Kemira Oyj
Interim Report
April 27, 2018 at 8.30 am (CET+1)
Kemira Oyj’s Interim Report January-March 2018: Revenue growth continued despite negative currency impact
This is a summary of the January – March 2018 Interim Report. The complete report with tables is attached to this release and available at www.kemira.com/investors .
Q1 2018
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Revenue increased by 1% to EUR 613.7 million (610.0) despite the negative currency impact as sales volume growth continued in all businesses and sales prices increased partially offsetting higher raw material costs. Revenue in local currencies, excluding acquisitions and divestments, increased by 7%.
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Operative EBITDA increased by 1% to EUR 69.4 million (69.0) mainly due to sales volume growth and higher sales prices, which offset increases in variable costs. Negative currency impact was approximately EUR 7 million. Operative EBITDA margin was 11.3% (11.3%).
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EBITDA increased by 2% to EUR 68.2 million (66.7).
- EPS increased to EUR 0.14 (0.12) due to lower net finance costs, which included EUR 3.6 million gain from the sale of shares in power plant companies.
Kemira’s President and CEO Jari Rosendal:
“The year started with strong organic growth. I am pleased about the sales volume growth development but sales price increases need to be faster implemented to offset increasing raw material prices. Profitability remained at the level of the previous year due to the higher raw material prices and unfavorable currencies, especially higher EUR/USD rate was headwind to our reported figures.
In Pulp & Paper, we had organic growth of 5% in the first quarter which is a good achievement compared to market growth. Especially our performance in EMEA region was strong while the North American market remains challenging. In APAC we are growing, but profitability is a challenge. We look forward to the closing of the joint venture deal in China, which will further strengthen our position in the market and improve profitability. The closing of the deal is estimated to be completed by the end of the second quarter. In the pulp and paper market, the global market trend is positive, helped for example by e-commerce megatrend driving need for packaging. Kemira is well positioned in the value chain helping board producers to create lighter and stronger packaging materials. Growing demand is beneficial also for Kemira’s bleaching business as pulp is the intermediate product for board producers.
Industry & Water continued its organic growth by growing 11%, driven by the North American oil and gas market. Operative EBITDA margin increased mainly with the help of higher sales prices. The implementation of the multi-year CEOR agreement with Chevron has started. The related polymer capacity addition is being built in the Netherlands, as announced in October 2017 and is progressing well. The global megatrend to make better use of remaining oil reserves is opening up new opportunities, since Kemira’s polymers can be used to prolong the operating life of oil fields.
In 2018, Kemira expects its operative EBITDA to increase from the prior year.”
KEY FIGURES AND RATIOS
| EUR million | Jan-Mar 2018 |
Jan-Mar 2017 |
Jan-Dec 2017 |
|
| Revenue | 613.7 | 610.0 | 2,486.0 | |
| Operative EBITDA | 69.4 | 69.0 | 311.3 | |
| Operative EBITDA, % | 11.3 | 11.3 | 12.5 | |
| EBITDA | 68.2 | 66.7 | 282.4 | |
| EBITDA, % | 11.1 | 10.9 | 11.4 | |
| Operative EBIT | 33.9 | 34.9 | 170.3 | |
| Operative EBIT, % | 5.5 | 5.7 | 6.9 | |
| EBIT | 32.7 | 32.6 | 141.4 | |
| EBIT, % | 5.3 | 5.3 | 5.7 | |
| Finance costs, net | -3.9 | -6.7 | -28.9 | |
| Profit before taxes | 28.8 | 26.1 | 112.6 | |
| Net profit for the period | 23.0 | 19.8 | 85.2 | |
| Earnings per share, EUR | 0.14 | 0.12 | 0.52 | |
| Capital employed* | 1,753.9 | 1,736.8 | 1,763.2 | |
| Operative ROCE*, % | 9.7 | 9.5 | 9.7 | |
| ROCE*, % | 8.1 | 8.1 | 8.0 | |
| Cash flow from operating activities | 34.5 | 12.2 | 205.1 | |
| Capital expenditure excl. acquisition | 23.2 | 36.9 | 190.1 | |
| Capital expenditure | 22.4 | 36.9 | 190.1 | |
| Cash flow after investing activities | 16.4 | -24.6 | 13.0 | |
| Equity ratio, % at end of period | 41 | 43 | 44 | |
| Equity per share, EUR | 7.13 | 7.24 | 7.61 | |
| Gearing, % at end of period | 61 | 59 | 59 | |
| Personnel at end of period | 4,740 | 4,771 | 4,732 |
*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
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%.
In Helsinki, April 26, 2018
Kemira Oyj
Board of Directors
FINANCIAL REPORTING 2018
Half-Year Financial Report January-June 2018 July 20, 2018
Interim Report January-September 2018 October 24, 2018
PRESS AND ANALYST CONFERENCE AND CONFERENCE CALL
Kemira will arrange a press conference for the analysts, investors, and media on Friday, April 27, 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: 633021
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