Thursday, 26 July 2012 09:30

Kemira Oyj's Interim Report January-June 2012

Written by
Rate this item
(0 votes)

Sales volumes and prices improved from Q1, fixed cost pressure continued

Second quarter:

  • Revenue grew 2% to EUR 562.3 million (548.8) supported by favourable currency exchange.
  • Operative EBIT decreased 4% to EUR 35.7 million (37.3) with a margin of 6.3% (6.8%) mainly due to higher fixed costs.
  • Earnings per share remained at EUR 0.20 (0.20).

January-June:

  • Revenue increased 1% to EUR 1,115.2 million (1,105.6).
  • Operative EBIT decreased 10% to EUR 73.9 million (82.2) with a margin of 6.6% (7.4%).
  • Earnings per share decreased 11% to EUR 0.39 (0.44).
  • Kemira outlook for 2012 remains unchanged with expected revenue and operative EBIT in 2012 to be approximately at the same level as in 2011.
  • To accelerate growth and improve profitability, Kemira has launched a global restructuring program "Fit for Growth" aimed to save EUR 60 million on an annualized basis.

Kemira's President and CEO Wolfgang Büchele:

 

"In the second quarter Kemira once again was able to compensate the lower sales volumes and higher raw material prices with sales price increases. In Paper, as well as in Municipal & Industrial, sales volumes recovered slightly. Fixed costs, however, continued to increase in all segments and resulted in a decrease in the operative EBIT. ChemSolutions operative EBIT decreased substantially mainly due to an extended maintenance shutdown of ChemSolutions' Oulu plant in Finland as well as higher variable costs.

 

After the first half of 2012, Kemira's operative EBIT is below the comparable period of 2011.

Our profitability is the fundamental issue we need to improve in order to continue to be a relevant player within the water quality and quantity management business, and to meet our guidance for 2012.

Therefore, Kemira announced today its global restructuring program "Fit for Growth" to improve the company's profitability, internal efficiency and to accelerate growth in emerging markets. The cost savings target with the planned program is EUR 60 million on an annualized basis. The ultimate goal of the program is to reach Kemira's financial targets in an accelerated mode. Revenue growth target for Kemira is above 3% in the mature markets and 7% in the emerging markets. Kemira's EBIT margin target is at least 10%.

The "Fit for Growth" restructuring program is based on the following measures:

  • Reducing internal complexity by renewing and simplifying the organizational structure in order to foster accelerated growth, innovation and application focus.
  • Improving internal efficiency by reducing organizational layers and by placing substantial responsibility into the regions by implementing regional business units reporting to the segment heads with full profit and loss responsibility.
  • Optimizing and rebalancing the manufacturing network.


The implementation of these measures may ultimately lead to a reduction of up to 600 positions globally, from which approximately 250 could be in Finland. Kemira will initiate the co-determination negotiations according to each country's local legislation. Kemira had 5,181 employees worldwide at the end of June 2012.

Non-recurring charges related to the restructuring program are estimated to be around EUR 85 million. These charges are expected to be accounted for within the next four quarters."

fig 1_26_7_2012

Definitions of key figures are available at www.kemira.com > Investors > Financial information. Comparative 2011 figures are provided in parentheses for some financial results, where appropriate. Operating profit, excluding non-recurring items, is referred to as Operative EBIT. Operating profit is referred to as EBIT.


Outlook and restructuring program

Kemira's vision is to be a leading water chemistry company. Kemira will continue to focus on improving profitability and reinforcing positive cash flow. The company will also continue to invest in order to secure the future growth in the water quality and quantity management business.

 

Kemira's financial targets remain as earlier communicated. The company's medium term financial targets are:

 

  • revenue growth in mature markets > 3% per year, and in emerging markets > 7% per year
  • EBIT, % of revenue > 10%
  • positive cash flow after investments and dividends
  • gearing level < 60%.

 

The basis for growth is the expanding water chemicals market and Kemira's strong know-how in the water quality and quantity management. Increasing water shortage, tightening legislation and customers' needs to increase operational efficiency create opportunities for Kemira to develop new water applications for both current and new customers. Investment in research and development is a central part of Kemira's strategy. The focus of Kemira's research and development activities is on the development and commercialization of the new innovative technologies for Kemira's customers globally and locally.

Today, Kemira Oyj announced a global restructuring program "Fit for Growth" to improve the company's profitability, its internal efficiency and to accelerate growth in emerging markets without sacrificing business opportunities in the mature markets. The cost savings target with the planned program is EUR 60 million on an annualized basis. The ultimate goal of the program is to reach Kemira Group's targets for revenue growth and EBIT margin.

 

The program is based on the following measures:

  • Reducing internal complexity by renewing and simplifying the organizational structure in order to foster accelerated growth, innovation and application focus.
  • Improving internal efficiency by reducing organizational layers and by placing substantial responsibility into the regions by implementing regional business units reporting to the segment heads with full profit and loss responsibility.
  • Optimizing and rebalancing the manufacturing network.


The implementation of these measures may ultimately lead to a reduction of up to 600 positions globally, from which approximately 250 could be in Finland. Kemira will initiate the co-determination negotiations according to each country's local legislation. Kemira had 5,181 employees worldwide at the end of June 2012.

Non-recurring charges related to the restructuring program are estimated to be around EUR 85 million. These charges are expected to be accounted for within the next four quarters.

 

In 2012, Kemira expects the revenue and operative EBIT to be at approximately the same level as in 2011. In the near term, an uncertainty in Europe and a slowdown in global economic growth may affect the demand for our products in the customer industries. This guidance assumes current currency exchange rates and oil price level.

Financial calendar 2012 and 2013


Interim Report January-September 2012                                                  October 24, 2012

Financial results for the year 2012                                                           February 6, 2013

Interim Report January-March 2013                                                          April 23, 2013
Interim Report January-June 2013                                                            July 23, 2013
Interim Report January-September 2013                                                  October 22, 2013

The Annual General Meeting 2013 is scheduled for Tuesday, March 26, 2013 at 1.00 pm (CET+1).
Read 3072 times