Financial performance, full year 2013
Kemira Group’s revenue was EUR 2,229.1 million (2,240.9). Organic revenue growth was 3% driven by higher sales volumes. Sales price changes did not have material impact on revenues.
Some of the main foreign currencies affecting Kemira’s financials depreciated against the euro in 2013, such as the US dollar (-3%), Brazilian real (-14%), and Canadian dollar (-7%). The negative currency exchange rate related translation impact on Kemira’s revenue was -2% or approximately EUR 50 million. Kemira made two acquisitions in 2013 of which 3F was closed on October 1 and Soto Industries on September 19. The impact of the acquisitions on Kemira’s revenue was close to EUR 20 million (less than 1%).
During the year, Kemira shifted its focus towards differentiated product lines according to the company’s strategy. This resulted in the divestments of several commodity product line based businesses, like chemicals to food and pharmaceutical industries (closed on March 1), aluminium and coagulant business in Brazil (closed on December 11), chemical distribution business in Denmark (closed on January 2, 2014, after the review period), formic acid and its derivatives business in Finland (closing expected in the first quarter of 2014) and some other small commodity chemical businesses in Denmark and Romania. The impact of the divestments on Kemira’s revenue was -2% or approximately EUR 50 million in 2013.
In the Paper segment, revenues increased 6% to EUR 1,067.6 million (1,005.6). Revenue growth in local currencies, excluding acquisitions and divestments, was 8%, driven by higher sales volumes. Sales price changes had a negligible impact on revenues. Currency exchange impacted revenues by -2%.
In the Municipal & Industrial segment, revenues decreased 4% to EUR 659.4 million (686.6). Revenue in local currencies, excluding acquistions and divestments, decreased 2%, driven by lower sales volumes. Sales price changes did not have a material impact on revenues. Acquisition had 1% impact and divestments -1% impact on revenues. Currency exchange impacted by -2%.
In the Oil & Mining segment, revenues decreased 3% to EUR 311.5 million (321.1). Revenue in local currencies, excluding acquisitions and divestments decreased 2% mainly due to the -3% impact of continued exit of some low margin product sales. The termination of low margin products was completed at the end of the third quarter of 2013. Sales volumes of differentiated products like polymers recovered, especially in the NAFTA region and could partly compensate for the negative impact of unfavorable pricing. The impact of the 3F acquisition on revenue was 2% and the impact of currency exchange -3%.
In the ChemSolutions segment, revenues decreased 16% to EUR 190.6 million (227.6). The divestment of the food and pharmaceuticals businesses had an impact of -18% on revenues. Revenues in local currencies, excluding divestments increased slightly as higher sales volumes could more than offset the impact of the somewhat lower sales prices. Currency exchange had a -1% impact on revenue.
Geographically, the revenue was split as follows: EMEA 57% (55%), North America 30% (31%), South America 7% (8%), and Asia Pacific 6% (6%). According to the sharpened strategy presented in April 2013, mature markets continue to be important for Kemira’s all segments, whereas the focus in the emerging markets is on selective expansion. In the emerging markets, China and Indonesia are the key markets for the paper wet-end chemistry. Brazil and Uruguay will remain important markets for the bleaching chemicals used in pulp industry. Oil & Mining is targeting expansion in selected countries in South America as well as in the Middle East and Africa.
|Revenue, EUR million||Jan–Dec 2013||Jan–Dec 2012||∆%|
|Municipal & Industrial||659.4||686.6||-4|
|Oil & Mining||311.5||321.1||-3|
The EBIT increased 29% to EUR 42.6 million (33.1) as lower EBITDA of EUR 141.9 million (179.9) was more than offset by lower depreciations of EUR 99.3 million (146.8).
Non-recurring items affecting the EBIT were EUR 121.6 million (122.4). Write-down related to the divestment of Kemira’s iron and aluminium coagulants business in Brazil amounted to EUR 43 million. Restructuring charges, related to continuous efficiency improvement measures amounted to approximately EUR 30 million. Restructuring charges and provisions related to the closure of the Vaasa process chemicals site amounted to EUR 24 million. Restructuring charges related to the establishment of the multifunction Business Service Center in Gdansk, Poland, amounted to EUR 13 million. Write-downs related to smaller disposals in Municipal & Industrial amounted to EUR 9 million. “Fit for Growth”-related write-downs, severance payments, and external service costs amounted to EUR 5 million. The comparable period in 2012 included “Fit for Growth” severance payments and costs related to external services of EUR 41 million and asset write-downs of EUR 30 million. Other, non “Fit for Growth” related, non-recurring items included the write-down of EUR 18 million from the divestment of Kemira’s food and pharmaceutical businesses and charges of EUR 33 million related to environmental liabilities, efficiency improvements, as well as streamlining of Kemira’s operations (see non-recurring items table on page 3).
|Non-recurring items, EUR million||Jan–Dec 2013||Jan–Dec 2012|
|Municipal & Industrial||68.8||30.0|
|Oil & Mining||8.1||9.4|
|Within depreciations, amortization and impairment losses||11.5||52.9|
|Municipal & Industrial||0.5||25.8|
|Oil & Mining||2.8||2.3|
The operative EBIT increased 6% to EUR 164.2 million (155.5), mainly due to a positive sales volumes impact of EUR 32 million. Sales price changes had EUR -9 million impact on operative EBIT.
Variable costs increased by EUR 8 million mainly due to higher propylene and electricity-related raw material costs. Fixed costs decreased EUR 11 million mainly due to the Fit for Growth-related savings and other efficiency measures.
Currency exchange had a negative impact of EUR 6 million on the operative EBIT. Divestments in ChemSolutions and Municipal & Industrial had EUR -6 million and other items EUR -7 million impact on the operative EBIT (see variance analysis on page 4). Acquisition of 3F and increased manufacturing related costs were main reasons for the negative impact.
The operative EBIT margin improved to 7.4% (6.9%).
“Fit for Growth”-related cost savings were EUR 46 million and almost reached the full cost savings run rate of EUR 60 million on an annualized basis at the end of 2013.
|Variance analysis, EUR million||Jan–Dec|
|Operative EBIT, 2012||155.5|
|Others, incl. acquisitions and divestments||-12.3|
|Operative EBIT, 2013||164.2|
|Operative EBIT||Jan–Dec 2013
|Municipal & Industrial||45.8||39.2||17||6.9||5.7|
|Oil & Mining||17.4||25.9||-33||5.6||8.1|
Income from associated companies decreased to EUR -1.1 million (11.2) as a result of lower net profits of the specialty titanium dioxide producer Joint Venture Sachtleben GmbH. Kemira divested its shares in the JV Sachtleben in February 2013.
Financing income and expenses totaled EUR -39.0 million (-15.7). Financing expenses included the non-recurring write-down of EUR 23 million related to the divestment of Kemira’s shares (39%) in the JV Sachtleben. The changes of EUR 3.2 million (-2.3) in fair values of electricity derivatives and the currency exchange differences of EUR 2.5 million (0.0) had positive impacts on the financing income and expenses. The comparable period in 2012 included a EUR 7.6 million dividend from Pohjolan Voima Oy (PVO), the Finnish electricity company.
Total taxes increased to EUR 28.4 million (6.2), mainly due to non-deductible write-downs. The tax rate, excluding non-recurring items affecting the EBIT and income from associated companies increased to 24.9% (20.6%). Comparable period in 2012 included positive impacts related to changes in deferred tax assets and liabilities. Income taxes decreased to EUR 25.6 million (29.8).
Net profit attributable to the owners of the parent company decreased to EUR -31.6 million (17.7) and the earnings per share to EUR -0.21 (0.12) mainly due to a write-down of EUR 23 million related to the divestment of the shares of Kemira’s JV Sachtleben, lower income from associated companies and higher taxes. Earnings per share, excluding non-recurring items, decreased 9% to EUR 0.70 (0.77), mainly due to the lower income from the associated companies.