6/21/2021

Short term risks and uncertainties

Risks

Kemira is exposed to risks that may arise from its own operations or from changes in the operating environment.

Kemira’s most significant risks relate to the following themes:

  • Price and availability of raw materials and commodities
  • Suppliers
  • Hazard risks
  • Changes in customer demand
  • Economic conditions and geopolitical changes
  • Competition
  • Acquisitions
  • Innovation and R&D
  • Changes in Laws and regulations
  • Talent management

All risks mentioned above are described in more detail in Kemira’s Financial Statements for the year 2020.

Latest update to short-term risks and uncertainties

The COVID-19 pandemic and the related economic slowdown have had a limited impact on Kemira’s operations. In several countries with government-imposed restrictions on economic activity, the chemical industry and Kemira’s customer industries were almost always classified as essential industries and, as a consequence, were exempt from government lockdown restrictions. In Q1 2021, Kemira’s manufacturing facilities and supply chain operated without significant COVID-19-related disruptions. Global supply chain disruptions and logistics issues in North America resulted in some shortages in raw material availability during the quarter.

The impact of COVID-19 on customer demand has varied by segment. During Q1 2021, Kemira’s endmarket demand continued to recover sequentially. In Pulp & Paper, demand for chemicals improved in pulp, board and tissue, while demand for printing and writing chemicals showed some signs of stabilization in Q1 2021. In Industry & Water, demand in municipal water treatment was solid, while industrial water treatment was somewhat impacted by the economic slowdown. Shale market activity continued to recover sequentially in Q1 2021.

The final impacts on Kemira’s end markets will depend on the pace of economic recovery, the development of the pandemic and the speed of vaccinations globally. New COVID-19 variants could result in further deterioration of the situation and result in additional or prolonged restrictions on economic activity before the vaccines are rolled out more broadly globally or they are modified to respond to new virus variants. A possible deterioration in the pandemic situation could lead to a widespread decline in customer demand. For Kemira’s 2021 outlook, including assumptions behind the outlook, please refer to the January-March 2021 Interim report section “Outlook” on page 16.

Kemira has set up regional crisis management teams to monitor the COVID-19 situation regionally, as the development of the COVID-19 pandemic varies by region. The aim of the crisis management teams is to mitigate the impact on Kemira in order to ensure our and our customers’ business continuity. Regional crisis management teams continued to convene regularly in Q1 2021. Business travel remains restricted, and Kemira has taken several steps to ensure employee safety at its locations. To mitigate the impact on its supply chain, Kemira reviews alternative suppliers on a continuous basis to ensure smooth operations in all circumstances.

Kemira has strongly recommended remote working for employees for whom it is possible since March 2020, and the transition to remote working has been smooth. As government-imposed lockdown restrictions on economic activity will gradually be relaxed and recommendations for remote working will be lifted, Kemira has taken steps to ensure a gradual and safe return to offices, while also complying with social distancing measures and local government recommendations. Kemira has supported leaders and employees in the adoption of remote working during the COVID-19 pandemic.

In Q1 2021, Kemira has assessed the impact of the uncertainty caused by the COVID-19 pandemic on its financial position and considered the values of assets and liabilities that contain significant accounting estimates that require judgment or that may have been particularly affected by the COVID-19 pandemic. Based on these analysis, no indications of goodwill impairment were identified, the fair value of Pohjolan Voima Group’s shares did not change, and realized credit losses on trade receivables did not increase during Q1 2021.

Kemira had ample liquidity and a EUR 400 million undrawn committed credit facility at the end of March 2021. Kemira issued a EUR 200 million, 7-year-bond in March 2021 and has no imminent financing needs.