Kemira Oyj's Financial Statements Bulletin 2018: G

Kemira Oyj Financial Statements Release February 8, 2019 at 8.30 am (CET+1)

Kemira Oyj's Financial Statements Bulletin 2018: Good revenue growth and solid results in 2018 

This is a summary of the Financial Statements Bulletin of 2018. The complete Financial Statements Bulletin 2018 with tables is attached to this release and available at www.kemira.com/investors .

Fourth quarter

- Revenue increased by 4% to EUR 661.8 million (636.5) as sales price increases continued in all product categories globally. Revenue in local currencies, excluding acquisitions and divestments, increased by 3% due to growth in sales prices.  - Operative EBITDA increased by 5% to EUR 84.5 million (80.7) mainly due to higher sales prices, which offset continuing increases in variable costs. Operative EBITDA margin increased to 12.8% (12.7%). EBITDA increased by 4% to EUR 81.3 million (78.4) and the difference to operative EBITDA is explained by items affecting comparability. - EPS increased by 5% to EUR 0.17 (0.16) mainly due to higher operative EBITDA

Full year

- Revenue increased by 4% to EUR 2,592.8 million (2,486.0), mainly due to higher sales prices. Revenue in local currencies, excluding acquisitions and divestments, increased by 7% with all businesses demonstrating growth. - Operative EBITDA increased by 4% to EUR 323.1 million (311.3) as higher sales prices more than offset the increase in variable costs. Operative EBITDA margin was 12.5% (12.5%). EBITDA increased by 11% to EUR 314.8 million (282.4) and the difference to operative EBITDA is explained by items affecting comparability. - EPS increased by 13% to EUR 0.58 (0.52) mainly due to higher operative EBITDA and lower items affecting comparability.  

Dividend proposal for 2018  The Board of Directors proposes a cash dividend of EUR 0.53 per share (0.53) to the Annual General Meeting 2019, totaling EUR 81 million (81).

Outlook for 2019  Kemira expects its operative EBITDA (2018: EUR 323.1 million) to increase from the prior year on a comparable basis, excluding the impact of the IFRS 16 accounting change.

Kemira's President and CEO Jari Rosendal:

"The year ended with continued revenue and earnings growth. We are on the right track as shown by the organic growth of 3% and operative EBITDA increase of 5% in the fourth quarter.

In 2018, we continued to grow driven by higher sales prices. The growth was supported by favorable market trends in all our business areas leading to 7% organic growth for the Group. We have improved our customer satisfaction and employee engagement while systematic improvements have been made in our operations to meet changing market dynamics. Our operative EBITDA margin of 12.5% was at the level of previous year while the second half of the year was clearly better than the first.

Pulp & Paper demonstrated organic growth of 6% in 2018, which was mainly driven by increased sales prices. Our business is supported by positive market trends - such as e-commerce and growing middle class in APAC -  which increase need for different kinds of packaging and paper material. However, operative EBITDA margin of the business declined in 2018. Particularly in paper chemicals, i.e. process and functional chemicals, we have yet only partially succeeded in passing on increases in raw material costs.

Industry & Water demonstrated strong organic growth of 9% in 2018. Our North American oil & gas business recorded over 40% growth in chemical sales, which is one of the main contributors to the increase in profitability from 11.3% to 12.3% for the segment.  We expect Oil & Gas revenue growth to normalize in 2019 as market growth is moderating and capacity utilization is at a high level. We believe that there will be long-term growth regarding polymer demand in North America and therefore we have now decided to expand our polymer capacity in the US with the EUR 60 million investment. From a long-term perspective, market trends are looking positive also for water treatment as increasing regulation requires more chemical usage. For example, the EU is currently reviewing multiple directives for water treatment. 

I want to thank all our customers, employees, suppliers, shareholders, and other stakeholders for the year 2018. Despite the global economic uncertainty, we look into 2019 with optimism."

IFRS 16 accounting change

Kemira adopted IFRS 16 -standard on January 1, 2019. In the profit and loss statement, current operating lease expenses are replaced by the depreciation of the right-of-use asset and interest cost associated with lease liability. As a result, it is estimated that impact on net profit in P&L is immaterial. Kemira currently estimates that the adaptation of IFRS 16 -standard is expected to increase total amount of balance sheet by approximately 5%, EBITDA margin by approximately 1 percentage point and gearing by approximately 10 percentage points. In 2019, the impact on operative EBITDA due to the adoption of IFRS 16 is estimated to be around EUR 30 million. See page 40 of the Financial Statements Bulletin for more details.

KEY FIGURES AND RATIOS

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

Kemira provides certain financial performance measures (alternative performance measures), which are not defined by IFRS. Kemira believes that alternative performance measures followed by capital markets and Kemira management, such as organic growth**, EBITDA, operative EBITDA, cash flow after investing activities as well as gearing, provide useful information about Kemira's comparable business performance and financial position. Selected alternative performance measures are also used as performance criteria in remuneration.

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 the individual figures may deviate slightly from the sum figure presented.

** Revenue growth in local currencies, excluding acquisitions and divestments

DIVIDEND AND DIVIDEND POLICY On December 31, 2018, Kemira Oyj's distributable funds totaled EUR 835,333,094 of which net profit for the period was EUR 132,458,292. No material changes have taken place in the company's financial position after the balance sheet date.

Kemira Oyj's Board of Directors proposes to the Annual General Meeting to be held on March 21, 2019 that a dividend of EUR 0.53 per share totaling EUR 81 million shall be paid on the basis of the adopted balance sheet for the financial year ended December 31, 2018. Kemira's dividend policy aims to pay a stable and competitive dividend. MID- TO LONG-TERM FINANCIAL TARGETS (UPDATED DUE TO THE ADOPTION OF IFRS 16 ACCOUNTING CHANGE)

Kemira aims at above-the-market revenue growth with operative EBITDA margin of 15-17%. The gearing target is below 75%. (Previously, before the adoption of IFRS 16 accounting change, the financial targets were: Kemira aims at above-the-market revenue growth with operative EBITDA margin of 14-16%. The gearing target is below 60%.) 

Helsinki, February 7, 2019

Kemira Oyj Board of Directors

FINANCIAL CALENDAR 2019

Interim Report January-March 2019                             April 26, 2019 Half-Year Financial Report January-June 2019           July 19, 2019 Interim Report January-September 2019                     October 24, 2019

Annual General Meeting will be held in Marina Congress Center on March 21, 2019.

Press and analyst conference and conference call

Kemira will arrange a press conference for analysts, investors, and media on Friday, February 8, 2019, starting at 10.30 am. (8.30 am. UK time) at Hotel Kämp, Kluuvikatu 2, 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 above-mentioned 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 9 817 10310 SE +46 8 566 42651 UK +44 333 3000804 US +1 631 9131422

Conference ID: 23886213# 

For more information, please contact: Kemira Oyj Olli Turunen, Vice President, Investor Relations Tel. +358 40 552 8907

Kemira is a global chemicals company serving customers in water intensive industries. We provide best suited products and expertise to improve our customers' product quality, process and resource efficiency. Our focus is on pulp & paper, oil & gas and water treatment. In 2018, Kemira had annual revenue of around EUR 2.6 billion and 4,915 employees. Kemira shares are listed on the Nasdaq Helsinki Ltd. www.kemira.com

Attachment

• Kemira Financial Statements Bulletin 2018.pdf