Stock exchange release

Kemira Oyj’s Interim Report January-September 2018: Revenue and earnings growth continued

Kemira Oyj
Interim Report
October 24, 2018 at 8.30 am (CET+1)

Kemira Oyj’s Interim Report January-September 2018: Revenue and earnings growth continued 

This is a summary of the January-September 2018 Interim report. The complete Interim Report with tables is attached to this release and available at www.kemira.com/investors.

Third quarter:

  • Revenue increased by 8% to EUR 669.6 million (622.2), as all businesses continued to grow, especially Oil & Gas. Revenue in local currencies, excluding acquisitions and divestments, increased by 9%.
  • Operative EBITDA increased by 5% to EUR 89.0 million (84.5) mainly due to sales volumes and higher sales prices, which offset continuing increases in variable costs. Operative EBITDA margin was 13.3% (13.6%). EBITDA increased by 18% to EUR 82.8 million (70.2) and the difference to operative EBITDA growth is explained by items affecting comparability.
  • EPS increased by 12% to EUR 0.14 (0.12) mainly due to higher operative EBITDA.

January-September:

  • Revenue increased by 4% to EUR 1,931.0 million (1,849.4), driven by Oil & Gas. Revenue in local currencies, excluding acquisitions and divestments, increased by 8% with all businesses demonstrating organic growth.
  • Operative EBITDA increased by 3% to EUR 238.6 million (230.6) as higher sales prices more than offset the increase in variable costs. Operative EBITDA margin was 12.4% (12.5%). EBITDA increased by 15% to EUR 233.5 million (203.9) and the difference to operative EBITDA growth is explained by items affecting comparability.
  • EPS increased by 17% to EUR 0.42 (0.36) mainly due to higher operative EBITDA and lower items affecting comparability.

Kemira’s President and CEO Jari Rosendal:

“Revenue growth continued, and earnings increased in the third quarter. Sales price increases are coming through, although I would like the increases to materialize faster.

In the third quarter, Pulp & Paper demonstrated strong organic growth of 7%, which is well above pulp and paper chemicals market growth. Growth is driven by healthy volume growth and increasing sales prices. Pulp, board and tissue markets have seen good growth driven by e-commerce and growing middle class in APAC. These trends are fueling growth for our customers and our investments follow this. We have decided to direct more hydrogen peroxide capacity to pulp customers, resulting in the closure of the sodium percarbonate production line in Sweden by the end of the year. During 2018, we have also debottlenecked one of our bleaching chemical plants in Finland.

Industry & Water recorded organic growth of 11% in the third quarter. After the exceptionally strong growth recently in the oil and gas business, we expect growth rates to moderate in the coming quarters. However, long-term market trends continue to be positive. During the summer we delivered polymers and coagulants for water treatment to a major Canadian oil sands operator, combining our unique expertise regarding these two water treatment chemicals. This creates a substantial long-term business opportunity as oil sands operators are required to treat their tailings ponds.

We continue to drive for higher profitability and are implementing measures to support that. In 2018, Kemira expects its operative EBITDA to increase from the prior year.”

KEY FIGURES AND RATIOS

EUR million Jul-Sep 2018 Jul-Sep
2017
Jan-Sep 2018 Jan-Sep 2017 Jan-Dec 2017
Revenue 669.6 622.2 1,931.0 1,849.4 2,486.0
Operative EBITDA 89.0 84.5 238.6 230.6 311.3
Operative EBITDA, % 13.3 13.6 12.4 12.5 12.5
EBITDA 82.8 70.2 233.5 203.9 282.4
EBITDA, % 12.4 11.3 12.1 11.0 11.4
Operative EBIT 50.0 47.7 129.0 126.3 170.3
Operative EBIT, % 7.5 7.7 6.7 6.8 6.9
EBIT 35.9 33.4 107.1 99.6 141.4
EBIT, % 5.4 5.4 5.5 5.4 5.7
Finance costs, net -7.9 -7.4 -19.2 -21.8 -28.9
Profit before taxes 28.1 26.1 87.9 78.0 112.6
Net profit for the period 22.1 20.0 68.7 59.5 85.2
Earnings per share, EUR 0.14 0.12 0.42 0.36 0.52
     
Capital employed* 1,759.5 1,759.9 1,759.5 1,759.9 1,763.2
Operative ROCE*, % 9.8 9.2 9.8 9.2 9.7
ROCE*, % 8.5 7.3 8.5 7.3 8.0
Cash flow from operating activities 64.2 92.9 122.1 133.7 205.1
Capital expenditure excl. acquisition 34.3 43.8 97.3 125.9 190.1
Capital expenditure 36.3 43.8 96.1 125.9 190.1
Cash flow after investing activities 28.8 50.4 32.3 9.2 13.0
Equity ratio, % at period-end 43 43 43 43 44
Equity per share, EUR 7.44 7.26 7.44 7.26 7.61
Gearing, % at period-end 65 63 65 63 59
   
Personnel at period-end 4,798 4,749 4,798 4,749 4,732

*12-month rolling average (ROCE, % based on the EBIT)

Kemira provides certain financial performance measures (alternative performance measures) on a non-GAAP basis. Kemira believes that alternative performance measures followed by capital markets and Kemira management, such as organic growth**, EBITDA, operative EBITDA, cash flow after investing activities as well as 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 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 the individual figures may deviate slightly from the sum figure presented.

** Revenue growth in local currencies, excluding acquisitions and divestments

OUTLOOK for 2018 (UNCHANGED)

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

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%.

Helsinki, October 23, 2018

Kemira Oyj
Board of Directors


FINANCIAL REPORTING 2018 AND 2019

Financial Statements Bulletin 2018                              February 8, 2019
Interim Report January-March 2019                             April 26, 2019
Half-Year Financial Report January-June 2019           July 19, 2019
Interim Report January-September 2019                     October 24, 2019

Annual General Meeting will be held in Marina Congress Center on March 21, 2019.

Press and analyst conference and conference call

Kemira will arrange a press conference for analysts, investors and the media on Wednesday, October 24, 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 81710310, UK: +44 3333000804, SE: +46 8 56642651, US: +1 6319131422

PIN Code: 99718567#


For more information, please contact:

Kemira Oyj
Olli Turunen, Vice President, Investor Relations
Tel.  +358 40 552 8907

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’s January-September 2018 Interim Report

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