Kemira Oyj
Stock exchange release
July 28, 2011 at 8.30 am (CET+1)
Disclosure procedure
Kemira Oyj follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority and hereby publishes its interim report January-June 2011 enclosed to this stock exchange release. Kemira's interim report January-June 2011 is attached to this release in pdf format and is also available on the company's web site at www.kemira.com.
Second quarter:
- Revenue was EUR 548.8 million (545.2).
- Operative EBIT decreased 8% to EUR 37.3 million (40.5) and the margin to 6.8% (7.4%).
- Profit before tax increased 9% to EUR 40.7 million (37.3).
January-June:
- Revenue increased 4% to EUR 1,105.6 million (1,059.9).
- Operative EBIT increased 3% to EUR 82.2 million (79.6) and the margin was 7.4% (7.5%).
- Profit before taxes increased 29% to EUR 89.3 million (69.0).
- Earnings per share from continuing operations increased 26% to 0.44 (0.35).
- Gearing improved to 37% (39% as of December 31, 2010).
- Outlook for 2011 remains unchanged from the January-March 2011 Interim report.
Kemira's President and CEO Harri Kerminen:
"Raw material prices continued to increase during the second quarter and together with higher freight and energy costs, had a negative effect on the operative EBIT. However, higher revenues from increased volumes and implemented sales price increases could fully offset the higher variable costs. Divestments made in the latter part of 2010 and currency exchange effects brought our operative EBIT below last year's level. Despite lower EBIT, our profit before tax increased due to higher income from associated companies and lower financial expenses.
Kemira's revenue grew nearly 7% in the second quarter, excluding the negative effect from divestments and currency exchange. The Paper segment's organic revenue growth was more than 6% and the operative EBIT margin remained on a good level. The Oil & Mining segment continued to show steady growth rates, especially with oil and gas business in North America.
The Municipal & Industrial segment's operative EBIT margin was negatively affected by higher raw material costs. In the municipal water treatment business, the average time between the change in raw material prices and in our sales prices is longer than in Kemira's other businesses.
Kemira owns a minority stake (39%) in Sachtleben, a major titanium dioxide producer. The performance of Sachtleben continued to be very strong.
Manufacturing facility projects in China and India are proceeding according to plan. The manufacturing facility in India will be operational during the second half of 2011. The new facility will produce water treatment chemicals for municipal and industrial customers in the Indian market. The facility in China is expected to be operational in the second quarter of 2012. Additionally in July, Kemira bought the remaining shares (49%) in Kemira Tiancheng Chemicals Co., Ltd, further strengthening our position in China.
Looking ahead, we expect that the implemented sales price increases will deliver positive results in the second half of the year. Outlook for the full year remains unchanged."
Key figures and ratios
The figures for 2010 are for continuing operations excluding Tikkurila, unless otherwise stated. Tikkurila Oyj was separated from Kemira on March 26, 2010.
| EUR million | Apr-Jun 2011 | Apr-Jun 2010 | Jan-Jun 2011 | Jan-Jun 2010 | Jan-Dec 2010 |
| Revenue | 548.8 | 545.2 | 1,105.6 | 1,059.9 | 2,160.9 |
| EBITDA | 61.1 | 68.3 | 129.5 | 131.1 | 265.7 |
| EBITDA, % | 11.1 | 12.5 | 11.7 | 12.4 | 12.3 |
| Operative EBIT | 37.3 | 40.5 | 82.2 | 79.6 | 162.3 |
| EBIT | 37.3 | 44.5 | 82.2 | 82.9 | 156.1 |
| Operative EBIT, % | 6.8 | 7.4 | 7.4 | 7.5 | 7.5 |
| EBIT, % | 6.8 | 8.2 | 7.4 | 7.8 | 7.2 |
| Financial income and expenses | -3.9 | -9.8 | -7.7 | -17.7 | -27.4 |
| Profit before tax | 40.7 | 37.3 | 89.3 | 69.0 | 137.9 |
| Net profit from continuing operations | 31.7 | 27.3 | 69.6 | 55.0 | 115.9 |
| Net profit | 31.7 | 27.3 | 69.6 | 586.0*** | 646.9*** |
| EPS, EUR, from continuing operations | 0.20 | 0.17 | 0.44 | 0.35 | 0.73 |
| Capital employed* | 1,684.1 | 1,631.7 | 1,684.1 | 1,631.7 | 1,665.1 |
| ROCE, %* | 10.4 | 8.8 | 10.4 | 8.8 | 9.9 |
| Cash flow after investments | 65.2 | 1.9 | 85.9 | 134.6** | 168.6** |
| Capital expenditure | 20.1 | 18.5 | 34.5 | 32.5 | 107.8 |
| Equity ratio, % at period-end | 55 | 50** | 55 | 50** | 54** |
| Gearing, % at period-end | 37 | 48** | 37 | 48** | 39** |
| Personnel at period-end | 5,065 | 5,177 | 5,065 | 5,177 | 4,935 |
* 12-month rolling average
**Includes Tikkurila until March 25, 2010
***Net profit January-December 2010 includes a non-recurring income of EUR 529.2 million from the separation of Tikkurila, consisting of the difference between the market price of Tikkurila on March 26, 2010 and the shareholder's equity of Tikkurila on March 25, 2010 less the transfer tax related to Tikkurila's listing as well as the listing costs.
Definitions of key figures are available at www.kemira.com > Investors > Financial information. Comparative 2010 figures are provided in parentheses for some financial results, where appropriate. Operating profit, excluding non-recurring items, is referred to as Operative EBIT. Operating profit is referred to as EBIT.
Outlook (unchanged)
Kemira's vision is to be a leading water chemistry company. Kemira will continue to focus on improving profitability and reinforcing positive cash flow. The company will also do investments to secure the future growth in the water treatment business.
Kemira's financial targets remain as communicated in connection with the Capital Markets Day in September 2010. The company's medium term financial targets are:
- revenue growth in mature markets > 3% per year, and in emerging markets > 7% per year
- EBIT, % of revenue > 10%
- positive cash flow after investments and dividends
- gearing level < 60%.
The basis for growth is the growing water chemicals markets and Kemira's strong know-how in water quality and quantity management. Increasing water shortage, tightening legislation and customers' needs to increase operational efficiency create opportunities for Kemira to develop new water applications for both new and current customers. Investment in research and development is a central part of Kemira's strategy. The focus of Kemira's research and development activities is on the development and commercialization of new innovative technologies for Kemira's customers globally and locally.
Kemira expects the volume recovery that was seen in 2010 to continue in 2011 and Kemira's revenue is expected to be slightly higher than in 2010. Despite the rising raw material prices, Kemira expects the operative EBIT in 2011 to be higher than in 2010.
Press conference and conference call
Kemira will arrange a press conference for analysts and the media on Thursday, July 28, 2011 starting at 10.30 am at Kemira House, Porkkalankatu 3, Helsinki. In the conference, Kemira's President and CEO Harri Kerminen will present the results. The press conference will be held in Finnish. Presentation material will be available on Kemira's website at www.kemira.com under Investors in English and at www.kemira.fi in Finnish at 10.30 am.
A conference call in English will begin at 1 pm Finnish time. In order to participate in the call, please dial +44 (0)20 7162 0025, code 900184 ten minutes before the conference begins. Presentation material will be available on Kemira's website. A recording of the conference call will be available on Kemira's website later the same day.
For more information, please contact
Kemira Oyj
Tero Huovinen, Director, Investor Relations
+358 10 862 1980
Kemira is a global two billion euro chemicals company that is focused on serving customers in water-intensive industries. The company offers water quality and quantity management that improves customers' energy, water, and raw material efficiency. Kemira's vision is to be a leading water chemistry company.
