Kemira Oyj’s January-March 2022 Interim Report: Strong start to the year

Kemira Oyj, Interim Report, April 27, 2022 at 8.30 am (EEST)

Kemira Oyj’s January-March 2022 Interim Report: Strong start to the year

This is a summary of the January - March 2022 Interim Report. The complete Interim Report with tables is attached to this release and available at kemira.com/investors.

First quarter:   

•    Revenue increased by 27% to a record-high, EUR 768.1 million (606.1). Revenue in local currencies, excluding acquisitions and divestments, increased by 22% following higher sales prices.  

•    Operative EBITDA increased by 15% to EUR 120.0 million (104.6) due to higher revenue. The operative EBITDA margin decreased to 15.6% (17.3%) due to inflationary pressures. The operative EBITDA margin improved from Q4 2021 (13.6%). EBITDA increased by 10% to EUR 113.5 million (103.0). The differences between operative and reported figures are explained by items affecting comparability, which were mainly related to Kemira's business in Russia.  

•    Operative EBIT increased by 24% to EUR 68.9 million (55.7). EBIT increased by 15% to EUR 62.2 million (54.2).  

•    Cash flow from operating activities was EUR -10.9 million (13.8) and it was impacted by an increase in net working capital. 

•    EPS (diluted) increased by 4% to EUR 0.26 (0.25).

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

Assumptions behind outlook (specified)
Market uncertainty increased during the first quarter of 2022 due to the war in Ukraine, the COVID-19 pandemic, particularly in China, and the inflationary environment. Despite the uncertainty, Kemira’s end-market demand in both segments is expected to be good in 2022.

The outlook assumes no major disruptions to Kemira’s manufacturing operations or further significant supply chain disruptions either due to the war in Ukraine or due to the COVID-19 pandemic. The outlook assumes normal energy availability in Europe. Inflationary pressures have been accelerated by the war in Ukraine and they are expected to remain strong in 2022.

Kemira’s President and CEO Jari Rosendal:

"In February, we saw tragic events unfolding in Ukraine. We are shocked and saddened to witness the humanitarian crisis caused by the war in Ukraine. Our deepest sympathies are with the Ukrainian people in the current situation. We announced our decision to discontinue deliveries to Russia and Belarus in early March. The fifth EU sanctions list published on April 9, 2022 includes now also the majority of Kemira’s products. We have also made a donation through the Red Cross and extended support to our own employees affected by the crisis.  

Russia is a relatively small market for us and accounted for roughly 3% of Kemira's sales in 2021. The impacts of the war in Ukraine were limited in our first quarter performance and we had a strong start to the year.

Despite the uncertain geopolitical situation, demand in our end-markets remained good. Revenue grew by 27% driven by higher sales prices and reached a record-high of EUR 768 million. Relative profitability continued to be impacted by strong inflationary pressures and the operative EBITDA margin declined to 15.6%. Thanks to the strong revenue, our operative EBITDA reached a record-high of EUR 120 million. 

In the Pulp & Paper segment, revenue increased by 21%. Demand remained good across customer segments and geographic regions during the quarter. A strike at a significant customer in Finland impacted quarterly volumes negatively. The operative EBITDA margin declined to 16.0% due to inflationary pressures, while operative EBITDA grew to EUR 71 million.

In the Industry & Water segment, revenue grew by 36%. Demand in the water treatment business continued to be good. Oil & Gas revenue grew by 73% driven by the strong demand in shale. We expect the current environment to support our Oil & Gas business. The operative EBITDA margin declined to 15.2% following inflationary pressures, while operative EBITDA grew to EUR 49 million. 

In March we held our Annual General Meeting, which approved the Board of Directors' dividend proposal of EUR 0.58 per share payable in two installments. The first dividend installment was paid in early April.

Market uncertainty increased during the first quarter of 2022. Also, the inflationary pressures intensified during the quarter and we expect them to remain strong throughout 2022. As a result, we will need to continue our actions to mitigate the impacts. Our outlook for 2022 remains unchanged. We expect revenue in local currencies, excluding acquisitions and divestments, to increase from 2021 (EUR 2,674.4 million) and the operative EBITDA to be within a + / - 5% range of the operative EBITDA in 2021 (EUR 425.5 million)."

KEY FIGURES AND RATIOS

Unless otherwise stated, all comparisons in this report are made to the corresponding period in 2021.
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 2022

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

WEBCAST AND CONFERENCE CALL FOR PRESS AND ANALYSTS  

Kemira will arrange a webcast for analysts, investors, and media on Wednesday April 27, 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.

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: 37090125#

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