Kemira Oyj, Financial Statement Release, February 11, 2021 at 8.30 am (EET)
Kemira Oyj’s Financial Statements Bulletin 2020: Strong performance during a challenging year
This is a summary of the Financial Statements Bulletin of 2020. The complete Financial Statements Bulletin with tables is attached to this release and available at www.kemira.com/investors.
Fourth quarter: Continued strong profitability and cash flow
- Revenue decreased by 8% to EUR 605.6 million (657.7) due to lower sales volumes and prices. Revenue in local currencies (excluding acquisitions and divestments) decreased by 4%.
- Operative EBITDA increased by 20% to EUR 107.9 million (90.1) following favorable development of variable costs and good fixed cost management. The operative EBITDA margin increased to 17.8% (13.7%). EBITDA increased by 31% to EUR 91.2 million (69.6).
- Operative EBIT increased by 34% to EUR 57.0 million (42.4). EBIT increased by 84% to EUR 40.3 million (21.9). The differences between operative and reported figures are explained by items affecting comparability, which were mainly explained by liabilities in a to-be-closed energy company.
- Cash flow from operating activities improved to EUR 146.4 million (142.5).
- EPS (diluted) increased by 214% to EUR 0.14 (0.05), mainly due to higher EBITDA.
January-December: Strong performance during a challenging year
- Revenue decreased by 9% to EUR 2,427.2 million (2,658.8), mainly due to lower sales volumes. Revenue in local currencies, excluding acquisitions and divestments, decreased by 7%.
- Operative EBITDA increased by 6% to EUR 435.1 million (410.0), mainly due to favorable development of variable costs. Good fixed cost management also contributed positively. The operative EBITDA margin increased to 17.9% (15.4%). EBITDA increased by 8% to EUR 413.2 million (382.3).
- Operative EBIT increased by 6% to EUR 237.7 million (224.0). EBIT increased by 11% to EUR 215.9 million (194.4). The differences between operative and reported figures are explained by items affecting comparability, which were mainly explained by liabilities in a to-be-closed energy company.
- Cash flow from operating activities remained strong at EUR 374.7 million (386.2).
- EPS (diluted) increased by 19% to EUR 0.86 (0.72), mainly due to higher EBITDA.
Dividend proposal for 2020
The Board of Directors proposes to the Annual General Meeting 2021 a cash dividend of EUR 0.58 per share (0.56), totaling EUR 89 million (85). It is proposed that the dividend be paid in two installments.
Outlook for 2021
Kemira’s revenue in local currencies, excluding acquisitions and divestments, is expected to increase from 2020 (EUR 2,427 million).
Kemira’s operative EBITDA is expected to be at the same or at a slightly (less than 5%) lower level than in 2020 (EUR 435 million).
Assumptions behind outlook
COVID-19 pandemic continues to cause uncertainty in 2021, but Kemira’s end market demand is expected to recover gradually from 2020 in line with forecasted economic growth. Demand, particularly in the oil and gas market, is expected to recover. The outlook assumes no significant disruptions to Kemira’s operations. Currencies are expected to have a negative impact on operative EBITDA.
Kemira’s President and CEO Jari Rosendal:
“Kemira delivered strong profitability in 2020. The operating environment during the year was characterized by the COVID-19 pandemic and its impact on the global economy. Thanks to our proactive measures, we avoided significant interruptions to our operations during the year. While Kemira’s overall revenue declined by 9%, excluding the more volatile Oil & Gas business and negative currency impact, revenue declined by 2%. This demonstrates the resilience of our business model. Despite lower revenue and a challenging market environment, profitability clearly improved. The operative EBITDA was EUR 435 million and the operative EBITDA margin reached a high level of 17.9% in 2020 thanks to good cost management. In addition, cash flow remained strong during the year.
In Pulp & Paper, profitability improved clearly, and the operative EBITDA margin was exceptionally strong: 17.9% in 2020. The ramp-up of the AKD manufacturing facility in China facilitated our growth in APAC and contributed to growth in operative EBITDA. The segment’s revenue declined by 4% in 2020, driven by lower sales volumes, particularly in process and functional and bleaching chemicals. One of the highlights of the year was the contract extension with UPM-Kymmene for their existing and upcoming pulp mills in Uruguay.
In Industry & Water, relative profitability improved despite lower revenue, which declined by 15%, mainly due to the Oil & Gas business. In shale, the sequential pick-up in demand continued in Q4 2020. In terms of segment profitability, the operative EBITDA margin improved further and was strong at 18.0%. During the year, we successfully ramped up our manufacturing facility in the Netherlands, which is the foundation for our growth in Chemical Enhanced Oil Recovery.
Overall, 2020 was an exceptional year. Thanks to our committed employees, loyal customers and other important stakeholders, our performance was strong throughout the year. I would like to warmly thank all our stakeholders for their trust during 2020.
In recent years, we have taken action to improve Kemira’s profitability, and Kemira is a fundamentally stronger company now. In conjunction with the Capital Markets Day in November, we announced our updated financial target for operative EBITDA margin and updated dividend policy. We are now aiming for an operative EBITDA margin of 15-18% (previously 15-17%) and for a competitive dividend that increases over time (previously “competitive and stable dividend”). Looking ahead, we are placing increased focus on profitable growth. We expect biobased products to be an important growth driver in the years to come, as customers are increasingly looking for biodegradable and recyclable solutions. We announced important new partnerships in December with Danimer Scientific and DuPont to develop and commercialize biobased products; significant milestones on our journey to reach EUR 500 million in biobased revenue by 2030.
Looking at the 2021 outlook, we expect revenue in local currencies, excluding acquisitions and divestments, to increase from 2020 (EUR 2,427 million). In terms of profitability, we expect operative EBITDA to be at the same or at a slightly (less than 5%) lower level than in 2020 (EUR 435 million). Thanks to the strong performance in 2020, the Board of Directors is proposing to increase the dividend to EUR 0.58 per share.
KEY FIGURES AND RATIOS
|Operative EBITDA, %||17.8||13.7||17.9||15.4|
|Operative EBIT, %||9.4||6.4||9.8||8.4|
|Net profit for the period||23.8||8.6||138.0||116.5|
|Earnings per share, diluted, EUR||0.14||0.05||0.86||0.72|
|Operative ROCE*, %||12.1||11.2||12.1||11.2|
|Cash flow from operating activities||146.4||142.5||374.7||386.2|
|Capital expenditure excl. acquisition||66.0||81.4||195.6||201.1|
|Cash flow after investing activities||76.6||60.0||173.3||189.8|
|Equity ratio, % at period-end||43||43||43||43|
|Equity per share, EUR||7.80||7.98||7.80||7.98|
|Gearing, % at period-end||63||66||63||66|
*12-month rolling average
Kemira provides certain financial performance measures (alternative performance measures) that are not defined by IFRS. Kemira believes that alternative performance measures followed by capital markets and Kemira management, such as organic growth (revenue growth in local currencies, excluding acquisitions and divestments), EBITDA, operative EBITDA, operative EBIT, cash flow after investing activities, and 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 from 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 Financial Statements Bulletin have been individually rounded, and consequently the sum of the individual figures may deviate slightly from the total figure presented.
DIVIDEND AND DIVIDEND POLICY
On December 31, 2020, Kemira Oyj’s distributable funds totaled EUR 565,621,554, of which net profit for the period was EUR -199,602,896. 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 24, 2021 that a dividend of EUR 0.58 per share, totaling EUR 89 million, be paid on the basis of the adopted balance sheet for the financial year that ended on December 31, 2020. The dividend will be paid in two installments. The first installment, of EUR 0.29 per share, will be paid to shareholders who are registered in the company’s shareholder register maintained by Euroclear Finland Oy on the record date for the dividend payment: March 26, 2021. The Board of Directors proposes that the first installment of the dividend be paid out on April 8, 2021. The second installment, of EUR 0.29 per share, will be paid in November 2021. The second installment will be paid to shareholders who are registered in the company’s shareholder register maintained by Euroclear Finland Oy on the record date for the dividend payment. The Board of Directors will decide the record date and the payment date for the second installment at its meeting in October 2021.The record date is planned to be October 28, 2021, and the dividend payment date November 4, 2021 at the earliest.
Kemira updated its dividend policy on November 19, 2020. Kemira’s dividend policy aims to pay a competitive dividend that increases over time.
Kemira aims for above-market revenue growth with an operative EBITDA margin of 15-18%. The target for gearing is below 75%.
Kemira updated its financial targets on November 19, 2020. Kemira’s target for operative EBITDA margin was updated to 15-18% (previously 15-17%), while other financial targets remain unchanged.
Helsinki, February 10, 2021
Board of Directors
FINANCIAL REPORTING SCHEDULE 2021
Interim Report January-March 2021 April 27, 2021
Half-year Financial Report January-June 2021 July 16, 2021
Interim Report January-September 2021 October 26, 2021
The Annual Report 2020 will be published on February 19, 2021.
The Annual General Meeting is scheduled for Wednesday, March 24, 2021 at 1:00 pm (EET).
WEBCAST AND CONFERENCE CALL FOR PRESS AND ANALYSTS
Kemira will arrange a webcast for analysts, investors, and media on Thursday, February 11, 2021, starting at 10:30 am EET (8:30 am UK time). During the webcast, Kemira’s President and CEO, Jari Rosendal, and CFO, Petri Castrén, will present the results. The webcast will be held in English and can be followed at www.kemira.com/company/investors. The presentation material and a recording of the webcast 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 call, please call in ten minutes before the conference begins:
FI +358 (0)9 81710 310
SE +46 (0)8 56642 651
UK +44 (0)333 300 0804
US +1 631 913 1422
Conference ID: 85588324#
For more information, please contact:
Mikko Pohjala, Vice President, Investor Relations
Tel. +358 40 838 0709
Kemira is a global leader in sustainable chemical solutions for 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 2020, Kemira had annual revenue of around EUR 2.4 billion and around 5,000 employees. Kemira shares are listed on the Nasdaq Helsinki Ltd. www.kemira.com