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kemira logoKemira will record non-recurring items with a negative impact of approximately EUR 71 million on its reported EBIT in the fourth quarter of 2012.

Due to the accelerated implementation of the "Fit for Growth" program, related non-recurring charges will affect the reported EBIT in the fourth quarter of 2012 by approximately EUR 27 million, resulting in a total of approximately EUR 67 million "Fit for Growth" related restructuring charges for the second half of 2012. Previous guidance, in connection to the third quarter 2012 result release, was to book EUR 60 million of the restructuring charges in the second half of 2012 and the balance in the first half of 2013. Overall, non-recurring charges related to the restructuring program are estimated to be around EUR 85 million, as communicated earlier.

The annualized cost savings target of EUR 60 million with the "Fit for Growth" restructuring program remain as earlier communicated. The savings impact is expected to take place as follows: EUR 10 million in 2012, EUR 50 million in 2013 and EUR 60 million in 2014.

The write-down related to the divestment of Kemira's food and pharmaceuticals businesses related to Niacet Corporation (Niagara Falls, USA), announced on December 14, 2012, will have a negative impact of approximately EUR 18 million on the reported EBIT in the fourth quarter of 2012.

In addition, approximately EUR 26 million non-recurring items, impacting the reported EBIT negatively in the fourth quarter of 2012, will be booked. These non-recurring items are mainly related to environmental liabilities and efficiency improvements, as well as streamlining of Kemira's current operations outside of the "Fit for Growth" program.

Kemira's dividend policy is to distribute a dividend that accounts for 40 - 60% of its operative net income. Operative net income is defined as net profit for the period, excluding non-recurring items and adjusted for tax effects. The non-recurring items therefore will not negatively impact Kemira's ability to distribute dividends.

Kemira will publish its fourth quarter and full year 2012 results on February 6, 2013 at around 2.30 pm (CET+1).

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Kemira's co-determination negotiations in Finland have been concluded. The negotiations concerned Kemira's sites in Helsinki, Espoo, Oulu, Sastamala, Kuusankoski, Joutseno, Vaasa and Harjavalta.

In the beginning of the negotiations it was estimated that the personnel reductions may affect approximately 260 employees' working in Finland. As a result of the negotiations, the head count reduction will be 152 in Finland, out of whom 79 persons will leave the company through pension schemes. Kemira will continue analyzing the outsourcing opportunities. The terminations will be carried out by the end of October. Kemira will support the affected employees by providing outplacement services which aim at re-training and re-employment.

The personnel reductions are related to the restructuring program "Fit for Growth" announced in July. The program aims to improve the company's profitability, internal efficiency and to accelerate growth in the emerging markets. The expected EUR 60 million cost savings impact of the program will occur as follows: EUR 10 million in 2012, EUR 50 million in 2013 and EUR 60 million in 2014. The ultimate goal of the program is to reach at least 10% EBIT margin in 2014. Redundancies will account for 50% of the expected savings. The targeted cost savings for Kemira's sites in Finland will be achieved with fewer redundancies than originally anticipated.

The expected restructuring charges connected to the program amount to EUR 85 million of which EUR 35 million will be cash cost and EUR 50 million being write-downs. EUR 55 million of the restructuring charges will be booked in the second half of 2012, and the balance in the first half of 2013.

The organizational restructuring also affects Kemira's sites outside of Finland and the negotiations in the sites affected by the possible personnel reductions will be completed in each country according to the local legislation.

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Kemira held its Capital Markets Day (CMD) 2012 in London today.

Kemira retained its existing outlook for 2012. In 2012, Kemira expects revenue and operative EBIT to be approximately at the same level as in 2011. In the near term, uncertainty in Europe and a slowdown in global economic growth may affect the demand for our products in our customer industries. This guidance assumes current currency exchange rates and an oil price level of 115 $ per barrel.

 

Kemira's financial targets remain as communicated earlier. 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 theme of the CMD was the "Fit for Growth" restructuring program, launched on July 26th, 2012. Wolfgang Büchele, President and CEO gave an update on the implementation of the program:

"The expected EUR 60 million cost saving impact of the program will occur as follows: EUR 10 million in 2012, EUR 50 million in 2013 and EUR 60 million in 2014. The ultimate goal of the program is to reach at least 10% EBIT margin in 2014. Redundancies will account for 50% of the expected savings, and the remaining 50% will be achieved through manufacturing network consolidation and leaner operations. Currently 14 manufacturing sites are under review as part of the ongoing manufacturing consolidation."

 

Wolfgang Büchele also gave an update on the ongoing work to sharpen Kemira's strategy. "Our main focus is on delivering our 'Fit for Growth' program, but we have also started to analyze how the company should look in 2020. The highest growth in our accessible markets is focused on Asia-Pacific and South America. Our oil and gas business is expected to grow strongly in all regions. One of Kemira's key strengths is the capability to tailor products and applications to customers' needs based on innovation and extensive manufacturing capability. We are also a leading global chemical supplier to the paper industry with long-term commitment. The strategy will be communicated, once approved, in connection with the Q1 results in 2013".


Jyrki Mäki-Kala, CFO, also gave further details on the "Fit for Growth" restructuring program: "The expected restructuring charges connected to the program amounts to EUR 85 million of which EUR 35 million will be cash cost and EUR 50 million being write-downs. EUR 55 million of the restructuring charges will be booked in the second half of 2012, and the balance in the first half of 2013. Our cost savings estimates for the different segments, based on the detailed action plan, are: Paper EUR 22 million, Municipal & Industrial EUR 22 million, Oil & Mining EUR 12 million and ChemSolutions EUR 4 million."

Other Kemira speakers at the Capital Markets Day included Petri Helsky, President, Paper segment, Hannu Virolainen, President, Municipal & Industrial segment, Randy Owens, President Oil & Mining segment, Frank Wegener, Managing Director of ChemSolutions, Joe Chan, Region head, APAC and Hilton Casas de Almeida, Region head, SA.

All Kemira Capital Markets Day 2012 presentations are available at www.kemira.com at around 2.00 pm (CET+1).
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The annual PPI Awards recognize the achievements of companies, mills and individuals in the pulp and paper sector. The awards provide an opportunity for pulp and papermakers worldwide to show off their strategic accomplishment as well as achievements in leadership, vision, and innovation on a global platform.

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Kemira participates in PPI Awards 2012 by sponsoring the Water Efficiency Award. “Water is a vital resource for the pulp and paper sector and the topic is becoming even more important as the global spotlight falls on the possible shortage in the future”, says Kenneth Nysten, Senior Vice President, Printing & Writing, Paper. “The worsening imbalance between water demand and supply will require new water treatment solutions, especially such that can increase water reuse and enable utilization of poor-quality raw water sources. The winner of this award will be the mill that has clearly reduced the need for raw water while at the same time demonstrating that it is maximizing water reuse by filtering and circulation.”

The finalists in the Water Efficiency Award category are:

  • Bignardi Papeis, Brazil
  • BILT Graphic Paper Products Limited, Bhigwan Unit, India
  • Cascades Candiac Mill, Canada
  • Klabin Monte Alegre, Brazil
  • Shandong Sun Paper Industry Joint Stock Co, Ltd, China
  • Tamil Nadu Newsprint and Papers Ltd, India

The PPI Awards 2012 will be held in Brussels, Belgium on November 12, 2012 alongside the CEPI European Paper Week event. The finalists of each category have been chosen by an international panel of independent judges made up of industry experts. The finalists are invited to attend a gala dinner where the winners are revealed. Winners are presented with their trophies by the sponsor of each category and a celebrity host. More information at www.ppiawards.com.

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Kemira announced on July 26, 2012 that it will start a global restructuring program "Fit for Growth" to improve the company's profitability, internal efficiency and to accelerate growth in the emerging markets. Kemira also announced that the implementation of the measures related to the program may ultimately lead to the reduction of up to 600 positions globally, from which approximately 250 could be reductions in Finland.

 

Kemira will start co-determination negotiations in Finland which will affect all employees working at the following group's Finnish sites: Helsinki, Espoo, Oulu, Sastamala, Kuusankoski, Joutseno, Vaasa and Harjavalta. The invitation to the negotiations was given to the employee representatives today, on August 6, 2012. At the end of June 2012, Kemira had 5,181 employees from which 1,259 were located in Finland.

 

"The number of employees affected by the possible personnel reduction has now been specified and the measures related to the program may affect approximately 260 employees' work in Finland. During the negotiations we will examine e.g. internal transfers, retirement arrangements and outsourcing. Although we are not planning to close our sites in Finland, the possibility of some direct layoffs cannot unfortunately be ruled out. The number of possible direct layoffs will be defined during the negotiations. Our aim is to complete the negotiations within the 6 weeks negotiation period," says Jukka Oinonen, Vice President, Human Resources, Finland.

 

The cost savings target with the planned "Fit for Growth" program is EUR 60 million on an annualized basis once the program is fully implemented. Non-recurring charges related to the "Fit for Growth" program are estimated to be around EUR 85 million. These charges are expected to be accounted for within the next four quarters.

 

Organizational restructuring also affects Kemira's sites outside Finland and the negotiations in the sites affected by the possible personnel reductions will proceed in each country according to the local legislation. Kemira has operations in around 40 countries.

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Kemira Oyj announces a global restructuring program "Fit for Growth" to improve the company's profitability, internal efficiency and to accelerate growth in the emerging markets. The cost savings target with the planned program is EUR 60 million on an annualized basis once the program is fully implemented. The goal of the planned program is to reach Kemira Group's financial targets for revenue growth and EBIT margin. The growth target for Kemira is above 3% in the mature markets and above 7% in the emerging markets. Kemira's EBIT margin target is at least 10%. Non-recurring charges related to the "Fit for Growth" program are estimated to be around EUR 85 million. These charges are expected to be accounted for within the next four quarters.

 

The planned group-wide restructuring program is based on the following key 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 the reduction of up to 600 positions globally, from which approximately 250 could be reductions 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.

 

Kemira will also consolidate its management structure. As of October 1, 2012, there will be one Management Board lead by the CEO. This Board will replace the previous Strategic Management and Business Management Boards. The Management Board is responsible for securing the long-term strategic development of the company. The members of the Management Board as of October 1, 2012 are listed in the attached chart.

 

"Since I assumed responsibility as the CEO of Kemira, my most evident key priorities for Kemira going forward are: improving profitability, accelerating growth in Asia and South America without sacrificing business opportunities in the mature markets and sharpening the strategy. We have started to work in all three areas. The second quarter results underlined the fact that these restructuring plans are needed in order to ensure sustainable profitability and competitive strength for Kemira," says Wolfgang Büchele, CEO of Kemira. 

"I understand that these plans may affect people and their families, and we will support our people during these changes," says Wolfgang Büchele.

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Thursday, 26 July 2012 07:30

Kemira Oyj's Interim Report January-June 2012

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).
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Kemira Oyj will publish its second quarter 2012 results on Thursday, July 26 around 8.30 am Finnish time (6.30 am UK time).

 

Kemira will arrange a press conference for analysts and the media starting at 10.00 am (8.00 am UK time) at Kemira House, Porkkalankatu 3, Helsinki. In the conference, Kemira's President and CEO Wolfgang Büchele and Chief Financial Officer Jyrki Mäki-Kala will present the results. The press conference will be held in English and will be webcasted at www.kemira.com. Presentation material will be available on Kemira's website at www.kemira.com under Investors in English and at www.kemira.fi in Finnish at about 10.00 am.


Conference call in connection to the press and analyst conference

You can also listen to the conference live over the phone and attend the Q&A session via a conference call. In order to participate in the call, please dial +44 (0)20 7162 0025, code 920266 ten minutes before the conference begins. A recording of the conference call will be available on Kemira's website later the same day.

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Kemira is introducing KemFlite™, a new concept to reduce paper and board machine problems that are caused by deposits due to the agglomeration of hydrophobic particles. These particles typically originate from wood pitch, stickies or binders in coated broke and have previously been difficult to detect and control. Under certain conditions the particles agglomerate to a larger size and eventually deposit on paper machine wet-end surfaces, wires, felts and dryer cans.

kem opt_web

KemFlite is designed to manage the hydrophobic substances, particularly their size, before they form deposits. The concept combines Kemira’s deep papermaking process know-how, with its broad deposit control product portfolio and powerful new analysis and monitoring tools.

These tools include Kemira Flyto™, a unique laboratory analysis to measure the particle size, quantity and hydrophobicity in samples taken from key points in the process, and Kemira AutoFlite™, a new on-line device that continuously provides similar information.

Following a complete mill survey by Kemira’s application experts, a tailor-made deposit control program can be implemented to manage the hydrophobic substances found in the mill process waters and eliminate machine deposition. The KemFlite concept has been proven in numerous mill cases where it has improved machine runnability and reduced defects like holes, spots, specks and hickeys in the final paper or board product.

“KemFlite is a concept that pools together a range of Kemira products and our process know-how in a consolidated package, directly addressing the problems customers have with deposit control on paper machines,” explains Chris Lewis, Regional Applications Manager, Paper.

The result for papermakers is smoother operation, decreased downtime, better cost efficiency, reduced chemical consumption and improved finished paper and board quality. 

To learn more about how KemFlite can help you solve deposit problems due to pitch, stickies and binder particles go to www.kemira.com/kemflite

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Kemira Oyj's and Rockwood Holdings Inc.'s titanium dioxide (TiO2) joint venture Sachtleben GmbH has reached an agreement to acquire the TiO2 production assets and inventory of crenox GmbH, based in Krefeld, Germany, from the insolvency administrator. The acquisition is expected to close by mid-July, subject to completion of due diligence, government approvals and other conditions.

Sachtleben will acquire the crenox Krefeld-Uerdingen plant and all inventory of the facility. The acquisition will add over 100,000 metric tons of TiO2 production, increasing total capacity to approximately 340,000 metric tons, further enhancing Sachtleben's position as a leading global supplier of high quality TiO2 pigments.

The joint venture Sachtleben (Kemira ownership 39% in the joint venture), which was formed in August 2008 by combining Kemira Oyj's and Rockwood's TiO2 businesses, is a leading producer of specialty TiO2 pigments for the synthetic fiber, packaging inks, cosmetics, pharmaceutical and food industries.


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