Kemira Oyj
Stock Exchange Release
October 22, 2014 at 8.30 am (CET+1)
This is a summary of the January-September 2014 Interim report. The complete January-September 2014 Interim report with tables is attached to this release and available at www.kemira.com/investors.
Third quarter:
- Organic revenue growth was 3%. Reported revenue decreased 2% to EUR 541.5 million (553.7) due to impact of divestments completed earlier.
- Operative EBITDA improved to EUR 69.9 million (68.9) with a margin of 12.9% (12.4%).
- Reported earnings per share increased to EUR 0.16 (0.09) mainly as a result of lower non-recurring charges than in the comparable period.
- On July 7, Kemira signed a preliminary agreement to acquire AkzoNobel's paper chemical business.
January-September:
- Organic revenue growth reached 1%. Reported revenue decreased 6% to EUR 1,589.6 million (1,683.9) due to divestments and unfavorable currency exchange rates.
- Operative EBITDA decreased 3% to EUR 187.6 million (193.9) with a margin of 11.8% (11.5%).
- Operative earnings per share were EUR 0.47 (0.53).
- Kemira maintains its outlook for 2014.
Kemira's President and CEO Jari Rosendal:
"In the third quarter, Kemira's organic growth accelerated to 3% from 1% in the first half of 2014. Paper and Oil & Mining continued to grow above-the-market and Municipal & Industrial's revenue showed signs of recovery. Our operative EBITDA margin increased from 12.4% to nearly 13% with notable improvements in Oil & Mining and Municipal & Industrial.
Kemira is moving forward in the next phase of its strategy implementation: focusing on growth. We updated our mid-term revenue and operative EBITDA margin targets in September, expecting revenue of EUR 2.7 billion in 2017 and an operative EBITDA margin of 15%. These targets are expected to be reached through organic growth, inorganic growth, and continuous efficiency improvements.
In Paper, our market leadership position as the only global pulp and paper chemical supplier will be further strengthened by the acquisition of AkzoNobel paper chemical business, announced in July. Another positive development was the receipt of the final operating permits for our new process chemicals site in Nanjing, China. We are also increasing pulp chemical deliveries to StoraEnso's new pulp mill in Montes del Plata, Uruguay that ramps up its capacity.
In Oil & Mining, we are investing in new and existing emulsion and dry polyacrylamide capacity in North America in order to harvest the good growth potential in the oil & gas market. Demand for emulsion polyacrylamide has been strong, especially in horizontal drilling and stimulation of shale oil & gas. Kemira is the second largest producer of emulsion and dry polyacrylamides in the world.
In Municipal & Industrial, our new coagulant manufacturing site in Dormagen, Germany has reached its full planned capacity and in Tarragona, Spain we are currently ramping up the capacity in order to further strengthen our market leadership position in chemical raw and waste water treatment. In North America, we regained business, especially in the municipal water treatment sector and revenue decline slowed down in the third quarter.
Looking ahead, we will keep our guidance for 2014 unchanged, expecting slight organic revenue growth and an operative EBITDA approximately at the same level as in 2013."
KEY FIGURES AND RATIOS
EUR million
| Jul-Sep 2014 | Jul-Sep 2013 | Jan-Sep 2014 | Jan-Sep 2013 | Jan-Dec 2013 | |
| Revenue | 541.5 | 553.7 | 1,589.6 | 1,683.9 | 2,229.1 |
| Operative EBITDA | 69.9 | 68.9 | 187.6 | 193.9 | 251.9 |
| Operative EBITDA, % | 12.9 | 12.4 | 11.8 | 11.5 | 11.3 |
| EBITDA | 67.2 | 50.4 | 179.8 | 153.1 | 141.9 |
| EBITDA, % | 12.4 | 9.1 | 11.3 | 9.1 | 6.4 |
| Operative EBIT | 45.5 | 47.5 | 118.8 | 129.7 | 164.2 |
| Operative EBIT, % | 8.4 | 8.6 | 7.5 | 7.7 | 7.4 |
| EBIT | 42.9 | 29.0 | 107.2 | 81.5 | 42.6 |
| EBIT, % | 7.9 | 5.2 | 6.7 | 4.8 | 1.9 |
| Share of profit or loss of associates | 0.0 | 0.1 | 0.0 | -1.0 | -1.1 |
| Financing income and expenses | -6.6 | -2.4 | -20.4 | -31.3 | -39.0 |
| Profit before tax | 36.3 | 26.7 | 86.8 | 49.2 | 2.5 |
| Net profit | 27.0 | 16.3 | 71.9 | 22.8 | -25.9 |
| Earnings per share, EUR | 0.16 | 0.09 | 0.44 | 0.12 | -0.21 |
| Operative earnings per share, EUR | 0.18 | 0.22 | 0.47 | 0.53 | 0.70 |
| Capital employed* | 1,310.2 | 1,421.0 | 1,310.2 | 1,421.0 | 1,366.5 |
| Operative ROCE* | 11.7 | 11.1 | 11.7 | 11.1 | 11.9 |
| ROCE* | 5.2 | 2.6 | 5.2 | 2.6 | 3.0 |
| Capital expenditure | 30.6 | 32.6 | 90.2 | 92.5 | 197.5 |
| Cash flow after investing activities | 6.8 | 13.8 | 97.6 | 214.2 | 195.7 |
| Equity ratio, % at period-end | 51 | 52 | 51 | 52 | 51 |
| Gearing, % at period-end | 41 | 34 | 41 | 34 | 41 |
| Personnel at period-end | 4,244 | 4,469 | 4,244 | 4,469 | 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 2017 AND OUTLOOK 2014
Kemira will continue to focus on improving its profitability and reinforcing positive operative cash flow. The company will also continue to invest in order to secure future growth in the water quality and quantity management business.
Kemira's financial targets have been revised in connection with its Capital Markets Day on September 9, 2014. The company's financial targets for 2017 are:
- revenue EUR 2.7 billion
- Operative EBITDA-% of revenue 15%
- gearing level <60%.
Kemira expects its capital expenditure-to-sales ratio to increase for the next few years from the current run rate of approximately 6%. In addition, Kemira expects its medium-term operative tax rate to be in the range of 22%-24%. This rate excludes non-recurring items and the contribution of 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 for 2014 (unchanged)
Kemira is maintaining its existing outlook for 2014. In 2014, Kemira expects its revenue in local currencies and excluding acquisitions and divestments to be slightly higher than in 2013 and its operative EBITDA to be approximately at the same level as in 2013.
The guidance for 2014 is defined as follows.
| Kemira guidance | Definition |
| Approximately at the same level | from -5% to 5% |
| 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% |
Helsinki, October 22, 2014
Kemira Oyj
Board of Directors
FINANCIAL CALENDAR 2014 AND 2015
Financial results for the year 2014 February 10, 2015
Interim Report January-March 2015 April 24, 2015
Interim Report January-June 2015 July 22, 2015
Interim Report January-September 2015 October 23, 2015
Kemira Oyj's Annual Report 2014 will be published during the week starting on February 23, 2015. The Annual General Meeting is scheduled for Monday, March 23, 2015 at 1.00 pm (CET+1). The Board of Directors of the company will convene the meeting.
Press and analyst conference and conference call
Kemira will arrange a press conference for analysts and the media starting at 10.30 am (8.30 am UK time) at Kemira House, Porkkalankatu 3, Helsinki. In the conference, Kemira's President and CEO Jari Rosendal and the CFO Petri Castrén will present the Q3 2014 results. The press conference will be held in English and will be webcasted at www.kemira.com/investors. Webcast will be available at www.kemira.com/investors also after the event. Presentation material will be available on Kemira's website at www.kemira.com/investors under Investors in English and at www.kemira.com/fi/sijoittajat in Finnish at about 10.00 am.
Conference call in connection to the press and analyst conference
You can also listen to the conference live over the phone and attend the Q&A session via a conference call. In order to participate in the call, please dial ten minutes before the conference begins:
FI: +358 9 817 10465
SE: +46 85 19993555
UK: +44 20 31940550
US: +1 855 2692605
No PIN code requested.
For more information, please contact
Kemira Oyj
Tero Huovinen, VP, Investor Relations
+358 10 862 1980
Kemira is a global chemicals company serving customers in water-intensive industries. We provide expertise, application know-how 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
