Kemira Oyj’s January-September 2022 Interim Report: Record result in a seasonally strong quarter

Third quarter:   

•   Revenue increased by 40% to a record-high: EUR 971.9 million (692.7). Revenue in local currencies, excluding acquisitions and divestments, increased by 31% due to higher sales prices, particularly in energy-intensive pulp and bleaching chemicals.  

•   Operative EBITDA increased by 32% to EUR 152.5 million (115.9) following improvement in both segments. The operative EBITDA margin decreased to 15.7% (16.7%) as strong inflationary pressures continued. EBITDA increased by 25% to EUR 137.3 million (109.5). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to an expected loss from the divestment of most of our colorants business.  

•   Operative EBIT increased by 54% to EUR 99.5 million (64.5). EBIT increased by 50% to EUR 84.5 million (56.4).  

•   Cash flow from operating activities was EUR 114.8 million (86.9).

•   EPS (diluted) increased by 53% to EUR 0.38 (0.25).

January-September:

•   Revenue increased by 33% to a record-high: EUR 2,601.3 million (1,956.2). Revenue in local currencies, excluding acquisitions and divestments, increased by 26% due to higher sales prices, particularly in energy-intensive pulp and bleaching chemicals.

•   Operative EBITDA increased by 20% to a record-high: EUR 394.6 million (327.8) following improvement in both segments. The operative EBITDA margin decreased to 15.2% (16.8%) following strong inflationary pressures. EBITDA increased by 23% to EUR 374.0 million (303.7). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to an expected loss from the divestment of most of our colorants business and Kemira's exit from Russia.

•   Operative EBIT increased by 33% to EUR 238.1 million (178.4). EBIT increased by 41% to EUR 215.8 million (152.5).

•   Cash flow from operating activities was EUR 145.4 million (139.4). 

•   EPS (diluted) increased by 43% to EUR 0.93 (0.65).

Outlook for 2022 (unchanged)

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 (specified)
Kemira’s end-market demand in both segments is expected to be good in 2022. Demand started to slow down slightly in Q3 2022 and the slowdown is expected to continue in Q4 2022. The outlook assumes no major disruptions to Kemira’s manufacturing operations or further major disruptions to energy availability in Europe. Inflationary pressures are expected to remain strong in 2022.

Kemira’s President and CEO Jari Rosendal:

"We had a strong third quarter. Revenue grew by 40% and reached a record-high of EUR 972 million driven by higher sales prices, particularly in energy-intensive pulp and bleaching chemicals. Sales volumes declined by 6%. Operative EBITDA reached a record-high of EUR 153 million following improvement in both segments. Operative EBITDA margin declined to 15.7% due to continued inflationary pressures, but it improved from the previous quarter.

In Pulp & Paper, revenue increased by 37% due to higher sales prices, particularly in pulp and bleaching chemicals. Market demand started to slow down during Q3 2022, which was also visible in our lower sales volumes. Operative EBITDA grew 45% to EUR 92 million and the operative EBITDA margin improved to 17.2%. The improvement was mainly driven by higher market prices for energy-intensive pulp and bleaching chemicals. In other products we continued to see margin pressure.

In Industry & Water, revenue increased by 44% driven by higher sales prices. Revenue in water treatment grew by 39%, while revenue in Oil & Gas increased by 61%. Market demand was good in water treatment and improved in Oil & Gas. Operative EBITDA increased 15% to EUR 60 million with improvement in both North America and Oil & Gas. The operative EBITDA margin declined to 13.9% due to continued strong inflationary pressures, particularly in the EMEA region.

In September, we arranged our Capital Markets Day. Our financial targets remain unchanged and we continue to be focused on sustainable profitable growth. We see interesting growth opportunities in our existing businesses and in new adjacent markets such as textiles. We are also in a much better position to look for M&A opportunities. In addition, we are continuously looking at ways to improve our business fundamentals. As an example, during Q3 2022 we announced an agreement to divest most of our colorants business, which will further simplify our product portfolio.

During Q3 2022, we also announced new appointments to the Management Board. Antti Salminen was appointed as President of the Pulp & Paper segment and Wido Waelput as Antti Salminen's successor as Interim President for Industry & Water. I am pleased with these appointments and confident that the segments are in excellent hands.

Our outlook for 2022 remains unchanged. We see inflationary pressures continuing. We have seen signs of moderation in some North American oil derivatives, while high energy prices in Europe are expected to put pressure on many raw material prices and even availability in the region. In terms of energy, Kemira is in a relatively good position, particularly in Finland, given our high level of backward-integration in electricity. Going forward, we will continue our actions to defend the relative profitability, while at the same time ensuring excellent delivery reliability to our customers."

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 2023

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.
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 Tuesday, October 25, 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.