Kemira Oyj
Stock Exchange Release
October 28, 2010 at 8.30 am (CET+1)
Third quarter:
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Revenue increased 14% to EUR 554.4 million (487.7).
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Operating profit, excluding non-recurring items, rose 9% to EUR 42.5 million (39.0) and the margin was 7.7% (8.0%).
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Gearing improved to 43% (December 31, 2009: 53%).
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Net profit attributable to owners of the parent company increased 51% to EUR 34.5 million (22.8) and earnings per share from continuing operations to EUR 0.23 (0.17).
January-September:
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Revenue increased 10% to EUR 1,614.3 million (1,473.7).
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Operating profit, excluding non-recurring items, increased 32% to EUR 122.1 million (92.4) and the margin was 7.6% (6.3%). Operating profit rose 40% to EUR 128.9 million (92.4).
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Net profit attributable to owners of the parent company more than doubled to EUR 87.2 million (43.5) and earnings per share from continuing operations increased to EUR 0.58 (0.33).
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Operating profit from continuing operations, excluding non-recurring items, is estimated to grow significantly from last year (2009: EUR 124.9).
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Tikkurila Oyj was separated from Kemira on March 26, 2010 and is reported under Discontinued operations (see tables).
Kemira´s President and CEO Harri Kerminen:
“Kemira delivered a solid quarter again and I am pleased with the robust profitability and growth. Organic revenue growth was 7% compared to the third quarter last year driven by increased volumes in Paper and Oil & Mining segments. Revenue was also positively affected by exchange rate fluctuations.
Operating profit from continuing operations, excluding non-recurring items, improved 9% in the third quarter and year-to-date 32%. During the third quarter margins improved significantly in Paper and Oil & Mining segments, but decreased in Municipal & Industrial segment due to higher raw material prices.
We are continuously looking for new investment opportunities that support our water chemistry focused strategy and during the third quarter we made very good progress. We announced the establishment of a new manufacturing facility in China and signed a joint venture agreement with Promoters of IVRCL in India both of which will strengthen our presence in the Asia Pacific area. We started a strategic cooperation with Outotec to develop mining industry applications in water treatment. In Canada, we started the research cooperation with the University of Alberta to focus on sustainable water use. We acquired an industrial water business in the UK focusing on the oil & gas industry and a municipal & industrial water treatment business in North America, and finalized the FWA paper chemical business divestment in Germany.
As a result of improved demand among our customers and firm cost control we are after just nine months close to last year’s operating profit, excluding non-recurring items. We estimate the whole year operating profit, excluding non-recurring items, to be significantly higher compared to last year.”
Key Figures and Ratios
Figures in the tables in the text section of the interim report are for continuing operations excluding Tikkurila, unless otherwise mentioned. Tikkurila Oyj was separated from Kemira on March 26, 2010. It is reported under Discontinued operations (see tables).
EUR million | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 1-12/2009 |
Revenue | 554.4 | 487.7 | 1,614.3 | 1,473.7 | 1,969.9 |
EBITDA | 70.5 | 64.7 | 201.6 | 168.7 | 207.2 |
EBITDA, % | 12.7 | 13.3 | 12.5 | 11.4 | 10.5 |
Operating profit, excluding non-recurring items | 42.5 | 39.0 | 122.1 | 92.4 | 124.9 |
Operating profit | 46.0 | 39.0 | 128.9 | 92.4 | 109.7 |
Operating profit, excluding non-recurring items, % | 7.7 | 8.0 | 7.6 | 6.3 | 6.3 |
Operating profit, % | 8.3 | 8.0 | 8.0 | 6.3 | 5.6 |
Financial income and expenses | -3.0 | -7.7 | -20.7 | -27.3 | -37.8 |
Profit before tax | 46.0 | 30.7 | 115.0 | 59.5 | 76.5 |
Net profit from continuing operations | 35.8 | 24.1 | 90.8 | 46.3 | 67.1 |
Net profit*** | 35.8 | 40.6** | 621.8** | 76.2** | 85.5** |
EPS, EUR, from continuing operations | 0.23 | 0.17 | 0.58 | 0.33 | 0.47 |
Capital employed * | 1,643.3 | 1,702.6 | 1,643.3 | 1,702.6 | 1,659.3 |
ROCE %* | 9.4 | 1.7 | 9.4 | 1.7 | 6.3 |
Cash flow after investments | 6.6 | 125.8** | 141.2** | 175.3** | 202.2** |
Equity ratio, % at period-end | 52** | 37** | 52** | 37** | 45** |
Gearing, % at period-end | 43** | 87** | 43** | 87** | 53** |
Personnel at period-end | 4,985 | 8,561** | 4,985 | 8,561** | 8,493** |
* 12-month rolling average
**Includes Tikkurila until March 25, 2010
***Net profit January-September 2010 includes a non-recurring income of EUR 529.2 million from the separation of Tikkurila, consisting of the difference between the market price of Tikkurila on March 26, 2010 and the shareholder’s equity of Tikkurila on March 25, 2010 less the transfer tax related to Tikkurila’s listing as well as listing costs.
Definitions of key figures are available at www.kemira.com > Investors > Financial information. Due to the rights offering arranged in 2009, historical per share key figures have been adjusted with the following formula: average number of shares x 1.1.
Additional information:
Tero Huovinen, Director, Investor Relations
Tel: +358 50 409 9373
Kemira is a global two billion euro chemicals company that is focused on serving customers in water-intensive industries. The company offers water quality and quantity management that improve customers’ energy, water and raw material efficiency. Kemira’s vision is to be a leading water chemistry company.
www.kemira.com
Financial Performance in July-September 2010
Kemira Group’s revenue increased by 14% to EUR 554.4 million (487.7). Volume and price based organic revenue growth was 7% and the positive effect of exchange rate fluctuations was 7% or EUR 35 million.
In the Paper segment, revenues increased 13% to EUR 259.9 million (230.2). Revenues grew organically by 6% and the positive effect of exchange rate fluctuations was 8% or EUR 18 million.
In the Municipal & Industrial segment, revenues increased 5% to EUR 164.0 million (155.5). Revenues, excluding the positive effect of exchange rate fluctuations of 7% or EUR 12 million, decreased slightly from the prior year level.
In the Oil & Mining segment, revenues increased 43% to EUR 80.2 million (56.0). Revenues increased organically by 35%. The positive effect of exchange rate fluctuations was 6% or EUR 4 million.
Revenue, EUR million | 7-9/2010 | 7-9/2009 | 1-12/2009 |
Paper | 259.9 | 230.2 | 906.4 |
Municipal & Industrial | 164.0 | 155.5 | 607.5 |
Oil & Mining | 80.2 | 56.0 | 235.0 |
Other | 50.3 | 65.7 | 300.4 |
Eliminations | 0.0 | -19.7 | -79.4 |
Total | 554.4 | 487.7 | 1,969.9 |
Operating profit increased 18% to EUR 46.0 million (39.0). Operating profit, excluding non-recurring items, rose 9% to EUR 42.5 million (39.0). Increased sales volumes more than offset the higher variable and fixed costs, whereas the decrease in sales prices had a negative impact. Exchange rate fluctuations had EUR 5 million positive effect. Operating profit, excluding non-recurring items, margin was 7.7% (8.0%).
Non-recurring items affecting operating profit totalled EUR 3.5 million which related to a capital gain from the sale of Fluorescent Whitening Agents (FWAs) business in Germany.
Operating profit, excluding non-recurring items, EUR million |
7-9/2010 |
7-9/2009 |
1-12/2009 |
Paper | 20.5 | 14.8 | 44.9 |
Municipal & Industrial | 14.5 | 24.9 | 66.4 |
Oil & Mining | 8.8 | 3.5 | 14.2 |
Other | -1.3 | -4.2 | -0.6 |
Eliminations | 0.0 | 0.0 | 0.0 |
Total | 42.5 | 39.0 | 124.9 |
Income from associated companies was EUR 3.0 million (-0.6).
Profit before tax increased to EUR 46.0 million (30.7).
Net profit from continued operations attributable to the owners of the parent company increased 51% to EUR 34.5 million (22.8) and earnings per share from continuing operations to EUR 0.23 (0.17).
Financial Performance in January-September 2010
Kemira Group’s revenue increased by 10% to EUR 1,614.3 million (1,473.7). Volume and price based organic revenue growth was 5%. The positive effect of exchange rate fluctuations was 5% or EUR 69 million.
In the Paper segment, revenues increased 10% to EUR 741.3 million (676.8). Revenues grew organically by 3%. The positive effect of exchange rate fluctuations was 6% or EUR 38 million.
In the Municipal & Industrial segment, revenues increased 2% to EUR 476.1 million (466.9). Revenues, excluding the positive effect of exchange rate fluctuations of 6% or EUR 26 million, declined by some 4%.
In the Oil & Mining segment, revenues increased 36% to EUR 224.9 million (165.6). Revenues increased organically by 29%. The positive effect of exchange rate fluctuations was 3% or EUR 5 million.
Revenue, EUR million | 1-9/2010 | 1-9/2009 | 1-12/2009 |
Paper | 741.3 | 676.8 | 906.4 |
Municipal & Industrial | 476.1 | 466.9 | 607.5 |
Oil & Mining | 224.9 | 165.6 | 235.0 |
Other | 172.1 | 222.6 | 300.4 |
Eliminations | -0.1 | -58.2 | -79.4 |
Total | 1,614.3 | 1,473.7 | 1,969.9 |
Operating profit increased 40% to EUR 128.9 million (92.4). Operating profit, excluding non-recurring items, increased 32% to EUR 122.1 million (92.4) driven by 10% higher sales volumes. The decrease in average sales prices due to the drop in raw material prices had a negative impact on the result, especially in the Paper and Municipal & Industrial segments. Exchange rate fluctuations affected operating profit positively by some EUR 5 million. Operating profit, excluding non-recurring items, margin was 7.6% (6.3%).
Non-recurring items affecting operating profit totalled EUR 6.8 million which mainly related to the divestment of a sulphuric acid plant in Finland, a service company in Sweden and the sale of the FWA business in Germany.
Operating profit, excluding non-recurring items, EUR million |
1-9/2010 |
1-9/2009 |
1-12/2009 |
Paper | 54.0 | 30.3 | 44.9 |
Municipal & Industrial | 46.8 | 53.5 | 66.4 |
Oil & Mining | 22.1 | 8.7 | 14.2 |
Other | -0.8 | -0.1 | -0.6 |
Eliminations | 0.0 | 0.0 | 0.0 |
Total | 122.1 | 92.4 | 124.9 |
Income from associated companies was EUR 6.8 million (-5.6).
Profit before tax improved to EUR 115.0 million (59.5) mainly due to higher operating profit and income from associated companies.
Net profit from continued operations attributable to the owners of the parent company doubled to EUR 87.2 million (43.5) and earnings per share from continuing operations increased to EUR 0.58 (0.33).
Financial position and cash flow
Cash flow from operating activities in January-September 2010 amounted to EUR 79.4 million (226.8). Cash flow includes Tikkurila until March 25, 2010. Compared to last year, cash flow was adversely affected by the separation of Tikkurila in the first quarter, as well as the increase of net working capital connected to the growth of revenue. Cash flow after investments amounted to EUR 141.2 million (175.3). Cash flow from investing activities includes the loan repayment from Tikkurila as well a cash and cash equivalents transferred to Tikkurila, and the effect of the transfer tax related to Tikkurila’s listing (EUR 119.3 in total). The cash flow effect of capital expenditures was EUR -78.0 million (-54.1) including acquisitions.
At the end of the period the Group’s net debt stood at EUR 559.4 million (December 31, 2009: EUR 675.6 million). The decrease in net debt was mainly due to the separation of Tikkurila that had an effect of approximately EUR 160 million. Currency exchange rate fluctuations increased net debt by approximately EUR 22 million.
At the end of the period, interest-bearing liabilities stood at EUR 658.1 million (December 31, 2009: 950.2). Fixed-rate loans accounted for 75% of total interest-bearing loans (December 31, 2009: 70%). The average interest rate on the Group’s interest-bearing liabilities was 4.4% (5.1%). At the end of September, the duration of the Group’s interest-bearing loan portfolio was 16 months (December 31, 2009: 19 months).
The unused amount of the EUR 500 million revolving credit facility that falls due in 2012 was EUR 453 million at the end of the period. Short-term liabilities maturing in the next 12 months amounted to EUR 164.8 million with repayments of long-term loans representing EUR 158.1 million. At the end of September there were no outstanding commercial papers issued on the Finnish markets. Cash and cash equivalents totalled EUR 98.7 million on September 30, 2010. Based on its current structure, it is expected that the Group will not encounter any significant refinancing needs in 2010, since the current loan arrangements cover its financing needs. The terms of the revolving credit facility and other major bilateral loan arrangements require that the Group’s equity ratio must be above 25%.
At the end of the period, the equity ratio stood at 52% (December 31, 2009: 45%), while gearing was 43% (December 31, 2009: 53%). Shareholders’ equity decreased by approximately EUR 70 million due to the separation of Tikkurila. The net impact of currencies on shareholders’ equity was approximately EUR 49 million.
In January-September, the Group’s net financial expenses were EUR 20.7 million (27.3). Net financial expenses decreased from the corresponding period in 2009, mainly due to lower debt and lower market rate levels.
In October, Kemira and the Nordic Investment Bank (NIB) signed EUR 40 million loan with maturity of 7 years.
Capital expenditure
Gross capital expenditure in January-September, excluding acquisitions, amounted to EUR 49.7 million (50.5). Gross capital expenditure of continuing operations, excluding acquisitions, totalled EUR 47.5 million (39.5). New business opportunity investments represented around 40% (0) of gross capital investments, expansion investments around 12% (33%), improvement investments around 24% (33%), and maintenance investments around 24% (34%). The depreciation of continuing operations amounted to EUR 72.7 million (76.3). Cash flow from the sale of assets in continuing operations was EUR 20.9 million (2.4) in January-September.
Research and Development
In continuing operations, research and development expenditure in January-September was EUR 30.8 million (28.0) i.e. 2.1% (2.1%) of all operating expenses.
In March, Kemira and VTT announced establishment of a major water research center in Finland. The total cost of the research, which will be performed at the centre, is estimated at EUR 120 million, including external funding. The investments are allocated over a period of 4 years, resulting in further investment activities in projects for piloting and proof of concept purposes. The centre will employ approximately 200 persons annually.
From the beginning of 2010, about 40% of the projects forming the water research program were initiated and new strategic partners (customers and other technology suppliers) are joining the program.
During the third quarter, Kemira and Outotec Oyj signed a strategic cooperation agreement to develop, promote and support the companies’ businesses in mining applications and oil sands processing as well as associated industrial water treatment solutions. As part of this cooperation, Kemira joined an industrial research program of the University of Alberta, which aims to foster sustainable water use in Canadian oil sands extraction. Kemira collaborates with Outotec as well as with Suncor Energy Services, the Government of Canada and the Alberta Water Research Institute.
Human Resources
The number of Kemira Group employees at the end of the period was 4,985 (September 30, 2009: 8,561). The number of personnel declined mainly due to the separation of Tikkurila.
Segments
Paper
We offer chemical products and integrated systems that help customers in the water-intensive pulp and paper industry to improve their profitability as well as their water, raw material and energy efficiency. Our solutions support sustainable development.
EUR million | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 1-12/2009 |
Revenue | 259.9 | 230.2 | 741.3 | 676.8 | 906.4 |
EBITDA | 35.9 | 26.9 | 96.4 | 67.6 | 87.0 |
EBITDA, % | 13.8 | 11.7 | 13.0 | 10.0 | 9.6 |
Operating profit, excluding non-recurring items | 20.5 | 14.8 | 54.0 | 30.3 | 44.9 |
Operating profit | 24.0 | 14.8 | 60.2 | 30.3 | 40.1 |
Operating profit, excluding non-recurring items, % | 7.9 | 6.4 | 7.3 | 4.5 | 5.0 |
Operating profit, % | 9.2 | 6.4 | 8.1 | 4.5 | 4.4 |
Capital employed* | 788.0 | 806.5 | 788.0 | 806.5 | 782.6 |
ROCE %* | 8.9 | -0.4 | 8.9 | -0.4 | 5.1 |
Capital expenditure, excluding acquisitions | 6.1 | 6.0 | 24.0 | 24.5 | 37.8 |
Cash flow after investments, excluding interest and taxes | 22.5 |
25.3 |
57.1 | 56.8 | 75.6 |
* 12-month rolling average
Third quarter
The Paper segment’s revenue rose 13% to EUR 259.9 million (230.2). The demand for packaging board improved and more specifically, the sales volumes increased in Asia and North America. The demand for magazine paper as well as newsprint has been recovering and has increased the demand for our products. Pulp demand has been at the same level as in the previous quarter. The exchange rate effects had a EUR 18 million positive impact on revenue.
Operating profit, excluding non-recurring items, increased 39% to EUR 20.5 million (14.8). The operating profit, excluding non-recurring items, margin rose to 7.9% (6.4%). Sales volumes increased while the costs were about EUR 7 million lower than in the corresponding period last year.
Nine-month period
The Paper segment’s revenue increased 10% to EUR 741.3 million (676.8). The exchange rate fluctuations effected revenues positively by approximately EUR 38 million. Operating profit, excluding non-recurring items, increased 78% to EUR 54.0 million (30.3). The margin rose to 7.3% (4.5%), resulting from both, higher sales volumes and EUR 35 million lower variable costs. Exchange rates had a slightly positive effect on the result.
Municipal & Industrial
We offer water treatment chemicals for municipalities and industrial customers. Our strengths are high-level application know-how, a comprehensive range of water treatment chemicals, and reliable customer deliveries.
EUR million | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 1-12/2009 |
Revenue | 164.0 | 155.5 | 476.1 | 466.9 | 607.5 |
EBITDA | 21.0 | 32.6 | 62.6 | 74.1 | 91.7 |
EBITDA, % | 12.8 | 21.0 | 13.1 | 15.9 | 15.1 |
Operating profit, excluding non-recurring items | 14.5 | 24.9 | 46.8 | 53.5 | 66.4 |
Operating profit | 14.5 | 24.9 | 43.9 | 53.5 | 59.8 |
Operating profit, excluding non-recurring items, % | 8.8 | 16.0 | 9.8 | 11.5 | 10.9 |
Operating profit, % | 8.8 | 16.0 | 9.2 | 11.5 | 9.8 |
Capital employed* | 360.7 | 357.3 | 360.7 | 357.3 | 349.4 |
ROCE %* | 13.9 | 11.2 | 13.9 | 11.2 | 17.1 |
Capital expenditure, excluding acquisitions | 4.0 | 3.7 | 12.2 | 9.2 | 21.0 |
Cash flow after investments, excluding interest and taxes | -11.3 |
28.2 |
9.8 | 84.1 | 93.5 |
* 12-month rolling average
Third quarter
The Municipal & Industrial segment’s revenue increased 5% to EUR 164.0 million (155.5). Overall volumes were higher than last year, but the average sales prices decreased and especially in the US region. The exchange rate effects had a EUR 12 million positive impact on revenue. Volumes were slightly higher than a year ago in the municipal water treatment business but somewhat lower sales prices offset the positive effect. In the industrial water treatment business the volumes continued to increase, especially in Europe.
Operating profit, excluding non-recurring items, declined 42% to EUR 14.5 million (24.9). Operating profit, excluding non-recurring items, was slightly lower than in the previous quarter due to higher raw material prices. The decline compared to third quarter last year was mainly due to exceptionally high average sales prices in the third quarter 2009 that were still affected by the record high raw material prices at the end of 2008. Exchange rates had a slightly positive effect on the result.
Nine-month period
The segment’s revenue was EUR 476.1 million (466.9). The average price decreased in some products as a result of a decreased raw material prices seen in 2009. The sales volumes grew by about 5%. The exchange rate effect increased the revenue by about EUR 26 million. Operating profit, excluding non-recurring items, was EUR 46.8 million (53.5) and the margin was 9.8% (11.5%). Costs were about EUR 13 million lower than in the same period a year ago. Exchange rates had a slightly positive effect on the result.
Oil & Mining
We offer a large selection of innovative chemical extraction and process solutions for the oil and mining industries, where water plays a central role. Utilizing our expertise, we enable our customers to improve efficiency and productivity.
EUR million | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 1-12/2009 |
Revenue | 80.2 | 56.0 | 224.9 | 165.6 | 235.0 |
EBITDA | 11.2 | 5.7 | 32.5 | 15.6 | 23.6 |
EBITDA, % | 14.0 | 10.2 | 14.5 | 9.4 | 10.1 |
Operating profit, excluding non-recurring items | 8.8 | 3.5 | 22.1 | 8.7 | 14.2 |
Operating profit | 8.8 | 3.5 | 25.5 | 8.7 | 19.9 |
Operating profit, excluding non-recurring items, % | 11.0 | 6.3 | 9.8 | 5.3 | 6.0 |
Operating profit, % | 11.0 | 6.3 | 11.3 | 5.3 | 8.5 |
Capital employed* | 137.9 | 154.7 | 137.9 | 154.7 | 148.9 |
ROCE %* | 26.6 | 0.6 | 26.6 | 0.6 | 13.4 |
Capital expenditure, excluding acquisitions | 1.3 |
1.2 |
3.6 | 2.7 | 4.7 |
Cash flow after investments, excluding interest and taxes | 4.8 |
4.3 |
19.8 | 13.2 | 20.8 |
* 12-month rolling average
Third quarter
The Oil & Mining segment’s revenue rose 43% to EUR 80.2 million (56.0). Overall sales volumes rose significantly from the corresponding period in 2009. Demand has been stronger for water treatment chemicals in both, the oil and gas markets, and mining markets.
Operating profit, excluding non-recurring items, more than doubled to EUR 8.8 million (3.5) and the margin rose to 11.0% (6.3%). In addition to the increase in sales volumes, the profit was improved by higher average sales prices of products. Costs increased by some EUR 6 million compared to the corresponding period in 2009.
Nine-month period
The segment’s revenue rose by 36% to EUR 224.9 million (165.6). The average sales prices of products were above the prior year. The sales volumes grew by about 26%. The exchange rate effect increased revenue by about EUR 5 million. Operating profit, excluding non-recurring items, increased to EUR 22.1 million (8.7) and the margin to 9.8% (5.3%). Costs increased by EUR 7 million compared to the corresponding period in 2009. Exchange rates had no significant effect on the result.
Other
The Other segment consists of specialty chemicals such as organic salts and acids and the Group expenses not charged to the segments (some research and development costs and the costs of the CEO Office).
The demand of specialty chemicals developed well during the period. Products are delivered mainly to the food industry, feed industry and pharmaceutical industry, as well as for airport runway de-icing.
Separation of Tikkurila
Trading with Tikkurila Oyj’s share began on NASDAQ OMX Helsinki Oy on March 26, 2010 when Tikkurila was separated from Kemira Oyj.
On March 16, 2010 Kemira’s Annual General Meeting decided that each of the four Kemira’s shares entitle their holder to receive one share of Tikkurila as a dividend. In total, Kemira distributed a total of 37,933,097 Tikkurila shares as dividend to its shareholders which corresponds with 86% of Tikkurila’s shares and votes. Kemira continues to hold a 14% minority share in Tikkurila. The taxation value and purchase price for the Tikkurila shares distributed as dividend is the volume-weighted average price of the shares on the first trading day, March 26, 2010, which was EUR 15.80.
Kemira Oyj’s shares and shareholders
On September 30, 2010, Kemira Oyj’s share capital was EUR 221.8 million and the number of shares was 155,342,557. At the end of September, Kemira owned 3,601,610 own shares (December 31, 2009: 3,854,771), which corresponds to 2.3% (December 31, 2009: 2.5%) of Kemira Oyj’s shares.
The highest share price of Kemira Oyj’s shares on NASDAQ OMX Helsinki Oy in January-September was EUR 11.09 and the lowest was EUR 8.52. The average share price was EUR 9.78. The company’s market value less the shares held by Kemira was EUR 1,531.1 million at the end of September.
Acquisitions and divestitures
On July 1, 2010, Kemira closed the IPOS (Industry Park of Sweden AB) deal. The deal according to which Kemira sold IPOS to Coor Service Management AB was announced on May 24.
On August 2, 2010, Kemira announced that it had closed a deal with Albemarle to acquire the legal entity located in Teesport, Middlesbrough, United Kingdom. The site employs approximately 30 persons.
On September 6, 2010, Kemira announced that it had acquired Water Elements, LCC, through its North American subsidiary Kemira Water Solution Inc. Water Elements, LLC, started its operations in 2007 and has one production plant in Baltimore, Maryland, USA and in 2009 had a revenue of approximately USD 10 million (EUR 7 million).
On September 30, 2010, Kemira closed the Blankophor GmbH & Co. KG (German Catec GmbH) deal announced on June 23, 2010. Kemira sold its global Fluorescent Whitening Agents (FWAs) business to Blankophor. The transaction does not have any significant impact on Kemira´s financial figures.
Other events during the review period
On September 3, 2010, Kemira signed a strategic cooperation agreement with Outotec Oyj to develop, promote and support the companies’ businesses in mining applications and oil sands processing as well as associated industrial water treatment solutions. This cooperation utilizes the research programs of SWEET, the center of Water Efficiency Excellence, which Kemira established together with VTT (Technical Research Center of Finland) in March, 2010.
On September 7, 2010, Kemira announced that it will establish a manufacturing facility in Nanjing, China to enhance customer service in the growing Chinese water treatment markets. The investment is expected to be at EUR 25 million. The facility will be a state of the art regional production hub for a range of specialty process chemicals serving all of Kemira’s customer segments. The facility will be 100% owned by Kemira, and is expected to be operational in 2012.
On September 7, 2010, Kemira announced that it had agreed to form a joint venture with the Promoters of IVRCL in India. Kemira also informed that it will form a strategic alliance with Hindustan Dorr-Olivar (HDO) and IVRCL to serve Indian water treatment markets. The joint venture will include an inorganic coagulant manufacturing facility and it will be constructed in Vishakapatnam (Vizg) in the state of Andhra Pradesh in India. The manufacturing facility is expected to be operational during the second half of 2011. The joint venture is 51% owned by Kemira and 49% by the Promoters of IVRCL. The joint venture and supply agreements included in the strategic alliance are not expected to have a significant short-term financial impact on Kemira.
On September 7, 2010 Kemira changed its financial targets. Growth in revenue is expected to be more than 3% in mature markets and more than 7% in emerging markets. Gearing is expected to be lower than 60%. Operating profit margin target of above 10% and cash flow after CAPEX and dividend target remained unchanged.
Short-term risks and uncertainties
Kemira’s main short-term risks and uncertainties are connected to raw material availability and prices.
Substantial fluctuations in the world market prices of electricity and oil are reflected in Kemira’s financial results, via raw material prices and logistics costs.
Introduction of REACH legislation may decrease the available raw material options and thus increase our raw material costs. REACH registration of Kemira’s own products may also be more expensive than estimated, especially if we are unable to share the costs with other companies. Acrylamide, boric acid, borates and sodium dichromate have been added to the list of candidates for authorization under REACH. If acrylamide, which Kemira uses as a raw material for polymers, will be added to the list of substances subject to authorization under REACH, this would make its use more difficult. Boric acid, borates and sodium dichromate are mainly used in the production of pulp chemicals in Finland.
Changes in the exchange rates of key currencies can affect Kemira’s financials.
A detailed account of Kemira’s risk management principles and organization is available on the company website at http://www.kemira.com. An account of financial risks is available in the Notes to the Financial Statements 2009. Environmental and hazard risks are discussed in Kemira’s environmental report.
Outlook
Kemira’s goal is to be a leading water chemistry company. Implementation of Kemira’s water strategy has progressed well and the company has improved its profitability significantly and strengthened the balance sheet. Kemira will continue to focus on improving profitability and reinforcing positive cash flow, and the company will also increase its actions to boost growth.
The basis for growth is the expanding water chemicals markets and Kemira’s strong know-how in water quality and quantity management. Increasing water shortages, tightening legislation and customers’ needs to increase operational efficiency create opportunities for Kemira to develop new water applications for both new and current customers. Investment in research and development is a central part of Kemira’s strategy. The focus of Kemira’s R&D activities is on the development and commercialization of new innovative technologies both globally and locally.
During the current year, Kemira expects the demand to develop favorably as our customers’ demand is getting stronger. Operating profit from continuing operations, excluding non-recurring items, is expected to grow significantly from last year (2009: EUR 124.9 million).
Helsinki, 28 October 2010
Board of Directors
Financial calendar
Year-end Report January-December 2010 February 9, 2011
Annual General Meeting 2011, Helsinki, Finland March 22, 2011
Interim Report January-March 2011 May 3, 2011
Interim Report January-June 2011 July 28, 2011
Interim Report January-September 2011 October 27, 2011
All forward-looking statements in this review are based on the management’s current expectations and beliefs about future events, and actual results may differ materially from the expectations and beliefs such statements contain.
KEMIRA GROUP | ||||||||||||||||||||||
Quarterly figures are unaudited. | ||||||||||||||||||||||
All figures in this financial report have been rounded and consequently the sum of individual figures can deviate from the presented sum figure. | ||||||||||||||||||||||
This Interim Consolidated Financial Statement has been prepared in compliance with IAS 34. | ||||||||||||||||||||||
The accounting policies adopted are consistent with those of the Group’s annual financial statement 2009. | ||||||||||||||||||||||
INCOME STATEMENT | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 2009 | |||||||||||||||||
EUR million | ||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||
Revenue | 554.4 | 487.7 | 1,614.3 | 1,473.7 | 1,969.9 | |||||||||||||||||
Other operating income | 6.9 | 3.2 | 20.4 | 10.0 | 13.5 | |||||||||||||||||
Expenses | -490.8 | -426.2 | -1,433.1 | -1,315.0 | -1,776.2 | |||||||||||||||||
Depreciation, impairments | ||||||||||||||||||||||
and reversals of impairments | -24.5 | -25.7 | -72.7 | -76.3 | -97.5 | |||||||||||||||||
Operating profit | 46.0 | 39.0 | 128.9 | 92.4 | 109.7 | |||||||||||||||||
Financial income and expenses, net | -3.0 | -7.7 | -20.7 | -27.3 | -37.8 | |||||||||||||||||
Share of profit or loss of associates | 3.0 | -0.6 | 6.8 | -5.6 | -4.8 | |||||||||||||||||
Group contribution | – | – | – | – | 9.4 | |||||||||||||||||
Profit before tax | 46.0 | 30.7 | 115.0 | 59.5 | 76.5 | |||||||||||||||||
Income tax | -10.2 | -6.6 | -24.2 | -13.2 | -9.4 | |||||||||||||||||
Net profit for the period, | ||||||||||||||||||||||
continuing operations | 35.8 | 24.1 | 90.8 | 46.3 | 67.1 | |||||||||||||||||
Discontinued operations | ||||||||||||||||||||||
Net profit for the period, | ||||||||||||||||||||||
discontinued operations | – | 16.5 | 531.0 | 29.9 | 18.4 | |||||||||||||||||
Net profit for the period | 35.8 | 40.6 | 621.8 | 76.2 | 85.5 | |||||||||||||||||
Attributable to: | ||||||||||||||||||||||
Equity holders of the parent | 34.5 | 22.8 | 87.2 | 43.5 | 63.4 | |||||||||||||||||
Non-controlling interest | 1.3 | 1.3 | 3.6 | 2.8 | 3.7 | |||||||||||||||||
Net profit for the period | 35.8 | 24.1 | 90.8 | 46.3 | 67.1 | |||||||||||||||||
Earnings per share, continuing operations | ||||||||||||||||||||||
basic and diluted, EUR | 0.23 | 0.17 | 0.58 | 0.33 | 0.47 | |||||||||||||||||
Earnings per share, basic and diluted, EUR | 0.23 | 0.30 | 4.08 | 0.55 | 0.61 | |||||||||||||||||
STATEMENT OF COMPREHENSIVE INCOME | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 2009 | |||||||||||||||||
Net profit for the period | 35.8 | 40.6 | 621.8 | 76.2 | 85.5 | |||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||
– change in fair value | 3.1 | – | 0.6 | – | 3.7 | |||||||||||||||||
Exchange differences | 5.8 | 19.9 | 59.6 | 22.5 | 28.1 | |||||||||||||||||
Hedge of net investment | ||||||||||||||||||||||
in foreign entities | -2.4 | -1.7 | -11.0 | -2.5 | -3.0 | |||||||||||||||||
Cash flow hedging | 1.4 | -3.1 | 3.5 | 2.0 | 10.0 | |||||||||||||||||
Other changes | -0.3 | -0.2 | -0.6 | -0.2 | -0.4 | |||||||||||||||||
Other comprehensive income, net of tax | 7.6 | 14.9 | 52.1 | 21.8 | 38.4 | |||||||||||||||||
Total comprehensive income | 43.4 | 55.5 | 673.9 | 98.0 | 123.9 | |||||||||||||||||
Attributable to: | ||||||||||||||||||||||
Equity holders of the parent | 42.4 | 54.1 | 669.4 | 94.9 | 119.9 | |||||||||||||||||
Non-controlling interest | 1.0 | 1.4 | 4.5 | 3.1 | 4.0 | |||||||||||||||||
Total comprehensive income | 43.4 | 55.5 | 673.9 | 98.0 | 123.9 | |||||||||||||||||
BALANCE SHEET | ||||||||||||||||||||||
EUR million | ||||||||||||||||||||||
ASSETS | 30.9.2010 | 31.12.2009 * | ||||||||||||||||||||
Non-current assets | ||||||||||||||||||||||
Goodwill | 599.7 | 658.0 | ||||||||||||||||||||
Other intangible assets | 70.7 | 102.2 | ||||||||||||||||||||
Property, plant and equipment | 664.1 | 761.5 | ||||||||||||||||||||
Holdings in associates | 137.1 | 131.1 | ||||||||||||||||||||
Available-for-sale investments | 264.0 | 166.2 | ||||||||||||||||||||
Deferred tax assets | 17.9 | 18.8 | ||||||||||||||||||||
Other investments | 10.3 | 13.2 | ||||||||||||||||||||
Defined benefit pension receivables | 38.3 | 35.3 | ||||||||||||||||||||
Total non-current assets | 1,802.1 | 1,886.3 | ||||||||||||||||||||
Current assets | ||||||||||||||||||||||
Inventories | 192.2 | 246.5 | ||||||||||||||||||||
Interest-bearing receivables | 3.0 | 1.4 | ||||||||||||||||||||
Accounts receivables and other receivables | 386.2 | 400.6 | ||||||||||||||||||||
Current tax asset | 7.8 | 7.3 | ||||||||||||||||||||
Money market investments | 41.6 | 202.1 | ||||||||||||||||||||
Cash and cash equivalents | 57.1 | 72.5 | ||||||||||||||||||||
Total current assets | 687.9 | 930.4 | ||||||||||||||||||||
Total assets | 2,490.0 | 2,816.7 | ||||||||||||||||||||
EQUITY AND LIABILITIES | 30.9.2010 | 31.12.2009 * | ||||||||||||||||||||
Equity attributable to equity holders of the parent | 1,279.8 | 1,249.5 | ||||||||||||||||||||
Non-controlling interest | 24.4 | 19.3 | ||||||||||||||||||||
Total equity | 1,304.2 | 1,268.8 | ||||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||||
Interest-bearing non-current liabilities | 493.3 | 512.6 | ||||||||||||||||||||
Deferred tax liabilities | 79.2 | 90.1 | ||||||||||||||||||||
Pension liabilities | 55.5 | 70.4 | ||||||||||||||||||||
Provisions | 53.8 | 55.6 | ||||||||||||||||||||
Total non-current liabilities | 681.8 | 728.7 | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||
Interest-bearing current liabilities | 164.8 | 437.6 | ||||||||||||||||||||
Interest-free current liabilities | 319.9 | 369.1 | ||||||||||||||||||||
Current tax liabilities | 8.6 | 0.5 | ||||||||||||||||||||
Provisions | 10.7 | 12.0 | ||||||||||||||||||||
Total current liabilities | 504.0 | 819.2 | ||||||||||||||||||||
Total liabilities | 1,185.8 | 1,547.9 | ||||||||||||||||||||
Total equity and liabilities | 2,490.0 | 2,816.7 | ||||||||||||||||||||
* Includes Tikkurila | ||||||||||||||||||||||
CONSOLIDATED CASH FLOW STATEMENT | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 2009 | |||||||||||||||||
EUR million | ||||||||||||||||||||||
Cash flow from operating activities | ||||||||||||||||||||||
Profit for the period | 34.5 | 39.2 | 618.2 | 73.4 | 81.8 | |||||||||||||||||
Total adjustments | 31.0 | 52.9 | -424.0 | 153.9 | 206.9 | |||||||||||||||||
Operating profit before net working capital | 65.5 | 92.1 | 194.2 | 227.3 | 288.7 | |||||||||||||||||
Change in net working capital | -23.3 | 59.4 | -75.3 | 48.2 | 74.4 | |||||||||||||||||
Cash generated from operations | 42.2 | 151.5 | 118.9 | 275.5 | 363.1 | |||||||||||||||||
Financing items | 8.7 | -5.3 | -23.3 | -25.9 | -49.0 | |||||||||||||||||
Taxes paid | -6.2 | -7.1 | -16.2 | -22.8 | -26.3 | |||||||||||||||||
Net cash generated from | ||||||||||||||||||||||
operating activities | 44.7 | 139.1 | 79.4 | 226.8 | 287.8 | |||||||||||||||||
Cash flow from investing activities | ||||||||||||||||||||||
Capital expenditure for acquisitions | -31.6 | 0.1 | -31.6 | -3.6 | -3.7 | |||||||||||||||||
Other capital expenditure | -15.2 | -14.4 | -46.4 | -50.5 | -82.2 | |||||||||||||||||
Proceeds from sale of assets * | 8.4 | 1.0 | -8.6 | 2.6 | 2.4 | |||||||||||||||||
Change in other investments * | 0.3 | – | 148.4 | – | -2.1 | |||||||||||||||||
Net cash used in investing activities | -38.1 | -13.3 | 61.8 | -51.5 | -85.6 | |||||||||||||||||
Cash flow before financing activities | 6.6 | 125.8 | 141.2 | 175.3 | 202.2 | |||||||||||||||||
Cash flow from financing activities | ||||||||||||||||||||||
Proceeds from non-current | ||||||||||||||||||||||
interest-bearing liabilities | 6.6 | -31.1 | 56.0 | 25.5 | 228.3 | |||||||||||||||||
Repayments from non-current | ||||||||||||||||||||||
interest-bearing liabilities | -15.4 | -89.1 | -40.6 | -107.3 | -249.7 | |||||||||||||||||
Short-term financing, | ||||||||||||||||||||||
net (increase +, decrease -) | -24.9 | 47.7 | -279.7 | 36.8 | -183.6 | |||||||||||||||||
Dividends paid | -0.2 | -0.5 | -44.9 | -33.5 | -33.5 | |||||||||||||||||
Share issue | – | – | – | – | 200.0 | |||||||||||||||||
Other financing items | 8.5 | -4.5 | -14.2 | -5.1 | -11.3 | |||||||||||||||||
Net cash used in financing activities | -25.4 | -77.5 | -323.4 | -83.6 | -49.8 | |||||||||||||||||
Net change in cash and cash equivalents | -18.8 | 48.3 | -182.2 | 91.7 | 152.4 | |||||||||||||||||
Cash and cash equivalents at end of period | 98.7 | 212.9 | 98.7 | 212.9 | 274.6 | |||||||||||||||||
Exchange gains (+) / losses (-) on cash | ||||||||||||||||||||||
and cash equivalents | 2.2 | -3.2 | -6.3 | -1.8 | -2.8 | |||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||
at beginning of period | 119.7 | 161.4 | 274.6 | 119.4 | 119.4 | |||||||||||||||||
Net change in cash and cash equivalents | -18.8 | 48.3 | -182.2 | 91.7 | 152.4 | |||||||||||||||||
* 1-9/2010 include cash and cash equivalents transferred to Tikkurila as well as the loan repayment from Tikkurila | ||||||||||||||||||||||
Includes Tikkurila until March 25, 2010 | ||||||||||||||||||||||
STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||||||
EUR million | ||||||||||||||||||||||
Equity attributable to equity holders of the parent | ||||||||||||||||||||||
Capital | Un- | |||||||||||||||||||||
paid-in in | Fair value | restricted | ||||||||||||||||||||
Share | excess of | and other | equity | |||||||||||||||||||
capital | par value | reserves | reserve | |||||||||||||||||||
Shareholders’ equity at January 1, 2009 | 221.8 | 257.9 | 81.4 | – | ||||||||||||||||||
Net profit for the period | – | – | – | – | ||||||||||||||||||
Other comprehensive income, net of tax | – | – | 2.1 | – | ||||||||||||||||||
Total comprehensive income | – | – | 2.1 | – | ||||||||||||||||||
Dividends paid | – | – | – | – | ||||||||||||||||||
Share-based compensations | – | – | – | – | ||||||||||||||||||
Changes due to business combinations | – | – | – | – | ||||||||||||||||||
Transfers in equity | – | – | 0.2 | – | ||||||||||||||||||
Shareholders’ equity at September 30, 2009 | 221.8 | 257.9 | 83.7 | – | ||||||||||||||||||
Shareholders’ equity at January 1, 2010 | ||||||||||||||||||||||
Net profit for the period | 221.8 | 257.9 | 95.8 | 196.3 | ||||||||||||||||||
Other comprehensive income, net of tax | – | – | – | – | ||||||||||||||||||
Total comprehensive income | – | – | 4.0 | – | ||||||||||||||||||
Dividends paid | – | – | 4.0 | – | ||||||||||||||||||
Treasury shares issued to target group | – | – | – | – | ||||||||||||||||||
of share-based incentive plan | – | – | – | – | ||||||||||||||||||
Share-based compensations | – | – | – | – | ||||||||||||||||||
Changes due to business combinations | – | – | – | – | ||||||||||||||||||
Shareholders’ equity at September 30, 2010 | 221.8 | 257.9 | 99.8 | 196.3 | ||||||||||||||||||
Equity attributable to equity holders of the parent | ||||||||||||||||||||||
Exchange | Treasury | Retained | ||||||||||||||||||||
differences | shares | earnings | ||||||||||||||||||||
Shareholders’ equity at January 1, 2009 | -104.6 | -25.9 | 532.2 | |||||||||||||||||||
Net profit for the period | – | – | 73.4 | |||||||||||||||||||
Other comprehensive income, net of tax | 19.5 | – | -0.1 | |||||||||||||||||||
Total comprehensive income | 19.5 | – | 73.3 | |||||||||||||||||||
Dividends paid | – | – | -30.3 | |||||||||||||||||||
Share-based compensations | – | – | 0.6 | |||||||||||||||||||
Changes due to business combinations | – | – | – | |||||||||||||||||||
Transfers in equity | – | – | -0.2 | |||||||||||||||||||
Shareholders’ equity at September 30, 2009 | -85.1 | -25.9 | 575.6 | |||||||||||||||||||
Shareholders’ equity at January 1, 2010 | -79.9 | -25.9 | 583.6 | |||||||||||||||||||
Net profit for the period | – | – | 618.2 | |||||||||||||||||||
Other comprehensive income, net of tax | 47.5 | – | -0.3 | |||||||||||||||||||
Total comprehensive income | 47.5 | – | 617.9 | |||||||||||||||||||
Dividends paid | – | – | -640.3 | |||||||||||||||||||
Treasury shares issued to target group | ||||||||||||||||||||||
of share-based incentive plan | – | 1.7 | – | |||||||||||||||||||
Share-based compensations | – | – | -0.3 | |||||||||||||||||||
Changes due to business combinations | – | – | -0.3 | |||||||||||||||||||
Shareholders’ equity at September 30, 2010 | -32.4 | -24.2 | 560.6 | |||||||||||||||||||
Non- | ||||||||||||||||||||||
controlling | Total | |||||||||||||||||||||
interests | ||||||||||||||||||||||
Shareholders’ equity at January 1, 2009 | 13.2 | 976.0 | ||||||||||||||||||||
Net profit for the period | 2.8 | 76.2 | ||||||||||||||||||||
Other comprehensive income, net of tax | 0.3 | 21.8 | ||||||||||||||||||||
Total comprehensive income | 3.1 | 98.0 | ||||||||||||||||||||
Dividends paid | -3.2 | -33.5 | ||||||||||||||||||||
Share-based compensations | – | 0.6 | ||||||||||||||||||||
Changes due to business combinations | 5.2 | 5.2 | ||||||||||||||||||||
Transfers in equity | – | 0.0 | ||||||||||||||||||||
Shareholders’ equity at September 30, 2009 | 18.3 | 1,046.3 | ||||||||||||||||||||
Shareholders’ equity at January 1, 2010 | 19.2 | 1,268.8 | ||||||||||||||||||||
Net profit for the period | 3.6 | 621.8 | ||||||||||||||||||||
Other comprehensive income, net of tax | 0.9 | 52.1 | ||||||||||||||||||||
Total comprehensive income | 4.5 | 673.9 | ||||||||||||||||||||
Dividends paid | -3.9 | -644.2 | ||||||||||||||||||||
Treasury shares issued to target group | ||||||||||||||||||||||
of share-based incentive plan | – | 1.7 | ||||||||||||||||||||
Share-based compensations | – | -0.3 | ||||||||||||||||||||
Changes due to business combinations | 4.6 | 4.3 | ||||||||||||||||||||
Shareholders’ equity at September 30, 2010 | 24.4 | 1,304.2 | ||||||||||||||||||||
Kemira had in its possession 3,601,610 of its treasury shares on September 30, 2010. The average share price of treasury shares was EUR 6.73 and they represented 2.3% of the share capital and the aggregate number of votes conferred by all shares. The aggregate par value of the treasury shares is EUR 5.1 million. | ||||||||||||||||||||||
The capital paid-in in excess of par value is a reserve accumulating through subscriptions entitled by the Management stock option program 2001 and is based on the Finnish Companies Act (734/1978), which does no longer change. According to IFRS, the Fair Value reserve is a reserve accumulating based on available-for-sale financial assets (shares) measured at fair value and hedge accounting. Other reserves are required by local legislation. The unrestricted equity reserve includes other equity type investments and the subscription price of shares to the extent that it will not, based on a specific decision, be recognized in share capital. | ||||||||||||||||||||||
KEY FIGURES | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 2009 | |||||||||||||||||
Earnings per share, continuing operations, | ||||||||||||||||||||||
basic and diluted, EUR ** | 0.23 | 0.17 | 0.58 | 0.33 | 0.47 | |||||||||||||||||
Earnings per share, discontinued | ||||||||||||||||||||||
operations, basic and diluted, EUR ** | – | 0.13 | 3.50 | 0.22 | 0.14 | |||||||||||||||||
Cash flow from operations per share, | ||||||||||||||||||||||
EUR ** | 0.29 | 1.04 | 0.52 | 1.70 | 2.13 | |||||||||||||||||
Capital expenditure, EUR million | 46.6 | 14.3 | 81.3 | 54.1 | 85.9 | |||||||||||||||||
Capital expenditure / revenue, % | 8.4 | 2.2 | 4.7 | 2.8 | 3.4 | |||||||||||||||||
Average number of shares (1000), | ||||||||||||||||||||||
basic * | 151,684 | 133,309 | 151,684 | 133,309 | 134,824 | |||||||||||||||||
Average number of shares (1000), | ||||||||||||||||||||||
diluted * | 151,741 | 133,309 | 151,741 | 133,309 | 135,085 | |||||||||||||||||
Number of shares at end | ||||||||||||||||||||||
of period (1000), basic * | 151,741 | 133,309 | 151,741 | 133,309 | 151,488 | |||||||||||||||||
Number of shares at end of | ||||||||||||||||||||||
period (1000), diluted * | 151,741 | 133,309 | 151,741 | 133,309 | 151,748 | |||||||||||||||||
Equity per share, attributable to | ||||||||||||||||||||||
equity holders of the parent, EUR ** | 8.43 | 7.71 | 8.25 | |||||||||||||||||||
Equity ratio, % | 52.5 | 37.4 | 45.1 | |||||||||||||||||||
Gearing, % | 42.9 | 86.6 | 53.2 | |||||||||||||||||||
Interest-bearing net liabilities, EUR million | 559.4 | 906.2 | 675.6 | |||||||||||||||||||
Personnel (average) | 5,833 | 8,954 | 8,843 | |||||||||||||||||||
* Number of shares outstanding, excluding the number of shares bought back. | ||||||||||||||||||||||
** Rights offering restatement year 2009 | ||||||||||||||||||||||
REVENUE BY BUSINESS AREA | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 2009 | |||||||||||||||||
EUR million | ||||||||||||||||||||||
Paper external | 259.9 | 229.9 | 741.3 | 676.0 | 905.2 | |||||||||||||||||
Paper Intra-Group | – | 0.3 | – | 0.8 | 1.2 | |||||||||||||||||
Municipal & Industrial external | 164.0 | 155.6 | 476.1 | 466.7 | 607.3 | |||||||||||||||||
Municipal & Industrial Intra-Group | – | -0.1 | – | 0.2 | 0.2 | |||||||||||||||||
Oil & Mining external | 80.2 | 55.9 | 224.9 | 165.2 | 234.4 | |||||||||||||||||
Oil & Mining Intra-Group | – | 0.1 | – | 0.4 | 0.6 | |||||||||||||||||
Other external | 50.3 | 46.3 | 172.0 | 165.8 | 223.0 | |||||||||||||||||
Other Intra-Group | 0.0 | 19.4 | 0.1 | 56.8 | 77.4 | |||||||||||||||||
Eliminations | 0.0 | -19.7 | -0.1 | -58.2 | -79.4 | |||||||||||||||||
Total, continuing operations | 554.4 | 487.7 | 1,614.3 | 1,473.7 | 1,969.9 | |||||||||||||||||
Tikkurila, external, | ||||||||||||||||||||||
discontinued operations | – | 158.1 | 108.2 | 431.7 | 530.2 | |||||||||||||||||
Total | 554.4 | 645.8 | 1,722.5 | 1,905.4 | 2,500.1 | |||||||||||||||||
OPERATING PROFIT BY BUSINESS AREA | 7-9/2010 | 7-9/2009 | 1-9/2010 | 1-9/2009 | 2009 | |||||||||||||||||
EUR million | ||||||||||||||||||||||
Paper | 24.0 | 14.8 | 60.2 | 30.3 | 40.1 | |||||||||||||||||
Municipal & Industrial | 14.5 | 24.9 | 43.9 | 53.5 | 59.8 | |||||||||||||||||
Oil & Mining | 8.8 | 3.5 | 25.5 | 8.7 | 19.9 | |||||||||||||||||
Other | -1.3 | -4.2 | -0.7 | -0.1 | -10.1 | |||||||||||||||||
Eliminations | – | – | – | – | – | |||||||||||||||||
Total, continuing operations | 46.0 | 39.0 | 128.9 | 92.4 | 109.7 | |||||||||||||||||
Tikkurila, discontinued operations | – | 26.3 | 5.3 | 52.4 | 47.7 | |||||||||||||||||
Total | 46.0 | 65.3 | 134.2 | 144.8 | 157.4 | |||||||||||||||||
CHANGES IN PROPERTY, PLANT AND EQUIPMENT | 1-9/2010 | 1-9/2009 | 2009 | |||||||||||||||||||
EUR million | ||||||||||||||||||||||
Carrying amount at beginning of year | 761.5 | 765.7 | 765.7 | |||||||||||||||||||
Acquisitions of subsidiaries | 19.4 | 0.1 | 0.1 | |||||||||||||||||||
Increases | 40.1 | 46.9 | 76.1 | |||||||||||||||||||
Decreases | -4.9 | -2.2 | -2.0 | |||||||||||||||||||
Disposal of subsidiaries | -116.3 | – | – | |||||||||||||||||||
Depreciation, impairments | ||||||||||||||||||||||
and reversals of impairments | -66.2 | -73.8 | -88.9 | |||||||||||||||||||
Exchange rate differences and | ||||||||||||||||||||||
other changes | 30.5 | 5.9 | 10.5 | |||||||||||||||||||
Net carrying amount at end of period | 664.1 | 742.6 | 761.5 | |||||||||||||||||||
CHANGES IN INTANGIBLE ASSETS | 1-9/2010 | 1-9/2009 | 2009 | |||||||||||||||||||
EUR million | ||||||||||||||||||||||
Carrying amount at beginning of year | 760.2 | 766.7 | 766.7 | |||||||||||||||||||
Acquisitions of subsidiaries | 6.7 | 2.4 | 2.4 | |||||||||||||||||||
Increases | 9.2 | 8.6 | 11.6 | |||||||||||||||||||
Decreases | -3.4 | – | -0.1 | |||||||||||||||||||
Disposal of subsidiaries | -101.4 | – | – | |||||||||||||||||||
Depreciation and impairments | -11.1 | -16.7 | -27.6 | |||||||||||||||||||
Exchange rate differences and | ||||||||||||||||||||||
other changes | 10.2 | 3.4 | 7.2 | |||||||||||||||||||
Net carrying amount at end of period | 670.4 | 764.4 | 760.2 | |||||||||||||||||||
CONTINGENT LIABILITIES | 30.9.2010 | 31.12.2009 | ||||||||||||||||||||
EUR million | ||||||||||||||||||||||
Mortgages | 13.9 | 37.5 | ||||||||||||||||||||
Assets pledged | ||||||||||||||||||||||
On behalf of own commitments | 6.2 | 5.5 | ||||||||||||||||||||
Guarantees | ||||||||||||||||||||||
On behalf of own commitments | 43.0 | 45.2 | ||||||||||||||||||||
On behalf of associates | 0.9 | 1.0 | ||||||||||||||||||||
On behalf of others | 4.4 | 9.2 | ||||||||||||||||||||
Operating leasing liabilities | ||||||||||||||||||||||
Maturity within one year | 21.6 | 26.0 | ||||||||||||||||||||
Maturity after one year | 152.2 | 137.3 | ||||||||||||||||||||
Other obligations | ||||||||||||||||||||||
On behalf of own commitments | 1.0 | 1.7 | ||||||||||||||||||||
On behalf of associates | 1.6 | 1.8 | ||||||||||||||||||||
Major off-balance sheet investment commitments | ||||||||||||||||||||||
There were no major contractual commitments for the acquisition of property, plant and equipment on September 30, 2010. | ||||||||||||||||||||||
Litigation | ||||||||||||||||||||||
On August 19, 2009, Kemira Oyj received a summons stating that Cartel Damage Claims Hydrogen Peroxide SA (CDC) had filed an action against six hydrogen peroxide manufacturers, including Kemira, for violations of competition law applicable to the hydrogen peroxide business. In its claim, Cartel Damage Claims Hydrogen Peroxide SA seeks an order from the Regional Court of Dortmund in Germany to obtain an unabridged and full copy of the decision of the European Commission, dated May 3, 2006, and demands that the defendants, including Kemira, are jointly and severally ordered to pay damages together with accrued interest on the basis of such decision. | ||||||||||||||||||||||
Cartel Damage Claims Hydrogen Peroxide SA states that it will specify the amount of the damages at a later stage after the full copy of the decision of the European Commission has been obtained by it. In order to provide initial guidance as to the amount of such damages, Cartel Damage Claims Hydrogen Peroxide SA presents in its claim a preliminary calculation of the alleged overcharge having been paid to the defendants as a result of the violation of the applicable competition rules by the parties which have assigned and sold their claim to Cartel Damage Claims Hydrogen Peroxide SA. Such alleged overcharge, together with accrued interest until December 31, 2008, is stated to be approximately EUR 641.3 million. The process is currently pending in the Regional Court of Dortmund, Germany. | ||||||||||||||||||||||
Kemira defends against the claim of Cartel Damage Claims Hydrogen Peroxide SA. However, Kemira is currently not in a position to make any estimate regarding the duration or the likely outcome of the process. No assurance can be given as to the outcome of the process, and an unfavorable judgment against Kemira could have a material adverse effect on Kemira’s business, financial condition or results of operations. Due to its extensive international operations the Group, in addition to the CDC claim, is involved in a number of other legal proceedings incidental to these operations and it does not expect the outcome of these other currently pending legal proceedings to have materially adverse effect upon its consolidated results or financial position. | ||||||||||||||||||||||
RELATED PARTY | ||||||||||||||||||||||
Transactions with related parties have not changed materially after annual closing 2009. | ||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | ||||||||||||||||||||||
EUR million | ||||||||||||||||||||||
30.9.2010 | 31.12.2009 | |||||||||||||||||||||
Nominal | Fair | Nominal | Fair | |||||||||||||||||||
value | value | value | value | |||||||||||||||||||
Currency instruments | ||||||||||||||||||||||
Forward contracts | 764.3 | 11.1 | 549.5 | 1.5 | ||||||||||||||||||
of which hedges of | ||||||||||||||||||||||
net investment in a foreign operation | – | – | – | – | ||||||||||||||||||
Currency options | ||||||||||||||||||||||
Bought | – | – | – | – | ||||||||||||||||||
Sold | – | – | – | – | ||||||||||||||||||
Currency swaps | – | – | 29.3 | -3.9 | ||||||||||||||||||
Interest rate instruments | ||||||||||||||||||||||
Interest rate swaps | 307.7 | -6.9 | 354.7 | -9.4 | ||||||||||||||||||
of which cash flow hedge | 270.4 | -5.5 | 307.8 | -7.4 | ||||||||||||||||||
Interest rate options | ||||||||||||||||||||||
Bought | 10.0 | – | 10.0 | – | ||||||||||||||||||
Sold | – | – | – | – | ||||||||||||||||||
Bond futures | 10.0 | -0.1 | 10.0 | 0.2 | ||||||||||||||||||
of which open | 10.0 | -0.1 | 10.0 | 0.2 | ||||||||||||||||||
Other instruments | GWh | Fair value | GWh | Fair value | ||||||||||||||||||
Fair | Fair | |||||||||||||||||||||
Electricity forward contracts, bought | 956.6 | 4.9 | 1,156.7 | 1.2 | ||||||||||||||||||
of which cash flow hedge | 904.0 | 4.8 | 1,051.6 | 1.1 | ||||||||||||||||||
Electricity forward contracts, sold | 52.6 | -0.1 | – | – | ||||||||||||||||||
of which cash flow hedge | – | – | – | – | ||||||||||||||||||
Fair | Fair | |||||||||||||||||||||
K tons | value | K tons | value | |||||||||||||||||||
Natural gas hedging | 11.3 | -0.1 | 14.8 | -0.2 | ||||||||||||||||||
of which cash flow hedge | 11.3 | -0.1 | 14.8 | -0.2 | ||||||||||||||||||
Salt derivatives | 160.0 | – | 160.0 | – | ||||||||||||||||||
The fair values of the instruments which are publicly traded are based on market valuation on the date of reporting. Other instruments have been valuated based on net present values of future cash flows. Valuation models have been used to estimate the fair values of options. | ||||||||||||||||||||||
Nominal values of the financial instruments do not necessarily correspond to the actual cash flows between the counterparties and do not therefore give a fair view of the risk position of the Group. | ||||||||||||||||||||||
QUARTERLY INFORMATION | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||||
EUR million | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||
Continuing operations | ||||||||||||||||||||||
Revenue | ||||||||||||||||||||||
Paper external | 229.2 | 229.9 | 222.2 | 223.9 | ||||||||||||||||||
Paper Intra-Group | 0.4 | 0.3 | -0.6 | 1.1 | ||||||||||||||||||
Municipal & Industrial external | 140.6 | 155.6 | 160.4 | 150.7 | ||||||||||||||||||
Municipal & Industrial Intra-Group | – | -0.1 | 0.3 | – | ||||||||||||||||||
Oil & Mining external | 69.2 | 55.9 | 52.3 | 57.0 | ||||||||||||||||||
Oil & Mining Intra-Group | 0.2 | 0.1 | 2.9 | -2.6 | ||||||||||||||||||
Other external | 57.2 | 46.3 | 53.6 | 65.9 | ||||||||||||||||||
Other Intra-Group | 20.6 | 19.4 | 18.1 | 19.3 | ||||||||||||||||||
Eliminations | -21.2 | -19.7 | -20.7 | -17.8 | ||||||||||||||||||
Total | 496.2 | 487.7 | 488.5 | 497.5 | ||||||||||||||||||
Operating profit | ||||||||||||||||||||||
Paper | 9.8 | 14.8 | 8.0 | 7.5 | ||||||||||||||||||
Municipal & Industrial | 6.3 | 24.9 | 18.2 | 10.4 | ||||||||||||||||||
Oil & Mining | 11.2 | 3.5 | 3.2 | 2.0 | ||||||||||||||||||
Other | -10.0 | -4.2 | -0.1 | 4.2 | ||||||||||||||||||
Eliminations | – | – | – | – | ||||||||||||||||||
Total | 17.3 | 39.0 | 29.3 | 24.1 | ||||||||||||||||||
Operating profit, excluding non-recurring items | ||||||||||||||||||||||
Paper | 14.6 | 14.8 | 8.0 | 7.5 | ||||||||||||||||||
Municipal & Industrial | 12.9 | 24.9 | 18.2 | 10.4 | ||||||||||||||||||
Oil & Mining | 5.5 | 3.5 | 3.2 | 2.0 | ||||||||||||||||||
Other | -0.5 | -4.2 | -0.1 | 4.2 | ||||||||||||||||||
Eliminations | – | – | – | – | ||||||||||||||||||
Total | 32.5 | 39.0 | 29.3 | 24.1 | ||||||||||||||||||
2010 | 2010 | 2010 | ||||||||||||||||||||
Q3 | Q2 | Q1 | ||||||||||||||||||||
Revenue | ||||||||||||||||||||||
Paper external | 259.9 | 247.4 | 234.0 | |||||||||||||||||||
Paper Intra-Group | – | – | – | |||||||||||||||||||
Municipal & Industrial external | 164.0 | 163.7 | 148.4 | |||||||||||||||||||
Municipal & Industrial Intra-Group | – | – | – | |||||||||||||||||||
Oil & Mining external | 80.2 | 78.1 | 66.6 | |||||||||||||||||||
Oil & Mining Intra-Group | – | – | – | |||||||||||||||||||
Other external | 50.3 | 56.0 | 65.7 | |||||||||||||||||||
Other Intra-Group | – | – | 0.1 | |||||||||||||||||||
Eliminations | – | – | -0.1 | |||||||||||||||||||
Total | 554.4 | 545.2 | 514.7 | |||||||||||||||||||
Operating profit | ||||||||||||||||||||||
Paper | 24.0 | 21.0 | 15.2 | |||||||||||||||||||
Municipal & Industrial | 14.5 | 14.8 | 14.6 | |||||||||||||||||||
Oil & Mining | 8.8 | 10.3 | 6.4 | |||||||||||||||||||
Other | -1.3 | -1.6 | 2.2 | |||||||||||||||||||
Eliminations | – | – | – | |||||||||||||||||||
Total | 46.0 | 44.5 | 38.4 | |||||||||||||||||||
Operating profit, excluding non-recurring items | ||||||||||||||||||||||
Paper | 20.5 | 18.3 | 15.2 | |||||||||||||||||||
Municipal & Industrial | 14.5 | 15.6 | 16.7 | |||||||||||||||||||
Oil & Mining | 8.8 | 6.9 | 6.4 | |||||||||||||||||||
Other | -1.3 | -0.3 | 0.8 | |||||||||||||||||||
Eliminations | – | – | – | |||||||||||||||||||
Total | 42.5 | 40.5 | 39.1 | |||||||||||||||||||
DEFINITIONS OF KEY FIGURES | ||||||||||||||||||||||
Earnings per share (EPS): | Equity ratio, %: | |||||||||||||||||||||
Net profit attributable to | Total equity x 100 / | |||||||||||||||||||||
equity holders | Total assets – prepayments | |||||||||||||||||||||
of the parent / | received | |||||||||||||||||||||
Average number of shares | ||||||||||||||||||||||
Cash flow from operations: | Gearing, %: | |||||||||||||||||||||
Cash flow from operations, | Interest-bearing net | |||||||||||||||||||||
after change in | liabilities x 100 / | |||||||||||||||||||||
net working capital | Total equity | |||||||||||||||||||||
and before investing | ||||||||||||||||||||||
activities | ||||||||||||||||||||||
Cash flow from operations | Interest-bearing net liabilities: | |||||||||||||||||||||
per share: | Interest-bearing liabilities – | |||||||||||||||||||||
Cash flow from operations / | money market investments – | |||||||||||||||||||||
Average number of shares | cash and cash equivalents | |||||||||||||||||||||
Equity per share: | Return on capital employed | |||||||||||||||||||||
Equity attributable to equity | (ROCE), %: | |||||||||||||||||||||
holders of the parent at | Operating profit + share of profit | |||||||||||||||||||||
end of period / | or loss of associates x 100 / | |||||||||||||||||||||
Number of shares at | Capital employed 1) 2) | |||||||||||||||||||||
end of period | ||||||||||||||||||||||
1) Average | ||||||||||||||||||||||
2) Net working capital + property, plant and equipment available for use + intangible assets available for use + investments in associates | ||||||||||||||||||||||
DISCONTINUED OPERATIONS | ||||||||||||||||||||||
Trading with Tikkurila Oyj’s share began on NASDAQ OMX Helsinki Oy on March 26, 2010 and Tikkurila was separated from Kemira Oyj. Tikkurila comprised own segment in Kemira. | ||||||||||||||||||||||
On March 16, 2010 Kemira’s Annual General Meeting decided that each four Kemira’s shares entitle their holder to receive one share of Tikkurila as a dividend. Kemira distributed a total of 37,933,097 Tikkurila shares as dividend to its shareholders which corresponds with 86% of Tikkurila’s shares and votes. Kemira held a 14% non-controlling interest share in Tikkurila. | ||||||||||||||||||||||
INCOME STATEMENT | 1.1.- 25.3.2010 | 1.1. – 31.12.2009 | ||||||||||||||||||||
EUR million | ||||||||||||||||||||||
Revenue | 108.2 | 530.2 | ||||||||||||||||||||
Other operating income | 0.4 | 1.5 | ||||||||||||||||||||
Expenses | -98.6 | -465.2 | ||||||||||||||||||||
Depreciation, impairments and reversals of impairments | -4.7 | -18.8 | ||||||||||||||||||||
Operating profit | 5.3 | 47.7 | ||||||||||||||||||||
Financial income and expenses, net | -1.6 | -12.0 | ||||||||||||||||||||
Share of profit or loss of associates | – | 0.1 | ||||||||||||||||||||
Group contribution | – | -9.4 | ||||||||||||||||||||
Profit before tax | 3.7 | 26.4 | ||||||||||||||||||||
Income tax | -1.9 | -8.0 | ||||||||||||||||||||
Net profit for the period | 1.8 | 18.4 | ||||||||||||||||||||
Profit for Tikkurila spin off | 529.2 | |||||||||||||||||||||
Net profit for the period, discontinued operations | 531.0 | |||||||||||||||||||||
Attributable to, discontinued operations: | ||||||||||||||||||||||
Equity holders of the parent | 1.8 | |||||||||||||||||||||
Non-controlling interest | 0.0 | |||||||||||||||||||||
Net profit for the period | 1.8 | |||||||||||||||||||||
Earnings per share, discontinued operations, | ||||||||||||||||||||||
basic and diluted, EUR | 3.50 | 0.14 | ||||||||||||||||||||
CASH FLOW | 1.1.- 25.3.2010 | 1.1. – 31.12.2009 | ||||||||||||||||||||
EUR million | ||||||||||||||||||||||
Cash flow from operating activities | -29.0 | 62.5 | ||||||||||||||||||||
Cash flow from investing activities | -1.9 | -17.1 | ||||||||||||||||||||
Cash flow from financing activities | 24.9 | -53.1 | ||||||||||||||||||||
Net change in cash and cash equivalents | -6.0 | -7.7 | ||||||||||||||||||||
The effect of paying Tikkurila as dividend on Group’s financial position | ||||||||||||||||||||||
25.3.2010 | 31.12.2009 | |||||||||||||||||||||
Non-current assets | 230.0 | 224.6 | ||||||||||||||||||||
Receivables | 222.1 | 178.5 | ||||||||||||||||||||
Non-current liabilities | -164.0 | -140.6 | ||||||||||||||||||||
Current liabilities | -132.6 | -118.6 | ||||||||||||||||||||
Assets and liabilities, net | 155.5 | 143.9 | ||||||||||||||||||||
Expenses paid in cash | -10.4 | |||||||||||||||||||||
Cash and cash equivalents of discontinued operations | -19.2 | |||||||||||||||||||||
The effect on cash flow | -29.6 | |||||||||||||||||||||
BUSINESS COMBINATIONS | ||||||||||||||||||||||
On August 2, 2010, Kemira announced that it has completed the negotiations with Albamarle on July 30, 2010 and closed a deal to acquire the legal entity located in Teesport, Middlesbrough, United Kingdom. The site employs approximately 30 persons. | ||||||||||||||||||||||
On September 6, 2010, Kemira announced that it had acquired Water Elements, LCC, through its North American subsidiary Kemira Water Solution Inc. Water Elements, LLC, started its operations in 2007 and has one production plant in Baltimore, Maryland, USA and in 2009 had a revenue of approximately USD 10 million (EUR 7 million). | ||||||||||||||||||||||
Purchase price for the acquisitions was EUR 31.6 million.The acquisitions are accounted for using provisional amounts. Kemira has a period of 12 months to finalize the acquisitions. The acquired companies are fully owned (100%) by Kemira Group. |