Stock exchange release

Kemira Oyj’s Financial Statements Bulletin 2017: Good revenue growth in 2017

Kemira Oyj
Financial Statement Release
February 8, 2018 at 8.30 am (CET+1)

Kemira Oyj’s Financial Statements Bulletin 2017: Good revenue growth in 2017

This is a summary of the Financial Statements Bulletin of 2017. The complete Financial Statements Bulletin 2017 with tables is attached to this release and available at www.kemira.com/investors .

Fourth quarter

  • Revenue increased 7% to EUR 636.5 million (596.5) as sales volume growth continued, especially in the North American oil & gas business, and sales prices started to offset increasing raw material costs. Revenue in local currencies, excluding acquisitions and divestments, increased 11%.
  • Operative EBITDA increased 15% to EUR 80.7 million (70.0) mainly due to sales volume growth and higher sales prices more than offsetting increases in variable costs. Operative EBITDA margin improved to 12.7% (11.7%).
  • EBITDA increased 20% to EUR 78.4 million (65.5).
  • EPS increased to EUR 0.16 (0.11) due to the higher profitability.

Full year

  • Revenue increased 5% to EUR 2,486.0 million (2,363.3) as sales volumes grew mainly due to recovery in the North American oil & gas business. Revenue in local currencies, excluding acquisitions and divestments, increased 6%.
  • Operative EBITDA increased 3% to EUR 311.3 million (302.5), mainly due to higher sales volumes more than offsetting the increase in variable costs. Operative EBITDA margin was 12.5% (12.8%).
  • EBITDA decreased 1% to EUR 282.4 million (284.2), mainly due to a EUR 12.7 million settlement for a damage claim relating to the alleged old infringement of competition law in the hydrogen peroxide business during 1994-2000.
  • EPS decreased to EUR 0.52 (0.60) mainly due to the settlement for the damage claim and higher finance costs. In the previous year, finance costs included a gain of EUR 5 million related to the sale of electricity production assets.

Dividend proposal for 2017
The Board of Directors proposes a cash dividend of EUR 0.53 per share (0.53) to the Annual General Meeting 2018, totaling EUR 81 million (81).

Outlook for 2018
Kemira expects its operative EBITDA to increase from the prior year (2017: EUR 311.3 million)

Kemira’s President and CEO Jari Rosendal:
“In the fourth quarter our organic growth was 11%. This is a strong achievement, all businesses demonstrated increased growth figures. The profitability improvement in Pulp & Paper was driven by higher sales volumes and various positive items whereas Industry & Water’s performance was impacted by seasonality and multiple negative factors leading all in all to a good quarter for the Group with an improved operative EBITDA margin.

The year 2017 was marked by revenue growth driven mainly by the uptake in the oil and gas markets, investments in new capacity, and operational efficiency measures. During the year we consolidated our organization from three into two segments: Pulp & Paper and Industry & Water. Markets remained volatile with currencies being a headwind on revenue and higher raw material prices putting pressure on profitability. Despite these turbulent circumstances – including hurricanes, snowstorms and shortage of some relevant raw materials – we were able to grow the business and improve operative EBITDA in 2017, second half of the year being clearly better than the first.

In Pulp & Paper, we had organic growth of 2% in 2017 driven by sales volumes. The sales price decline stopped in the second half of the year. The segment’s operative EBITDA margin of 13.4% was at the same level as in the previous year. During 2017, we started a new bleaching chemical line in Finland ahead of the initial schedule and the ramp-up was successful. We also signed an agreement to form a new joint venture in China, which will secure the supply of a key raw material for AKD wax, and will further strengthen our position in the pulp and paper chemicals market.

Industry & Water grew organically 12% in 2017, driven by a recovery of the North American oil and gas market. Water treatment also continued to grow at a healthy rate. Operative EBITDA increased but margin declined to 11.3% due to higher raw material prices and margin-dilutive revenue from new growth areas such as Chemical Enhanced Oil Recovery and oil sands. We expect these growth businesses to contribute positively also to profitability once they are scaled up and optimized. In October, we announced an investment of EUR 30 million in polymer technology for Chemical Enhanced Oil Recovery (CEOR), based on an anticipated uptake in customer demand.

Kemira is well positioned in terms of the megatrends that drive our strategy. We create added value for our customers through expertise and chemicals that improve their product quality, processes and resource efficiency. Increasing e-commerce and recycling require chemistry to produce strong but light packaging materials. Replacing plastics with biodegradable, e.g. pulp-based, products provides us with many opportunities thanks to our long-established expertise serving the pulp industry. Urbanization, along with a growing middle class and increased standards of living, leads to higher usage of water, energy, as well as board, tissue and paper. Regulation is driving the water treatment requirements of our customers and we want to be their partner in creating more efficient and sustainable water treatment solutions. The need to make better use of remaining oil and gas reserves is opening up new opportunities, since Kemira’s polymers can be used to prolong the operating life of oil fields.

Looking forward, we are continuing the execution of our strategy with the goal of growing our revenue faster than the market with an operative EBITDA margin of 14-16%.”

 KEY FIGURES AND RATIOS

EUR million Oct-Dec
2017
Oct-Dec
2016
Jan-Dec
2017
Jan-Dec
2016
Revenue 636.5 596.5 2,486.0 2,363.3
Operative EBITDA 80.7 70.0 311.3 302.5
Operative EBITDA, % 12.7 11.7 12.5 12.8
EBITDA 78.4 65.5 282.4 284.2
EBITDA, % 12.3 11.0 11.4 12.0
Operative EBIT 44.0 36.1 170.3 170.1
Operative EBIT, % 6.9 6.1 6.9 7.2
EBIT 41.8 29.2 141.4 147.0
EBIT, % 6.6 4.9 5.7 6.2
Finance costs, net -7.1 -5.9 -28.9 -19.1
Profit before taxes 34.6 23.3 112.6 128.0
Net profit for the period 25.8 18.2 85.2 97.9
Earnings per share, EUR 0.16 0.11 0.52 0.60
   
Capital employed* 1,763.2 1,718.2 1,763.2 1,718.2
Operative ROCE*, % 9.7 9.9 9.7 9.9
ROCE*, % 8.0 8.6 8.0 8.6
Cash flow from operating activities 71.4 102.4 205.1 270.6
Capital expenditure excl. acquisition 64.2 89.4 190.1 212.6
Capital expenditure 64.2 89.3 190.1 210.6
Cash flow after investing activities 3.7 13.4 13.0 97.8
Equity ratio, % at period-end 44 45 44 45
Equity per share, EUR 7.61 7.68 7.61 7.68
Gearing, % at period-end 59 54 59 54
   
Personnel at period-end 4,732 4,818 4,732 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, such as organic growth*, EBITDA, operative EBITDA, cash flow after investing activities, and gearing followed by capital markets and Kemira management, provide useful information of its 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 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, 2017, Kemira Oyj’s distributable funds totaled EUR 782,601,045 of which net profit for the period was EUR 41,340,931. 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, 2018 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, 2017.

Kemira’s dividend policy aims to pay a stable and competitive dividend.

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%. 

In Helsinki, February 7, 2018 

Kemira Oyj
Board of Directors

FINANCIAL REPORTING 2018 

Interim Report January-March 2018                             April 27, 2018
Half-Year Financial Report January-June 2018           July 20, 2018
Interim Report January-September 2018                     October 24, 2018

The Annual General Meeting will be held in Marina Congress Center on March 21, 2018.

PRESS AND ANALYST CONFERENCE AND CONFERENCE CALL  

Kemira will arrange a press conference for the analysts, investors, and media on Thursday, February 8, 2018, starting at 10.30 am. (8.30 am. 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 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 7479 0360
SE +46 8 5033 6573
UK +44 330 336 9104
US +1 323 794 2095

Conference ID: 175702

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 and water treatment. In 2017, Kemira had annual revenue of around EUR 2.5 billion and 4,732 employees. Kemira shares are listed on the Nasdaq Helsinki Ltd.
www.kemira.com 

Kemira Financial Statements Bulletin 2017 (.pdf)

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