The year has started off in line with expectations, although the result for the first quarter will fall short of last year's corresponding period because of GrowHow's weak result. Despite the uncertainties in the global economy, the Kemira Group estimates that its operating income for the whole year will improve from the year 2002, said CEO Tauno Pihlava at Kemira Oyj's Annual General Meeting today, 8 April 2003.
The Group seeks growth in chemicals for the pulp and paper industry, water treatment chemicals, and paints and coatings. In addition to organic growth, the Group will seek expansion in these areas also through acquisitions. Industrial chemicals and plant nutrients are further areas of focus.
The demand for pulp and paper chemicals has shown slight signals of an upward trend in the customer industry, although it is estimated that the depressed phase in the cycle will continue. The Group's geographical presence has strengthened and its product range and scope of services has expanded, particularly following the acquisition of Vinings, Inc. in North America. The operating income of pulp and paper chemicals for the full year should improve from the previous year.
Demand is expected to continue developing favorably in water treatment chemicals, and operating income should remain at a good level.
The outlook in industrial chemicals continues to be positive. New capacity has been brought on stream, e.g. in sodium percarbonate in Helsingborg, formic acid in Oulu, and titanium dioxide pigments in Pori. The income of the industrial chemicals business for the first months of the year will reflect the damage caused by a fire that occurred at the titanium dioxide plant in Pori in early February 2003. The damages to the company amounted to approx. EUR two million. The war in Iraq is a further factor of uncertainty to a continuation in the upward trend in the titanium dioxide prices. The 2003 income of the industrial chemicals business should improve from the previous year.
The demand for paints and coatings seems to be reasonably good at the beginning of the summer painting season. The general slowdown in economy should not affect demand to any significant degree. Growth will be strongest in Russia and in the Baltic states. Synergy benefits arising from combining the Swedish Alcro-Beckers with the Kemira Paints and Coatings business will further improve operating income for the financial year.
GrowHow's product price levels were weaker than during the same period the year before. Prices have improved quicker than expected as the season has progressed, but the positive effect will not yet show in the result for the first quarter which will be substantially lower than last year. Kemira GrowHow has been forced to use the much more expensive purchased ammonia for part of its fertilizer production following production problems at ammonia plants in the U.K. It has not been possible to fully start up the new production unit for potassium nitrate in Jordan in the Middle East because of the war in Iraq. With the year progressing, it is estimated that the restructuring in the European fertilizer industry will have a stabilizing effect on the business prospects of Kemira GrowHow as well. Grain stocks are at an exceptionally low level globally, which should raise the price of grain and also have a positive effect on fertilizer prices. In line with Kemira's earlier statement, the operating income for GrowHow for the whole year is likely to be slightly below last year's level.
Kemira Oyj will publish its 3-month interim report on 6 May 2003 at 09.00 Helsinki time.
Kemira Oyj will issue a further press release later today on the resolutions passed at the Annual General Meeting.
For further information:
Kemira Oyj, Helsinki
Tel. +358 (0)10 8611
Kaj Friman, Group Treasurer
Tel. +358 (0)10 862 1704
GSM +358 (0)50 62 626