Kemira Oyj’s Financial Statements Bulletin 2022: Record year with exceptionally strong Q4

Kemira Oyj’s Financial Statements Bulletin 2022: Record year with exceptionally strong Q4  

This is a summary of the Financial Statements Bulletin of 2022. The complete report with tables is attached to this release and available at kemira.com/investors.

Fourth quarter:   

• Revenue increased by 35% to EUR 968.2 million (718.2). Revenue in local currencies, excluding acquisitions and divestments, increased by 30% due to higher sales prices, particularly in energy-intensive pulp and bleaching chemicals, especially caustic soda.  
• Operative EBITDA increased by 81% to a record-high: EUR 177.0 million (97.8). Operative EBITDA improved in both segments driven by higher sales prices. The operative EBITDA margin increased to 18.3% (13.6%) following improvement in both segments. EBITDA increased by 166% to EUR 184.8 million (69.5). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to a manufacturing unit sale to a customer. 
• Operative EBIT increased by 163% to EUR 123.4 million (47.0). EBIT increased by 652% to EUR 131.8 million (17.5).  
• Cash flow from operating activities was EUR 254.9 million (80.8).  
• EPS (diluted) increased by 955% to EUR 0.57 (0.05) following higher EBITDA. 

January-December: 

• Revenue increased by 33% to a record-high: EUR 3,569.6 million (2,674.4). Revenue in local currencies, excluding acquisitions and divestments, increased by 27% due to higher sales prices, particularly in energy-intensive pulp and bleaching chemicals, including caustic soda.
• Operative EBITDA increased by 34% to a record-high: EUR 571.6 million (425.5) following improvement in both segments. The operative EBITDA margin increased to 16.0% (15.9%) following actions to mitigate impacts from strong inflation. EBITDA increased by 50% to EUR 558.8 million (373.2). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to an expected loss from the divestment of most of our colorants business, Kemira's exit from Russia and a manufacturing unit sale to a customer.
• Operative EBIT increased by 60% to EUR 361.6 million (225.4). EBIT increased by 104% to EUR 347.6 million (170.1). 
• Cash flow from operating activities was EUR 400.3 million (220.2).  
• EPS (diluted) increased by 114% to EUR 1.50 (0.70).

Dividend proposal for 2022

The Board of Directors proposes to the Annual General Meeting 2023 a cash dividend of EUR 0.62 per share (0.58), totaling EUR 95 million (89). It is proposed that the dividend be paid in two installments.

Outlook for 2023

Revenue

Kemira's revenue is expected to be between EUR 3,200 million and EUR 3,700 million in 2023 (2022: EUR 3,569.6 million).

Operative EBITDA

Kemira's operative EBITDA is expected to be between EUR 500 and EUR 600 million in 2023 (2022: EUR 571.6 million).

Assumptions behind outlook
We expect demand in Kemira's end-markets to be resilient despite the significant uncertainty related to the global macroeconomic environment, energy prices, and the development of the war in Ukraine. Overall, Kemira’s end-market demand (in volumes) is expected to decline somewhat. Demand in the oil & gas market is expected to grow. Variable costs are expected to decline but with variation by raw material. Electricity prices are expected to remain above long-term average in Europe, but with uncertainty related to the level of pricing. Market prices for caustic soda are expected to moderate during 2023 from the current very high level. The outlook assumes no major disruptions to Kemira’s manufacturing operations, supply chain, or Kemira’s energy-generating assets in Finland. Foreign exchange rates are expected to remain at approximately current levels.

Kemira’s President and CEO Jari Rosendal:
"The year 2022 was a record year for Kemira. Revenue reached a historical high of almost EUR 3.6 billion. The increase was driven by higher sales prices, particularly in energy-intensive pulp and bleaching chemicals, especially caustic soda. Also the operative EBITDA reached a record-high of EUR 572 million in 2022. We had exceptionally strong performance in Q4 with the operative EBITDA improving in both segments. During the year our team worked hard to mitigate the impacts of unprecedented inflationary pressures. The operative EBITDA margin improved to 16.0%, which is within our financial target range of 15-18%. In line with our dividend policy, the Board of Directors is proposing to increase the dividend to EUR 0.62 to be paid in two installments in April and November.

The Pulp & Paper segment had an excellent year. Market demand was solid in H1, but the market in volumes started to slow down in Q3 2022. Revenue grew by 30% to over EUR 2 billion. This was driven by higher market prices, particularly for energy-intensive pulp and bleaching chemicals, which increased in particular during H2 2022. Operative EBITDA margin improved to 17.2% driven by higher sales prices.

The Industry & Water segment also had a strong year. Demand in the water treatment business remained good, while the oil & gas market grew strongly following higher oil prices. Segment revenue grew by 38% to EUR 1.5 billion driven by both the Oil & Gas business and water treatment. Operative EBITDA margin declined to 14.5% in 2022  due to strong inflationary pressures. However, operative EBITDA margin improved in Q4 2022.

Kemira is now a fundamentally stronger company. Our balance sheet is strong and the net debt / operative EBITDA ratio declined to 1.3 at the end of 2022. Our strong position enables us to look for organic and inorganic growth opportunities as sustainable profitable growth continues to be our strategic focus area. In 2023, our capacity expansion in Uruguay will be completed. We will also continue to progress our biobased strategy to reach our goal of EUR 500 million in biobased revenue by 2030.

Looking at 2023, we expect market demand to decline somewhat following macroeconomic uncertainty. Variable costs, on the other hand, are expected to decline. We are in a good position going into 2023, thanks to our well-performing segments and also thanks to the high level of backward-integration in electricity in Finland. As a result, we expect revenue to be between EUR 3,200 million and EUR 3,700 million and operative EBITDA between EUR 500 and EUR 600 million in 2023.

To conclude, I am very pleased with our performance in 2022: strong financial performance, improved employee engagement, and customer satisfaction. I would like to thank all our stakeholders in making 2022 the most successful year for Kemira so far."

 KEY FIGURES AND RATIOS

*12-month rolling average

Unless otherwise stated, all comparisons are made to the corresponding period in 2021.

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 revenue growth in local currencies, excluding acquisitions and divestments (=organic growth), 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 report have been individually rounded, and consequently the sum of the individual figures may deviate slightly from the total figure presented.

FINANCIAL TARGETS   

Kemira aims for above-market revenue growth with an operative EBITDA margin of 15–18%. The target for gearing is below 75%.

FINANCIAL REPORTING SCHEDULE 2023

Interim report January-March 2023      April 25, 2023
Half-year financial report January-June 2023   July 18, 2023
Interim report January-September 2023   October 24, 2023

Annual Report 2022 will be published on February 17, 2023.
The Annual General Meeting will be held on Wednesday, March 22, 2023. 

WEBCAST AND CONFERENCE CALL FOR PRESS AND ANALYSTS  

Kemira will arrange a webcast for analysts, investors, and media on Friday, February 10, 2023, 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 kemira.com/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 conference call. You can access the teleconference by registering on the link below. After the registration you will be provided phone numbers and a conference ID to access the conference.
http://palvelu.flik.fi/teleconference/?id=1008732

If you wish to ask a question please, dial *5 on your telephone keypad to enter the queue.