Financial position and cash flow

Financial position and cash flow

Cash flow from the operating activities in 2013 increased to EUR 200.3 million (176.3) mainly due to favorable changes in net working capital and lower interest and tax payments. The comparable period included in total EUR 15 million dividends received from PVO and JV Sachtleben. Cash flow after investing activities increased to EUR 195.7 million (71.8), mainly due to the proceeds of EUR 98 million received from the divestment of the shares in JV Sachtleben, EUR 80 million received from the divestment of the food and pharmaceuticals businesses and EUR 8 million received from the divestment of coagulant business in Brazil. The acquisition of 3F in Italy and USA had a cash flow impact of EUR -59 million. The comparable period of 2012 included EUR 27 million paid-in-capital from JV Sachtleben. The net working capital ratio decreased to 10.9% of the revenue (12.8% on December 31, 2012), mainly due to lower receivables and inventories as well as higher payables.

At the end of the period, Kemira Group’s net debt was EUR 456 million (532 on December 31, 2012). Net debt decreased mainly due to the total proceeds of the divestments. Acquisition of 3F and the dividend payment of EUR 81 million in April increased the net debt.

At the end of the period, interest-bearing liabilities totaled EUR 558 million (665 on December 31, 2012). Fixed-rate loans accounted for 60% of the net interest-bearing liabilities (56% on December 31, 2012). The average interest rate of the Group’s interest-bearing liabilities was 1.5% (1.6% on December 31, 2012). The duration of the Group’s interest-bearing loan portfolio was 14 months (16 months on December 31, 2012). In August 2013, Kemira signed a 5+1+1-year revolving credit facility of EUR 400 million, which replaced an undrawn EUR 300 million credit facility. In addition, Kemira signed EUR 45 million term loan with European Investment Bank (EIB). The new credit facility and loan with EIB remains undrawn at the end of the period.

Short-term liabilities maturing in the next 12 months amounted to EUR 278 million, the commercial papers of which, issued in the Finnish market, represented EUR 164 million and the short term part of the long-term loans represented EUR 58 million. Cash and cash equivalents totaled EUR 102 million on December 31, 2013 (133).

At the end of the period, the equity ratio was 51% (51% on December 31, 2012), while the gearing was 41% (42% on December 31, 2012). Shareholder’s equity decreased to EUR 1,125.5 million (1,260.6 on December 31, 2012) mainly due to the EUR 81 million dividend distribution and EUR -27 million change in the fair value of Kemira’s ownership in Pohjolan Voima Group shares. Fair value decreased mainly as a consequence of the lower electricity price in Finland in 2013.

The Group's most significant transaction currency risk arises from the Swedish krona and the Canadian dollar. At the end of the year, the denominated 12-month exchange rate risk of Swedish krona had an equivalent value of approximately EUR 33 million, 79% of which was hedged on an average basis. Correspondingly, the CAD denominated exchange rate risk was approximately EUR 30 million, 42% of which was hedged on an average basis. In addition, Kemira is exposed to smaller transaction risks in relation to the British pound and the Norwegian krona and the U.S. dollar with the total annual exposure in these currencies being approximately EUR 30 million, 60% of which was hedged on an average basis.

Because Kemira’s consolidated financial statements are compiled in euros, Kemira is also a subject to currency translation risk to the extent that the income statement and balance sheet items of subsidiaries located outside Finland are reported in a currency other than euro. The most significant translation exposure derives from the US dollar, the Swedish krona and the Brazilian real. A weakening of the above mentioned currencies against the euro would decrease Kemira’s revenue and EBIT through a translation risk. 10% depreciation of the above mentioned currencies against the euro would decrease Kemira’s EBIT by some EUR 10 million on an annual basis through a translation risk.