Kemira's President and CEO Jari Rosendal:
"We had a strong second quarter with 15% revenue growth and improved operative EBITDA margin of 12.6%. Favorable currency exchange rates continued to contribute to the revenue growth. The acquired AkzoNobel's paper chemicals business has been consolidated since May 2015. We have succeeded well with business continuity and integration has started according to plan. Earlier communicated synergies are expected to start showing towards the end of the year.
Organic growth in the Paper segment continued above-the-market at 4%. Growth was driven mainly by higher sales volumes across continental Europe and increasing pulp chemical deliveries to the new Montes del Plata pulp mill in Uruguay. I am glad to note that in the second quarter, Paper segment's profitability improved notably, despite the significant efforts put on the integration of a major acquisition.
In the Oil & Mining segment sales volumes have been impacted by the significant reduction of shale drilling and fracking activity in the US. However, despite the decline of sales volumes, absolute operative EBITDA contribution remained at the level of the comparable quarter. In EMEA, we started first polyacrylamide shipments for the chemically enhanced oil recovery.
The Municipal & Industrial segment's turnaround and revenue recovery continued and the segment delivered profitable growth in line with its strategic objective. Organic growth reached 3% driven by higher sales volumes in all regions and the operative EBITDA margin was more than 14%.
I am satisfied with Kemira's progress in the first half of the year. Our businesses delivered solid results, despite the current slowdown of activity in shale operations in US."
This is a summary of the January - June 2015 Interim report. The complete January - June 2015 Interim report with tables is attached to this release and available at www.kemira.com/investors.
- Revenue increased 15% to EUR 594.8 million (518.2) supported by the acquisition of AkzoNobel's paper chemicals business, completed on May 4, and favorable currency exchange rates. Revenues in local currencies, excluding acquisitions and divestments remained largerly unchanged.
- Operative EBITDA increased 24% to EUR 74.7 million (60.2) with an improved margin of 12.6% (11.6%).
- Revenue increased 10% to EUR 1,147.8 million (1,048.1).
- Operative EBITDA increased 20% to EUR 141.1 million (117.7) with a margin of 12.3% (11.2%).
- Operative earnings per share increased 10% to EUR 0.32 (0.29).
- Kemira's outlook for 2015 is updated to include the acquisition of AkzoNobel's paper chemicals business. Kemira expects its revenue and operative EBITDA in 2015 to increase compared to 2014.
KEMIRA'S FINANCIAL TARGETS 2017 AND UPDATED OUTLOOK for 2015
Kemira will continue to focus on improving its profitability and operative cash flow. The company will also continue to invest in order to secure future growth to serve selected water intensive industries.
The company's financial targets for 2017 are:
- Revenue EUR 2.7 billion
- Operative EBITDA-% of revenue 15%
- Gearing level <60%.
Kemira expects its capital expenditure-to-sales ratio, excluding acquisitions to increase in the next few years from the 2014 level of 6.3%. In addition, Kemira expects its medium-term operative tax rate to be in the range of 22%-25%. This rate excludes non-recurring items.
The basis for growth is the expanding market for chemicals and Kemira's expertise that helps customers in water intensive industries to increase their water, energy and raw material efficiency. The need to increase operational efficiency in our customer industries creates opportunities for Kemira to develop new products and services for both current and new customers. Research and Development is a critical enabler of organic growth for Kemira, providing differentiation capabilities in its relevant markets. Kemira will invest in innovation, technical expertise, and competencies in its selected focus areas.
Outlook for 2015 (updated to include the acquisition completed in May, 2015)
Updated outlook for 2015: In 2015, Kemira will focus on profitable growth both organically and inorganically. Kemira's revenue and operative EBITDA in 2015 are expected to increase compared to 2014. The outlook includes the impact of AkzoNobel's paper chemicals business.
Previous outlook for 2015: In 2015, Kemira will focus on profitable growth both organically and inorganically. Kemira's revenue in 2015 is expected to increase compared to 2014 and operative EBITDA in 2015 to remain approximately at the same level or to increase compared to 2014. The outlook excludes the impact of AkzoNobel's paper chemical business (acquisition expected to close in the second quarter of 2015). At closing, AkzoNobel's paper chemical business is expected to add revenue of more than EUR 200 million on an annualized basis.