Kemira Oyj's Interim report January-September 2010: Demand continued favourable and operating profit improved
(Thomson Reuters ONE) -
Kemira Oyj
Stock Exchange Release
October 28, 2010 at 8.30 am (CET+1)
Third quarter:
* Revenue increased 14% to EUR 554.4 million (487.7).
* Operating profit, excluding non-recurring items, rose 9% to EUR 42.5 million
(39.0) and the margin was 7.7% (8.0%).
* Gearing improved to 43% (December 31, 2009: 53%).
* 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:
* Revenue increased 10% to EUR 1,614.3 million (1,473.7).
* 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).
* 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).
* Operating profit from continuing operations, excluding non-recurring items,
is estimated to grow significantly from last year (2009: EUR 124.9).
* 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- 42.5 39.0 122.1 92.4 124.9
recurring items
Operating profit 46.0 39.0 128.9 92.4 109.7
--------------------------------------------------------------------------------
Operating profit, excluding non- 7.7 8.0 7.6 6.3 6.3
recurring items, %
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 35.8 24.1 90.8 46.3 67.1
operations
--------------------------------------------------------------------------------
Net profit*** 35.8 40.6** 621.8** 76.2** 85.5**
--------------------------------------------------------------------------------
EPS, EUR, from continuing 0.58 0.33
operations 0.23 0.17 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
www.waterfootprintkemira.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- 20.5 14.8 54.0 30.3 44.9
recurring items
Operating profit 24.0 14.8 60.2 30.3 40.1
Operating profit, excluding non- 7.9 6.4 7.3 4.5 5.0
recurring items, %
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 6.1 6.0
acquisitions 24.0 24.5 37.8
Cash flow after investments, 22.5 25.3 57.1 56.8 75.6
excluding interest and taxes
* 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- 14.5 24.9 46.8 53.5 66.4
recurring items
Operating profit 14.5 24.9 43.9 53.5 59.8
Operating profit, excluding non- 8.8 16.0 9.8 11.5 10.9
recurring items, %
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 4.0 3.7
acquisitions 12.2 9.2 21.0
Cash flow after investments, -11.3 28.2 9.8 84.1 93.5
excluding interest and taxes
* 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, 8.8 3.5 22.1 8.7 14.2
excluding non-recurring
items
Operating profit 8.8 3.5 25.5 8.7 19.9
Operating profit, 11.0 6.3 9.8 5.3 6.0
excluding non-recurring
items, %
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, 1.3 1.2 3.6 2.7 4.7
excluding acquisitions
Cash flow after 4.8 4.3 19.8 13.2 20.8
investments, excluding
interest and taxes
* 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 7-9/2010 7-9/2009 1-9/2010 1-9/2009 2009
STATEMENT
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 0.23 0.17 0.58 0.33 0.47
diluted, EUR **
Earnings per
share,
discontinued
operations,
basic and - 0.13 3.50 0.22 0.14
diluted, EUR **
Cash flow from
operations per
share,
EUR ** 0.29 1.04 0.52 1.70 2.13
Capital
expenditure, 46.6 14.3 81.3 54.1 85.9
EUR million
Capital
expenditure / 8.4 2.2 4.7 2.8 3.4
revenue, %
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 151,741 133,309 151,741 133,309 151,488
(1000), basic *
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, 8.43 7.71 8.25
EUR **
Equity ratio, % 52.5 37.4 45.1
Gearing, % 42.9 86.6 53.2
Interest-bearing net 559.4 906.2 675.6
liabilities, EUR million
Personnel 5,833 8,954 8,843
(average)
* Number of shares outstanding, excluding the number of
shares bought back.
** Rights
offering
restatement
year 2009
REVENUE BY 7-9/2010 7-9/2009 1-9/2010 1-9/2009 2009
BUSINESS AREA
EUR million
Paper external 259.9 229.9 741.3 676.0 905.2
Paper Intra- - 0.3 - 0.8 1.2
Group
Municipal &
Industrial 164.0 155.6 476.1 466.7 607.3
external
Municipal &
Industrial - -0.1 - 0.2 0.2
Intra-Group
Oil & Mining 80.2 55.9 224.9 165.2 234.4
external
Oil & Mining - 0.1 - 0.4 0.6
Intra-Group
Other external 50.3 46.3 172.0 165.8 223.0
Other Intra- 0.0 19.4 0.1 56.8 77.4
Group
Eliminations 0.0 -19.7 -0.1 -58.2 -79.4
Total,
continuing 554.4 487.7 1,614.3 1,473.7 1,969.9
operations
Tikkurila,
external,
discontinued - 158.1 108.2 431.7 530.2
operations
Total 554.4 645.8 1,722.5 1,905.4 2,500.1
OPERATING
PROFIT BY 7-9/2010 7-9/2009 1-9/2010 1-9/2009 2009
BUSINESS AREA
EUR million
Paper 24.0 14.8 60.2 30.3 40.1
Municipal & 14.5 24.9 43.9 53.5 59.8
Industrial
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 46.0 39.0 128.9 92.4 109.7
operations
Tikkurila,
discontinued - 26.3 5.3 52.4 47.7
operations
Total 46.0 65.3 134.2 144.8 157.4
CHANGES IN PROPERTY, PLANT 1-9/2010 1-9/2009 2009
AND EQUIPMENT
EUR million
Carrying amount
at beginning of 761.5 765.7 765.7
year
Acquisitions of 19.4 0.1 0.1
subsidiaries
Increases 40.1 46.9 76.1
Decreases -4.9 -2.2 -2.0
Disposal of -116.3 - -
subsidiaries
Depreciation,
impairments
and reversals -66.2 -73.8 -88.9
of impairments
Exchange rate
differences and
other changes 30.5 5.9 10.5
Net carrying
amount at end of 664.1 742.6 761.5
period
CHANGES IN
INTANGIBLE 1-9/2010 1-9/2009 2009
ASSETS
EUR million
Carrying amount
at beginning of 760.2 766.7 766.7
year
Acquisitions of 6.7 2.4 2.4
subsidiaries
Unternehmensinformation / Kurzprofil:
Datum: 28.10.2010 - 07:31 Uhr
Sprache: Deutsch
News-ID 46787
Anzahl Zeichen: 0
contact information:
Town: Helsinki
Kategorie: Business News
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