Kemira Oyj’s Half-year Financial Report 2022: Record-high Revenue and Operative EBITDA

Kemira Oyj’s Half-year Financial Report 2022: Record-high Revenue and Operative EBITDA

This is a summary of the January – June 2022 Half-year Financial Report. The complete January-June 2022 Financial Report with tables is attached to this release and available at kemira.com/investors.

Second quarter: 
 

•    Revenue increased by 31% to a record-high, EUR 861.4 million (657.5). Revenue in local currencies, excluding acquisitions and divestments, increased by 24% due to higher sales prices.  

•    Operative EBITDA increased by 14% to EUR 122.1 million (107.3) following higher revenue. The operative EBITDA margin decreased to 14.2% (16.3%) due to continued strong inflationary pressures. EBITDA increased by 35% to EUR 123.2 million (91.1). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to a gain on sale of land. In the comparison period, items affecting comparability amounted to EUR 16.2 million and were mainly related to a damage claim settlement.  

•    Operative EBIT increased by 20% to EUR 69.7 million (58.2). EBIT increased by 65% to EUR 69.1 million (41.9).  

•    Cash flow from operating activities was EUR 41.6 million (38.6) and it was impacted by an increase in net working capital. 

•    EPS (diluted) increased by 95% to EUR 0.29 (0.15).

January-June:

•    Revenue increased by 29% to a record-high, EUR 1,629.4 million (1,263.6). Revenue in local currencies, excluding acquisitions and divestments, increased by 23% due to higher sales prices.

•    Operative EBITDA increased by 14% to EUR 242.1 million (211.9). The operative EBITDA margin decreased to 14.9% (16.8%) following strong inflationary pressures. EBITDA increased by 22% to EUR 236.7 million (194.2). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to Kemira's exit from Russia.

•    Operative EBIT increased by 22% to EUR 138.6 million (114.0). EBIT increased by 37% to EUR 131.3 million (96.1).

•    Cash flow from operating activities was EUR 30.6 million (52.4) as net working capital increased clearly. 

•    EPS (diluted) increased by 38% to EUR 0.56 (0.40).

Outlook for 2022 (updated on June 8, 2022)
Revenue
Kemira’s revenue in local currencies, excluding acquisitions and divestments, is expected to increase from 2021 (EUR 2,674.4 million). 

Operative EBITDA
Kemira’s operative EBITDA is expected to increase from 2021 (EUR 425.5 million).

Assumptions behind outlook
Kemira’s end-market demand in both segments is expected to be good in 2022. The outlook assumes no major disruptions to Kemira’s manufacturing operations or further significant supply chain disruptions. The outlook also assumes normal energy availability in Europe. Inflationary pressures are expected to remain strong in 2022.

Previous outlook (published February 11, 2022):
Revenue: Kemira’s revenue in local currencies, excluding acquisitions and divestments, is expected to increase from 2021 (EUR 2,674.4 million).
Operative EBITDA: Kemira’s operative EBITDA is expected to be within a +/- 5% range of the operative EBITDA in 2021 (EUR 425.5 million).

Kemira’s President and CEO Jari Rosendal:

"We had a strong second quarter. Revenue grew by 31% to a record-high of EUR 861 million. Revenue growth was driven by higher sales prices, while sales volumes declined mainly due to our decision to exit Russia. Operative EBITDA reached a record-high level of EUR 122 million thanks to strong revenue growth. Inflationary pressures continued to impact our relative profitability and the operative EBITDA margin declined to 14.2%.

In Pulp & Paper, revenue increased by 29%. Demand remained robust in our end markets. Our sales volumes declined slightly during the quarter mainly due to our exit from Russia. Operative EBITDA grew to EUR 74 million, and the operative EBITDA margin was almost unchanged at 15.1% despite unprecedented inflationary pressures.

In Industry & Water, revenue increased by 34%. Demand in the water treatment business continued to be good. Oil & Gas revenue grew by 36%. Operative EBITDA was rather stable at EUR 48 million, while the operative EBITDA margin declined to 13.0% following unprecedented inflationary pressures.

We made progress with our profitable growth strategy during Q2 2022. We launched a new Growth Accelerator unit within Kemira to accelerate the commercialization of new biomaterials in our current markets and to create business opportunities in new adjacent markets. The build-up of this new organization is ongoing  and it is expected to be operational in early 2023. During Q2 2022, we also announced an extension to our partnership with Danimer Scientific in order to commercialize fully biobased barrier coatings. This is another concrete proof point of how our growth strategy is progressing.

Sustainability is a key cornerstone of our profitable growth strategy. In June, we committed to the Science Based Targets Initiative (SBTi) and set a new ambitious climate target. We commit to cut emissions from our own operations (scope 1 and scope 2 emissions) by 50% by 2030 from a 2018 baseline. This target is in line with limiting global warming to 1.5°C and it will be validated by the SBTi. Our ambition continues to be carbon neutral by 2045 for scope 1 and scope 2 emissions.

We see uncertainties continuing in our operating environment. We expect inflation to remain strong for the remainder of the year and we are preparing for various scenarios should energy availability be disrupted in Europe in the coming quarters. We will need to continue our actions to mitigate the impact from higher inflation going forward. Despite the uncertainty, on June 8, we upgraded our 2022 outlook for operative EBITDA. We expect revenue in local currencies, excluding acquisitions and divestments, to increase from 2021 (EUR 2,674.4 million) and the operative EBITDA to increase from 2021 (EUR 425.5 million)."

KEY FIGURES AND RATIOS

*12-month rolling average

Unless otherwise stated, all comparisons in this report 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 2022 AND 2023

Interim report for January-September 2022               October 25, 2022
Financial Statements Bulletin for the year 2022        February 10, 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 the week starting on February 13, 2023.

Capital Markets Day will be held on September 13, 2022.
The Annual General Meeting is scheduled for Wednesday, March 22, 2023. 

WEBCAST AND CONFERENCE CALL FOR PRESS AND ANALYSTS  

Kemira will arrange a webcast for analysts, investors, and media on Friday July, 15, 2022, starting at 10.30 am EEST (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. In order to participate in the conference call, please call in ten minutes before the conference begins:

FI +358 (0)9 81710310   
SE +46 (0)8 56642 651 
UK +44 (0)333 300 0804   
US +1 631 913 1422

Conference ID: 86867612#