue growth and operative EBIT targets for 2014. This is supported by a streamlined strategic portfolio and a clear focus on growth in Paper and Oil & Mining, as well as on cash optimization in Municipal & Industrial."

KEY FIGURES AND RATIOS

EUR million  Jan-Mar 2014 Jan-Mar 2013 2013
Revenue 529.9 560.9 2,229.1
Operative EBITDA 57.5 63.5 251.9
Operative EBITDA, % 10.9 11.3 11.3
EBITDA 77.7 61.1 141.9
EBITDA, % 14.7 10.9 6.4
Operative EBIT 36.3 42.2 164.2
Operative EBIT, % 6.9 7.5 7.4
EBIT 54.3 39.2 42.6
EBIT, % 10.2 7.0 1.9
Share of profit or loss of associates 0.0 -1.2 -1.1
Financing income and expenses -5.3 -24.7 -39.0
Profit before tax 49.0 13.3 2.5
Net profit 43.1 2.8 -25.9
Earnings per share, EUR 0.28 0.01 -0.21
Operative earnings per share, EUR 0.15 0.17 0.70
Capital employed* 1,322.2 1,595.6 1,366.5
Operative ROCE* 12.0 9.9 11.9
ROCE* 4.4 2.2 3.0
Capital expenditure 25.6 29.0 197.5
Cash flow after investing activities 130.3 189.9 195.7
Equity ratio, % at period-end 50 50 51
Gearing, % at period-end 30 30 41
Personnel at period-end 4,267 4,662 4,453

*12-month rolling average (ROCE, % based on the reported EBIT)

Definitions of key figures are available at www.kemira.com > Investors > Financial information. Comparative 2013 figures are provided in parentheses for some financial results, where appropriate. Operative EBITDA, operative  EBIT, operative earnings per share and operative ROCE are excluding non-recurring items.

KEMIRA'S FINANCIAL TARGETS FOR 2016 and outlook 2014 (UNCHANGED)

Kemira will continue to focus on improving its profitability and reinforcing positive cash flow. The company will also continue to invest in order to secure future growth in the water quality and quantity management business.

The company's financial targets for 2016 are:

  • revenue EUR 2.6-2.7 billion
  • EBITDA-% of revenue 15%
  • gearing level < 60%.

In addition, Kemira expects its medium-term operating tax rate to be in the range of 22%-24%. The operating tax rate excludes non-recurring items and the impact of the income from associated companies.

The basis for growth is the expanding market for chemicals related to water quality and quantity management and Kemira's strong expertise in this field. The need to increase operational efficiency in our customer industries creates opportunities for Kemira to develop new products and services for both current and new customers. Research and Development is a critical organic growth enabler for Kemira and it provides differentiation capabilities in the water quality and quantity management markets. Kemira will invest in innovation, technical expertise, and competencies in the targeted focus areas.

Outlook

In 2014, Kemira expects its revenue in local currencies and excluding acquisitions and divestments to be slightly higher than in 2013 and its operative EBIT to be higher than in 2013.

The guidance for 2014 is defined as follows:
 

Kemira guidance  Definition
Slightly higher/lower from 0% to 5% or from 0% to -5%
Higher/lower from 5% to 15% or from -5% to -15%
Significantly higher/lower more than 15% or less than -15%

Kemira is a global chemicals company serving customers in water-intensive industries. We provide expertise and chemicals that improve our customers' water, energy and raw material efficiency. Our focus is on pulp & paper, oil & gas, mining and water treatment. In 2013, Kemira had annual revenue of EUR 2.2 billion and around 4,500 employees. Kemira shares are listed on the NASDAQ OMX Helsinki Ltd. www.kemira.com

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