Kemira Oyj Interim Report April 26, 2017 at 8.30 am (CET+1)
Kemira Oyj's Interim Report January-March 2017: Revenue grew in all segments while profitability was under pressure
This is a summary of the January - March 2017 Interim report. The complete Interim report with tables is attached to this release and available at www.kemira.com/investors .
Q1 2017
- Revenue increased 5% and was EUR 610.0 million (582.7) as revenue grew in all segments, especially in Oil & Mining driven by increased activity in the shale oil & gas markets. Revenue in local currencies, excluding acquisitions and divestments, increased 2% driven by volume growth.
- Operative EBITDA decreased 5% to EUR 69.0 million (72.8) due to lower sales prices, temporary supply distractions and sudden increases in some raw material prices during the first quarter.
- Operative EBITDA margin declined to 11.3% (12.5%).
- EPS decreased to EUR 0.12 (0.16) mainly due to lower profitability and higher finance costs.
Outlook for 2017 (unchanged)
Kemira expects its operative EBITDA to increase from the prior year (2016: EUR 302.5 million).
Kemira's President and CEO Jari Rosendal: "The start for the year was two-folded. Our revenue grew in all segments driven by the organic growth while profitability was below the prior-year level due to three main reasons. Sales prices are still lower than a year ago, although the decline in sales prices has stopped on sequential comparison. Rising feedstock prices impacted profitability for all segments as the tightness in ethylene and propylene markets caused sudden increases in oil-based raw material prices. Temporary supply distractions, such as the force majeure at Huntsman Pigments in Finland and the supply shortage of chlorinated fatty acid, have increased costs and caused some asset under-utilization.
In Pulp & Paper, sales volumes continued to grow. We lost revenue due to the force majeure, but the underlying revenue generation is developing according to plan. The new site serving Klabin in Brazil is fully operational and we expect the new sodium chlorate line in Joutseno, Finland, to be up and running in the fourth quarter of 2017. The major contract manufacturing agreements with AkzoNobel will end in the coming months leading to synergies of EUR 20 million as a run-rate at the end of 2017.
Oil & Mining had organic growth of 16% driven by strong sales volume development in the North American shale oil & gas business. However, the profitability level was unsatisfactory for the segment in Q1 due to recent increases in raw material prices. We have already announced price increases for our polymer products to counteract the impact of these higher raw material costs.
In Municipal & Industrial, volume growth continued, however, lower average sales prices and higher manufacturing costs impacted profitability. The segment continued to deliver strong cash flow.
We are executing our strategy according to plan in the mixed market environment. We will merge Oil & Mining and Municipal & Industrial into one new segment, Industry & Water. Organizational structure is planned to be changed to support the two segment model and this is expected to result in further operational efficiencies of EUR 15-20 million as a run-rate at the end of 2017. The main objectives of the change are to simplify Kemira's way of working and further improve service to its customers." KEY FIGURES AND RATIOS
| EUR million | Jan-Mar 2017 | Jan-Mar 2016 | Jan-Dec 2016 |
| Revenue | 610.0 | 582.7 | 2,363.3 |
| Operative EBITDA | 69.0 | 72.8 | 302.5 |
| Operative EBITDA, % | 11.3 | 12.5 | 12.8 |
| EBITDA | 66.7 | 71.1 | 284.2 |
| EBITDA, % | 10.9 | 12.2 | 12.0 |
| Operative EBIT | 34.9 | 40.9 | 170.1 |
| Operative EBIT, % | 5.7 | 7.0 | 7.2 |
| EBIT | 32.6 | 39.2 | 147.0 |
| EBIT, % | 5.3 | 6.7 | 6.2 |
| Finance costs, net | -6.7 | -6.0 | -19.1 |
| Profit before taxes | 26.1 | 33.3 | 128.0 |
| Net profit attributable to equity owners | 18.3 | 24.5 | 91.8 |
| Earnings per share, EUR | 0.12 | 0.16 | 0.60 |
| Capital employed* | 1,736.8 | 1,697.8 | 1,718.2 |
| Operative ROCE* | 9.5 | 9.7 | 9.9 |
| ROCE*, % | 8.1 | 7.9 | 8.6 |
| Cash flow from operating activities | 12.2 | 26.2 | 270.6 |
| Capital expenditure excl. acquisitions | 36.9 | 31.4 | 212.6 |
| Capital expenditure | 36.9 | 29.5 | 210.6 |
| Cash flow after investing activities | -24.6 | -2.3 | 97.8 |
| Equity ratio, % at period-end | 43 | 42 | 45 |
| Equity per share, EUR | 7.24 | 6.96 | 7.68 |
| Gearing, % at period-end | 59 | 60 | 54 |
| Personnel at period-end | 4,771 | 4,711 | 4,818 |
*12-month rolling average (ROCE, % based on the EBIT) Kemira provides certain financial performance measures (alternative performance measures) on non-GAAP basis. Kemira believes that alternative performance measures, like operative EBITDA and operative EBIT, followed by Kemira management, provide useful and more comparable information of its operative business performance. 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 can deviate from the presented sum figure.
OUTLOOK FOR 2017 (UNCHANGED) Kemira expects its operative EBITDA to increase from the prior year (2016: EUR 302.5 million). MID- AND LONG-TERM FINANCIAL TARGETS (UNCHANGED) Kemira aims at above-the-market revenue growth with operative EBITDA margin of 14-16%. The gearing target is below 60%. Helsinki, April 25, 2017
Kemira Oyj Board of Directors INTERIM REPORTS 2017 Interim report January-June 2017 July 20, 2017 Interim report January-September 2017 October 25, 2017
Capital Markets Day will be held in London on September 21, 2017. PRESS AND ANALYST CONFERENCE AND CONFERENCE CALL Kemira will arrange a press conference for the analysts, investors, and media on April 26, 2017 starting at 10.30 a.m. (8.30 a.m. UK time) at GLO Hotel Kluuvi, Kluuvikatu 4, 2nd Floor, Helsinki. During the conference, Kemira's President and CEO Jari Rosendal and CFO Petri Castrén will present the results. The press conference will be held in English and will be webcasted at www.kemira.com/investors . The presentation material and the webcast recording will be available on the abovementioned company website. You can attend the Q&A session via a conference call. In order to participate in the conference, please call ten minutes before the conference begins: FI +358 9 7479 0361 SE +46 8 5033 6574 UK +44 330 336 9105 US +1 719 325 4746 Conference id: 2982715
For more information, please contact: Kemira Oyj Olli Turunen, Vice President, Investor Relations Tel. +358 10 862 1255
Kemira is a global chemicals company serving customers in water-intensive industries. We provide expertise, application know-how and chemicals that improve our customers' product quality, process and resource efficiency. Our focus is on pulp & paper, oil & gas, mining and water treatment. In 2016, Kemira had annual revenue of around EUR 2.4 billion and 4,800 employees. Kemira shares are listed on the Nasdaq Helsinki Ltd. www.kemira.com
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