About Kemira’s Risks

A variety of risks affect Kemira’s ability to achieve its targets. Despite Kemira’s proactive risk management efforts, some of the risks may nevertheless materialize and significantly impact Kemira’s ability to achieve its targets.

More detailed information on environmental risks and liabilities as well as financial risks and their management can be found from the Notes to Consolidated Financial Statements (.pdf).

Effects of general economic development

As a result of unfavorable economic development, the demand for Kemira’s products may weaken. Weak economic development may also have serious effects on Kemira’s customers’ liquidity, which could result in increased credit losses for Kemira. The prices of many raw materials decrease in unfavorable market conditions but the availability and price risk related to some of Kemira’s raw materials may also increase. As a result of general economic development, the serviceability of some of Kemira’s cooperation partners, for instance logistics companies, can become jeopardized.

Competition

Kemira’s performance in the ever changing competitive arena represents a considerable risk to meeting Kemira’s goals. New players seeking a foothold in Kemira’s key business segments use aggressive pricing as a competitive tool, which may erode Kemira’s financial results. Kemira is seeking growth in segments that are less familiar, and Kemira will have to face a new competitive situation in these segments. Substitute products competing with Kemira’s may also undermine Kemira’s competitive position.

Price and Availability of Raw Materials and Commodities

As stated in Kemira’s strategy, one of the goals is the profitability improvement. Significant increases in raw material, commodity or logistic costs could place Kemira’s profitability targets at risk. For instance, high oil and electricity prices could materially weaken Kemira’s profitability. Changes in the raw material supplier field, for instance consolidation or capacity decreases, may also increase Kemira’s raw material prices. Poor availability of certain raw materials may affect Kemira’s production if the company fails to prepare for this by mapping out alternative suppliers or opportunities for process changes.

Human Resources

Kemira’s strategy deployment might be at risk if the company is unable to recruit, induct and retain skilled and motivated personnel. Induction and successor training is a long-term process, which is why good successor planning is essential for business continuity and success. Human resources risk management is particularly challenging in the growth areas of South America, Russia and Asia.

REACH

Introduction of REACH legislation may decrease the available raw material options and thus increase Kemira’s raw material costs. REACH registration of Kemira’s own products may also be more expensive than estimated, in particular if Kemira is not able to divide the costs with other companies. Inclusion of acrylamide in the list of substances subject to authorization under REACH may, if realized, increase the costs and decrease the revenue of Kemira.