Kemira decreased operative EBITDA margin to 12.5% in 2Q2017

​Kemira, a global chemicals company serving customers in water-intensive industries, reported revenue increase of 5% to EUR 617.2 million in 2Q2017. The company recorded the good volume growth both in Industry & Water and Pulp & Paper continued. At the same time, the company’s operative EBITDA decreased 2% to EUR 77.1 million mainly due to higher variable costs, despite sales volume growth and stabilizing sales prices. Thus, operative EBITDA margin declined to 12.5% from 13.4% y-o-y.

Jari Rosendal, Kemira’s President and CEO, commented:

“In the second quarter, revenue growth continued. Organic revenue growth was 4%, which is a good achievement. Profitability was below the prior-year level due to higher variable costs. During the quarter, Oil & Mining and Municipal & Industrial merged into a new segment Industry & Water. At the same time, Group’s overall structures were streamlined leading to fewer layers of management and increased span of control. The actions are expected to generate savings of EUR 15-20 million with a full run-rate by the end of 2017.

In Pulp & Paper, sales volumes continued to grow. We lost revenue due to force majeure at Huntsman (now Venator) in Pori, Finland, but the underlying revenue generation is developing according to plan. A major contract manufacturing agreement with AkzoNobel in China ended during Q2, and the two remaining ones in Europe will end in Q3 and Q4 leading to a step-up in synergies in the second half of the year. Our chlorate capacity investment in Joutseno has been granted all required permits and the site is expected to be operational during Q4.

Industry & Water generated organic growth of 9% driven by strong sales volume development in the North American oil & gas business. However, the profitability level was unsatisfactory as the first quarter’s spike in feedstock prices, particularly in North America, impacted variable costs negatively. In water treatment business, volume growth continued.

We continue to execute our strategy. Our new organizational structure is effective as of June 1 and the operational excellence program BOOST is progressing with a roll-out of logistics’ management in North America. Despite the Group’s lower profitability in the first half, I am confident that due to improvement actions already ongoing, the second half will be better than last year’s.”

Earlier Kemira completed investments into emulsion and cationic rosin production lines in China.

About Kemira:

The company provides expertise, application know-how and tailored combinations of chemicals for water-intensive industries. It focuses on pulp & paper, oil & gas, mining and water treatment to best improve our customers’ water, energy and raw material efficiency.

Source: Woodbizforum