Kemira Oyj’s Financial Statements Bulletin 2021: Strong revenue growth; profitability impacted by continued inflationary pressures

Kemira Oyj, Financial Statements Release, February 11, 2022 at 8.30 am (EET)

Kemira Oyj’s Financial Statements Bulletin 2021: Strong revenue growth; profitability impacted by continued inflationary pressures

This is a summary of the Financial Statements Bulletin of 2021. The complete Financial Statements Bulletin with tables is attached to this release and available at www.kemira.com/investors.

Fourth quarter:  

• Revenue increased by 19% to a record-high, EUR 718.2 million (605.6). Revenue in local currencies, excluding acquisitions and divestments, increased strongly by 16% following higher sales prices and sales volumes. 
• Operative EBITDA decreased by 9% to EUR 97.8 million (107.9) due to higher variable costs that were partly offset by higher sales prices. The operative EBITDA margin decreased to 13.6% (17.8%) following higher raw material and energy prices. EBITDA decreased by 24% to EUR 69.5 million (91.2). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to a provision caused by the expected underutilization of a single-asset energy company in Pori, Finland majority owned by Kemira via Pohjolan Voima. 
• Operative EBIT decreased by 17% to EUR 47.0 million (57.0). EBIT decreased by 56% to EUR 17.5 million (40.3). 
• Cash flow from operating activities was EUR 80.8 million (146.4). 
• EPS (diluted) decreased by 62% to EUR 0.05 (0.14), mainly due to items affecting comparability. 

January–December:

• Revenue increased by 10% to a record-high, EUR 2,674.4 million (2,427.2). Revenue in local currencies, excluding acquisitions and divestments, increased strongly by 11% mainly due to higher sales volumes and sales prices.
• Operative EBITDA decreased by 2% to EUR 425.5 million (435.1). The operative EBITDA margin decreased to 15.9% (17.9%) following higher raw material and energy prices. EBITDA decreased by 10% to EUR 373.2 million (413.2). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to a provision caused by the expected underutilization of a single-asset energy company in Pori, Finland majority owned by Kemira via Pohjolan Voima, a damage claim settlement and restructuring costs.
• Operative EBIT decreased by 5% to EUR 225.4 million (237.7). EBIT decreased by 21% to EUR 170.1 million (215.9).
• Cash flow from operating activities was EUR 220.2 million (374.7). 
• EPS (diluted) decreased by 18% to EUR 0.70 (0.86), mainly due to items affecting comparability.

DIVIDEND PROPOSAL FOR 2021

The Board of Directors proposes to the Annual General Meeting 2022 a cash dividend of EUR 0.58 per share (0.58), totaling EUR 89 million (89). It is proposed that the dividend be paid in two installments.

OUTLOOK FOR 2022

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 be within a +/- 5% range of the operative EBITDA in 2021 (EUR 425.5 million).

Assumptions behind outlook

There continues to be uncertainty related to COVID-19 and the inflationary environment. However, Kemira’s end-market demand in both segments is expected to grow following forecasted global economic growth. The outlook assumes the COVID-19 pandemic situation to remain under control and not having a significant impact on Kemira’s end-market demand. The outlook also assumes no major disruptions to Kemira’s manufacturing operations or further significant supply chain disruptions. Strong inflationary pressures are expected to continue, particularly in H1 2022.

Kemira’s President and CEO Jari Rosendal:

"We saw strong end-market growth in both our segments in 2021. Revenue grew by 10% to EUR 2,674 million, a record revenue for Kemira, driven by strong organic growth in both segments. Kemira’s operative EBITDA was EUR 426 million in 2021. Our profitability in 2021 was impacted by significantly higher raw material, energy and transportation costs as well as supply chain bottlenecks. Operative EBITDA margin in 2021 was 15.9%, within our financial target range of 15-18%.

In Pulp & Paper, revenue increased by 7%. We saw strong demand across customer segments and in all regions. Operative EBITDA margin was 15.7% in 2021 and it was impacted by inflationary pressures.

In Industry & Water, revenue grew by 15%. Our water treatment business continued to perform strongly driven by growing customer demand. We also saw significant revenue growth in the Oil and Gas business driven by the strong rebound in shale and oil sands tailings demand. Operative EBITDA margin was 16.2% in 2021 following inflationary pressures.

In 2020, we announced our increased focus on profitable growth. During 2021, we completed our capacity expansions in the U.S, South Korea and the U.K., which will strengthen our market positions in the relevant markets. Also the expansion of bleaching capacity in Uruguay continued and it will contribute positively to our EBITDA as of 2023. In 2021, we announced an expansion of ASA sizing capacity in China, which will further strengthen our market-leading position in sizing products once the investment is completed in 2023. In addition, Kemira’s biobased strategy progressed during the year with the first biodegradable coatings sales for the paper and board industry taking place in 2021. We continue to aim for EUR 500 million in biobased revenue by 2030.

Looking ahead, market demand is expected to remain strong in 2022. We expect strong inflationary pressures to continue in 2022, particularly during the first half of the year. As a result, we will continue our cost mitigation actions to compensate for inflationary pressures and to defend margins. We expect revenue in local currencies, excluding acquisitions and divestments, to increase from 2021 (EUR 2,674.4 million). In terms of profitability, we expect operative EBITDA to be within a +/-5% range of the operative EBITDA in 2021 (EUR 425.5 million). The Board of Directors is proposing a dividend of EUR 0.58 per share to be paid in two installments in April and November.

To conclude, 2021 was yet another exceptional year. I am pleased that both employee engagement and customer satisfaction have remained high despite the challenging operating environment. I would like to thank all our customers, employees, suppliers and partners for their continued trust in Kemira in 2021."

KEY FIGURES AND RATIOS

 *12-month rolling average

Unless otherwise stated, all comparisons in this report are made to the corresponding period in 2020.

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.

DIVIDEND AND DIVIDEND POLICY  

On December 31, 2021, Kemira Oyj’s distributable funds totaled EUR 475,407,339, of which net profit for the period was EUR -2,851,325. No material changes have taken place in the company’s financial position after the balance sheet date. 

Kemira Oyj’s Board of Directors proposes to the Annual General Meeting to be held on March 24, 2022 that a dividend of EUR 0.58 per share, totaling EUR 89 million, be paid on the basis of the adopted balance sheet for the financial year that ended on December 31, 2021. The dividend will be paid in two installments. The first installment, of EUR 0.29 per share, will be paid to shareholders who are registered in the company’s shareholder register maintained by Euroclear Finland Oy on the record date for the dividend payment: March 28, 2022. The Board of Directors proposes that the first installment of the dividend be paid out on April 7, 2022. The second installment, of EUR 0.29 per share, will be paid in November 2022. The second installment will be paid to shareholders who are registered in the company’s shareholder register maintained by Euroclear Finland Oy on the record date for the dividend payment. The Board of Directors will decide the record date and the payment date for the second installment at its meeting in October 2022. The record date is planned to be October 27, 2022, and the dividend payment date November 3, 2022 at the earliest.

Kemira’s dividend policy is to pay a competitive dividend that increases over time.

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 2022

Interim report for January-March 2022   April 27, 2022
Half-year financial report for January-June 2022  July 15, 2022
Interim report for January-September 2022    October 25, 2022

The Annual report for 2021 will be published on February 18, 2022.
The Annual General Meeting is scheduled to be held on Thursday, March 24, 2022.  

WEBCAST AND CONFERENCE CALL FOR PRESS AND ANALYSTS 

Kemira will arrange a webcast for analysts, investors, and media on Friday, February 11, 2022, starting at 10.30 am EET (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 www.kemira.com/company/investors. The presentation material and a recording of the webcast will be available on the above-mentioned company website.

You can attend the Q&A session via conference call. In order to participate in the conference call, please call in ten minutes before the conference begins:

FI +358 (0)9 81710310  
SE +46 (0)8 56642 651 
UK +44 (0)333 300 0804   
US +1 631 913 1422

Conference ID: 82530834#

For more information, please contact:

Kemira Oyj
Mikko Pohjala, Vice President, Investor Relations
Tel. +358 40 838 0709

Kemira is a global leader in sustainable chemical solutions for water intensive industries. We provide best suited products and expertise to improve our customers’ product quality, process and resource efficiency. Our focus is on pulp & paper, water treatment and energy industry. In 2021, Kemira had annual revenue of around EUR 2.7 billion and around 5,000 employees. Kemira shares are listed on the Nasdaq Helsinki Ltd.
www.kemira.com