Kemira Oyj's Interim Report January-June 2015: Revenue growth with improved profitability

Kemira Oyj
Stock Exhange Release
July 22, 2015 at 2.30 pm (CET+1)


This is a summary of the January - June 2015 Interim report. The complete January - June 2015 Interim report with tables is attached to this release and available at www.kemira.com/investors. 

Second quarter:

• Revenue increased 15% to EUR 594.8 million (518.2) supported by the acquisition of AkzoNobel's paper chemicals business, completed on May 4, and favorable currency exchange rates. Revenues in local currencies, excluding acquisitions and divestments remained largerly unchanged.
• Operative EBITDA increased 24% to EUR 74.7 million (60.2) with an improved margin of 12.6% (11.6%).

January-June:

• Revenue increased 10% to EUR 1,147.8 million (1,048.1).
• Operative EBITDA increased 20% to EUR 141.1 million (117.7) with a margin of 12.3% (11.2%).
• Operative earnings per share increased 10% to EUR 0.32 (0.29).
• Kemira's outlook for 2015 is updated to include the acquisition of AkzoNobel's paper chemicals business. Kemira expects its revenue and operative EBITDA in 2015 to increase compared to 2014.  

Kemira's President and CEO Jari Rosendal:

"We had a strong second quarter with 15% revenue growth and improved operative EBITDA margin of 12.6%. Favorable currency exchange rates continued to contribute to the revenue growth. The acquired AkzoNobel's paper chemicals business has been consolidated since May 2015. We have succeeded well with business continuity and integration has started according to plan. Earlier communicated synergies are expected to start showing towards the end of the year.

Organic growth in the Paper segment continued above-the-market at 4%. Growth was driven mainly by higher sales volumes across continental Europe and increasing pulp chemical deliveries to the new Montes del Plata pulp mill in Uruguay. I am glad to note that in the second quarter, Paper segment's profitability improved notably, despite the significant efforts put on the integration of a major acquisition.

In the Oil & Mining segment sales volumes have been impacted by the significant reduction of shale drilling and fracking activity in the US. However, despite the decline of sales volumes, absolute operative EBITDA contribution remained at the level of the comparable quarter. In EMEA, we started first polyacrylamide shipments for the chemically enhanced oil recovery.

The Municipal & Industrial segment's turnaround and revenue recovery continued and the segment delivered profitable growth in line with its strategic objective. Organic growth reached 3% driven by higher sales volumes in all regions and the operative EBITDA margin was more than 14%.

I am satisfied with Kemira's progress in the first half of the year. Our businesses delivered solid results, despite the current slowdown of activity in shale operations in US."

KEY FIGURES AND RATIOS

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

Definitions of key figures are available at www.kemira.com > Investors > Financial information. Comparative 2014 figures are provided in parentheses for some financial results, where appropriate. Operative EBITDA, operative EBIT, operative earnings per share and operative ROCE do not include non-recurring items.

KEMIRA'S FINANCIAL TARGETS 2017 AND UPDATED OUTLOOK for 2015

Kemira will continue to focus on improving its profitability and operative cash flow. The company will also continue to invest in order to secure future growth to serve selected water intensive industries.


The company's financial targets for 2017 are:

• Revenue EUR 2.7 billion
• Operative EBITDA-% of revenue 15%
• Gearing level <60%.

Kemira expects its capital expenditure-to-sales ratio, excluding acquisitions to increase in the next few years from the 2014 level of 6.3%. In addition, Kemira expects its medium-term operative tax rate to be in the range of 22%-25%. This rate excludes non-recurring items.

The basis for growth is the expanding market for chemicals and Kemira's expertise that helps customers in water intensive industries to increase their water, energy and raw material efficiency. The need to increase operational efficiency in our customer industries creates opportunities for Kemira to develop new products and services for both current and new customers. Research and Development is a critical enabler of organic growth for Kemira, providing differentiation capabilities in its relevant markets. Kemira will invest in innovation, technical expertise, and competencies in its selected focus areas.

Outlook for 2015 (updated to include the acquisition completed in May, 2015)

Updated outlook for 2015: In 2015, Kemira will focus on profitable growth both organically and inorganically. Kemira's revenue and operative EBITDA in 2015 are expected to increase compared to 2014. The outlook includes the impact of AkzoNobel's paper chemicals business.

Previous outlook for 2015: In 2015, Kemira will focus on profitable growth both organically and inorganically. Kemira's revenue in 2015 is expected to increase compared to 2014 and operative EBITDA in 2015 to remain approximately at the same level or to increase compared to 2014. The outlook excludes the impact of AkzoNobel's paper chemical business (acquisition expected to close in the second quarter of 2015). At closing, AkzoNobel's paper chemical business is expected to add revenue of more than EUR 200 million on an annualized basis.

Helsinki, July 22, 2015

Kemira Oyj
Board of Directors

FINANCIAL CALENDAR 2015 AND 2016

Interim Report January-September 2015                     October 23, 2015
Financial Statements Bulletin 2015                             February 11, 2016
Interim Report January-March 2016                            April 26, 2016
Interim Report January-June 2016                               July 21, 2016
Interim Report January-September 2016                     October 25, 2016
Kemira Capital Markets Day will be held in Espoo R&D Center, Finland on September 17, 2015.


Press and analyst conference and conference call

Kemira will arrange a press conference for analysts and the media starting at 3.30 pm (1.30 pm UK time) at Kemira House, Porkkalankatu 3, Helsinki. In 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 will be available around 3.00 pm and the webcast after the event at the above mentioned company web site.

Conference call in connection to the press and analyst conference

You can also listen to the conference live over the phone and attend the Q&A session via a conference call. In order to participate in the call, please dial ten minutes before the conference begins: 

FI:      +358 9 817 10495
SE:    +46 8 566 42702
UK:    +44 20 31940552
US:    +1 855 7161597

No PIN code requested.

For more information, please contact

Kemira Oyj
Tero Huovinen, VP, Investor Relations
+358 10 862 1980

Kemira is a global chemicals company serving customers in water-intensive industries. We provide expertise, application know-how and chemicals that improve our customers' water, energy and raw material efficiency. Our focus is on pulp & paper, oil & gas, mining and water treatment. In 2014, Kemira had annual revenue of EUR 2.1 billion and around 4,250 employees. Kemira shares are listed on the Nasdaq OMX Helsinki Ltd.
www.kemira.com