(Stock Exchange Release)
- Revenue: EUR 673.3 million (Q1/2006: 552.9 million), up 22%.
- Operating profit: EUR 48.9 million (45.5 million), up 7% (up 18%,
when excluding the effect of non-recurring items).
- Earnings per share: EUR 0.22 (0.21), up 5%
- Full-year revenue, operating profit and earnings per share are
expected to improve from their 2006 levels.
KEY FIGURES AND RATIOS
EUR million 1-3/2007 1-3/2006 Change % 1-12/2006**
REVENUE 673.3 552.9 22% 2,522.5
EBITDA 82.6 74.9 10% 317.2
EBITDA, % 12.3% 13.5% 12.6%
OPERATING PROFIT 48.9 45.5 7% 193.7
Operating profit, % 7.3 % 8.2 % 7.7%
Financial income and expenses -12.2 -7.1 -37.2
PROFIT BEFORE TAX 37.3 37.5 -1% 154.2
Profit before tax, % 5.5 % 6.8 % 6.1%
NET PROFIT 27.3 26.6 3% 112.2
EPS, EUR 0.22 0.21 5% 0.90
Capital employed * 1,924.6 1,805.5 1,876.6
ROCE, % * 10.2 % 9.9 % 10.2%
Cash flow after investments, -117,6 -41.5 155.0
excluding acquisitions
* 12-month rolling average
** Prior year correction included (see page 6)
Kemira Group's revenue for January-March 2007 rose by 22% year on
year, to EUR 673.3 million (Q1/2006: 552.9 million). Acquisitions
contributed around EUR 129.7 million to revenue growth. Divestments
depressed revenue by roughly EUR 9.0 million. Organic growth was 2%,
excluding the currency effect, which had a 2% negative impact on
revenue.
Operating profit grew by 7%, to EUR 48.9 million (45.5), with
acquisitions contributing approximately EUR 4.7 million to the
figure. Operating profit includes capital gains on the sale of assets
and other non-recurring items, with their net effect on operating
profit amounting to EUR 0.8 million, compared with EUR 4.9 million
reported a year ago. Excluding the effect of non-recurring items,
operating profit totaled EUR 48.1 million (40.6), or an increase of
18%, year on year.
Non-recurring items included in operating profit:
+-----------------------------------------------------------------+
| EUR million | 1-3/2007 | 1-3/2006 | 1-12/2006 |
|-------------------------------+----------+----------+-----------|
| Kemira Pulp&Paper | 1.3 | 4.1 | 11.0 |
|-------------------------------+----------+----------+-----------|
| Kemira Water | - | - | -0.2 |
|-------------------------------+----------+----------+-----------|
| Kemira Specialty | - | - | 3.6 |
|-------------------------------+----------+----------+-----------|
| Kemira Coatings | - | - | 16.4 |
|-------------------------------+----------+----------+-----------|
| Other, including eliminations | -0.5 | 0.8 | -7.6 |
|-------------------------------+----------+----------+-----------|
| Total | 0.8 | 4.9 | 23.2 |
+-----------------------------------------------------------------+
Profit before tax came to EUR 37.3 million (37.5) and net profit
totaled EUR 27.3 million (26.6).
RESEARCH AND DEVELOPMENT
Reported research and development expenditure totaled EUR 15.2
million (11.9), accounting for 2.3% of revenue (2.0%).
CAPITAL EXPENDITURE
Gross capital expenditure, excluding acquisitions, amounted to EUR
55.1 million (27.2). The largest ongoing investments involve a
chemical plant under construction at the site of the Botnia pulp mill
in Uruguay, EUR 12.0 million, and a paint factory under construction
in the Stockholm area, EUR 5.9 million. Maintenance investments
represented around 26% of capital expenditure excluding acquisitions.
Group depreciation came to EUR 33.7 million (29.4 million).
Gross capital expenditure, including acquisitions worth EUR 23.2
million (30.3), totaled EUR 78.3 million (57.5).
FINANCIAL POSITION AND CASH FLOWS
In January-March, the Group reported a negative cash flows of EUR
30.0 million from operating activities (negative cash flow of EUR
20.3 million), due mainly to seasonal fluctuations in working
capital. The Group generated negative net cash flows of EUR 110.8
million from investing activities, of which acquisitions accounted
for an outflow of EUR 23.2 million. Kemira showed a negative free
cash flow of EUR 140.8 million (-71.8).
On March 31, 2007, the Group's net liabilities stood at EUR 964.5
million (December 31, 2006: EUR 827.4 million), this growth being
primarily due to a seasonal increase in working capital and
acquisitions carried out during the period.
On the same date, interest-bearing liabilities stood at EUR 1021.3
million. The duration of the Group's interest-bearing loan portfolio
at the period-end was 15 months.
On March 31, 2007, the equity ratio stood at 39% (March 31, 2006:
42%; December 31, 2006: 39%). while gearing was 87% (March 31, 2006:
65%; December 31, 2006: 76%).
Net financial expenses increased to EUR 12.2 million (7.1), due
mainly to higher interest bearing debt and also the rise in interest
rates.
Cash and cash equivalents on March 31, 2007 totaled EUR 56.6 million
(March 31, 2006: EUR 108,0 million).
In October 2006, Kemira signed a credit facility worth EUR 80
million, enabling six Group companies to sell certain account
receivables to the finance company. The related credit risk transfers
to the finance company and the receivables are derecognized from the
Group companies' balance sheet. The amount of outstanding sold
receivables on March 31, 2007 was EUR 15.8 million (December 31,
2006: EUR 15.7 million).
HUMAN RESOURCES
The number of Group employees totaled 9,405 on March 31, 2007 (March
31, 2006: 8734; December 31, 2006: 9,327).
KEMIRA PULP&PAPER
Kemira Pulp&Paper is the world's leading supplier of pulp and paper
chemicals, its extensive solutions spanning the pulp and paper
industry's value chain from pulp to paper coating.
EUR million 1-3/2007 1-3/2006 Change % 1-12/2006
REVENUE 255.3 209.5 22% 993.3
EBITDA 35.5 37.0 -4% 137.1
EBITDA, % 13.9% 17.7% 13.8%
OPERATING PROFIT 23.0 26.0 -12% 90.8
Operating profit, % 9.0% 12.4% 9.1%
Capital employed * 819.7 793.1 819.5
ROCE, % * 10.7% 9.5% 11.0%
Capital expenditure, excluding 22.3 14.6 77.6
acquisitions
Cash flow after investments, -7.7 5.6 65.1
excluding acquisitions
Personnel at period-end 2,286 2,058 2,304
* 12-month rolling average
Kemira Pulp&Paper reported year-on-year revenue growth of 22%,
totaling EUR 255.3 million (209.5), due largely to the acquisition of
the Lanxess paper chemicals business in April 2006. Organic revenue
growth was 4%, excluding the currency effect, which had a 3% negative
impact on revenue. The early arrival of spring in Finland made it
more difficult for customers to purchase timber causing some
downtime, that was reflected in bleaching chemicals' weaker sales
volume performance. The business area was able to fully pass raw
material price increases, which were more modest than a year ago, on
to end product prices to their full extent.
Reported operating profit of EUR 23.0 million (26.0) included EUR 1.3
million (4.1) in non-recurring income. The Lanxess paper chemicals
business was included for the first time in the first-quarter
figures; this contributed to the decreased ratio of operating profit
to revenue. Operating profit was lowered by the Korean hydrogen
peroxide business, divested in 2006. The integration of Lanxess
continues to make good progress.
KEMIRA WATER
Kemira Water is the world's leading supplier of inorganic coagulants
and ranks third in water treatment polymers. Kemira Water offers
customized water treatment and sludge treatment solutions to
municipal and private water treatment plants and industry.
EUR million 1-3/2007 1-3/2006 Change % 1-12/2006
REVENUE 170.0 92.3 84% 467.6
EBITDA 18.8 10.4 81% 53.4
EBITDA, % 11.1% 11.3% 11.4%
OPERATING PROFIT 11.9 6.4 86% 35.3
Operating profit, % 7.0% 6.9% 7.5%
Capital employed * 320.4 223.7 269.2
ROCE, % * 13.0% 13.6% 13.4%
Capital expenditure, excluding 7.7 2.8 19.4
acquisitions
Cash flow after investments, -10.5 -2.1 26.7
excluding acquisitions
Personnel at period-end 2,057 1,545 1,846
* 12-month rolling average
Kemira Water's revenue improved by 84%, to EUR 170.0 million (92.3),
due particularly to the acquisition in October 2006 of Cytec,
Galvatek and Parcon. Organic growth stood at 7%, excluding the
currency effect, which had a 5% negative impact on revenue.
Operating profit grew by 86%, to EUR 11.9 million (6.4), due to
company acquisitions in particular.
January saw the confirmation of the second stage included in the
acquisition of the Cytec water treatment chemicals and acrylamide
business. The first stage in October 2006 involved the confirmation
of the Cytec water treatment chemicals business transfer to Kemira,
excluding the Botlek production plant in the Netherlands and the
assets of subsidiaries based in Latin America and Asia-Pacific.
Thereafter, the second stage involved the confirmation of the Botlek
production plant's transfer to Kemira and assets in Latin America and
Asia-Pacific are expected to transfer to Kemira during the second
quarter of 2007. The purchase price will total roughly EUR 197
million, including the price related to the deal's second and final
stage and costs related to the acquisition.
In January, Kemira agreed to acquire two Dalquim Industria e Comercio
Ltda companies in Brasil. With combined revenue of around EUR 12
million, these companies manufacture inorganic water-treatment
coagulants and their main customers include the paper industry and
municipalities. In addition to serving the paper industry's growing
needs, the acquirees focus on the treatment of municipal drinking and
wastewater. Bolstering Kemira's goal of intensifying mutual synergy
and strengthening its position as the world's leading supplier of
pulp, paper and water treatment chemicals in the emerging market,
this acquisition was completed in April.
In March, Kemira agreed to acquire Arkema's coagulants business for
water treatment. In 2006, the acquired business reported revenue of
around EUR 19 million. As a result of the acquisition, Kemira will
become the market leader for inorganic coagulants in France and
fortifies its leading position in the Spanish market.
In April, Kemira confirmed the acquisition of 80% of the shares in
the Chinese company Chongqing Lanjie Tap Water Materials Co.,Ltd..
The company is a producer of inorganic coagulants and organic
polymers for water treatment in the municipality of Chongqing,
located in central China. Its main client base is in the local
potable water production. The company's current revenue, in the range
of EUR two million annually, is expected to grow rapidly in the years
to come.
KEMIRA SPECIALTY
Kemira Specialty is the leading supplier of specialty chemicals in
selected customer segments, serving customers in a wide array of
industries, such as the cosmetics, printing ink, food, feed and
detergent industries, through its customer-driven solutions.
EUR million 1-3/2007 1-3/2006 Change % 1-12/2006
REVENUE 103.5 118.6 -13% 456.2
EBITDA 18.1 19.1 -5% 77.0
EBITDA, % 17.5% 16.1% 16.9%
OPERATING PROFIT 10.3 11.3 -9% 45.8
Operating profit, % 9.9% 9.5% 10.0%
Capital employed * 446.4 457.8 451.6
ROCE, % * 10.0% 10.5% 10.1%
Capital expenditure, excluding 9.5 4.8 30.8
acquisitions
Cash flow after investments, -7.6 15.3 53.6
excluding acquisitions
Personnel at period-end 1,004 1,137 1,011
* 12-month rolling average
Kemira Specialty's revenue decreased by 13%, to EUR 103.5 million
(118.6). Due to developments in the US housing market and dollar,
competition toughened in Europe in particular and titanium dioxide
sales volumes decreased during January-March. The euro selling prices
of titanium dioxide fell slightly. In addition, sales of deicer
chemicals were at low levels as a result of the warmer-than-usual
winter in Europe. Currency effect lowered the sales by 3%.
Operating profit was EUR 10.3 million (11.3), due chiefly to lower
sales volumes and selling prices of titanium dioxide. Year on year,
operating profit as a percentage of revenue improved to 9.9% (9.5%).
In March. Kemira acquired Sustainable Nutrition BV of the Netherlands
from the company's management. Kemira and the acquiree have
collaborated in previous years when Sustainable Nutrition has
operated as Kemira's sales, marketing and product development partner
in the feed industry. The acquisition will strengthen Kemira's
customer knowledge in the feed industry.
In April, Kemira agreed to acquire TRI-K Industries Inc., including
its subsidiary Maybrook Inc., from the company's management. The
company is headquartered in New Jersey and has additional operations
in Massachusetts. With a staff of 50 and revenue of around USD 20
million in 2006, TRI-K Industries Inc. is a distributor and producer
of specialty ingredients for the cosmetics industry. This acquisition
will provide Kemira Specialty with an excellent platform for
expanding its cosmetics business, especially in the field of skin
care and hair care.
KEMIRA COATINGS
Kemira Coatings is the leading supplier of paints in Northern and
Eastern Europe, providing consumers and professionals with branded
products. Its products consist of decorative paints and coatings for
the woodworking and metal industries.
EUR million 1-3/2007 1-3/2006 Change % 1-12/2006
REVENUE 135.8 118.6 15% 562.8
EBITDA 17.1 13.7 25% 88.9
EBITDA, % 12.6% 11.6% 15.8%
OPERATING PROFIT 12.8 9.6 33% 72.1
Operating profit, % 9.4% 8.1% 12.8%
Capital employed * 311.5 288.4 310.5
ROCE, % * 24.6% 20.2% 23.7%
Capital expenditure, excluding 9.8 3.8 22.5
acquisitions
Cash flow after investments, -39.7 -31.9 71.2
excluding acquisitions
Personnel at period-end 3,543 3,496 3,494
* 12-month rolling average
Kemira Coatings increased its revenue by 15% year on year, to EUR
135.8 million (118.6). Due to the warm spring and its premature
arrival, all market areas showed a good sales performance. Organic
growth stood at 12%. In addition, revenue was boosted by the
acquisition in February 2006 of Kraski Teks. Showing a favorable
sales performance in all market areas, the Decorative Paints unit
improved its revenue by 16%. The Industrial Coatings unit's sales
increased by 6%.
Operating profit rose by 33%, to EUR 12.8 million (9.6), due to a
good sales performance and efficient cost management.
In April, Kemira announced the confirmation of the purchase of
holdings in two Russian industrial coatings companies. Accordingly,
Tikkurila bought 70% holdings in OOO "Gamma" and OOO "Ohtinski zavod
poroshkovyh krasok" based in St Petersburgh. With revenue of roughly
EUR 8 million and a staff of 100, Gamma is a major manufacturer of
metal-industry coatings in Russia. Ohtinski zavod poroshkovyh krasok,
a manufacturer and marketer of powder coatings, has revenue of
approximately EUR 3 million and personnel of 50. This acquisition
will strengthen Kemira's position in the Russian metal-industry
coatings market.
OTHER OPERATIONS
In February, Kemira sold its shareholding (50%) in Kemira Arab Potash
Company Ltd (Kemapco) to Arab Potash Company Ltd (APC). Kemira will
continue selling potassium nitrate, produced by the Jordanian plant,
for a one-year transition period.
During the current year, an error was found in the calculation of the
provision recognized in 2006 due to the closure of the Water Soluble
unit. This prior year's error was corrected retrospectively in the
last quarter figures of 2006 in accordance with IAS 8. The provision
was increased by EUR 8 million decreasing the result for the last
quarter by the same amount. The financial statement section in this
interim report provides more detailed information on the correction
of this error.
In March, Kemira sold all of its shares in OnePoint Oy, a provider of
infrastructure and production support services in the Kokkola
Industrial Park, to Kokkolan Voima, in accordance with a letter of
intent signed in December 2006.
Other operations include corporate expenses not charged to the
business areas, such as some research and development costs and the
costs of the Kemira Corporate Center.
KEMIRA OYJ SHARES AND SHAREHOLDERS
During January-March, Kemira Oyj shares registered a high of EUR
19.20 and a low of EUR 16.00, the share price averaging EUR 17.60. On
March 31, 2007, the company's market capitalization, excluding
treasury shares, totaled EUR 2077 million.
On March 31, 2007, the company's share capital totaled EUR 221.7
million and the number of registered shares 125,001,310. The
reporting period saw the subscription of 33,699 new shares using
warrants under the 2001 stock option program. The resulting share
capital increase, EUR 59,763.67, was registered in the Traded
Register on March 30, 2007.
On February 23, 2007, Kemira Oyj transferred 144,143 treasury shares
to employees involved in the company's 2006 share-based incentive
plan. Kemira holds 3,848,877 treasury shares, accounting for 3.1% of
outstanding company shares and voting rights.
AGM DECISIONS
Based on a decision by the Annual General Meeting on April 16, 2007,
the Group paid out a per-share dividend of EUR 0.48, or a total of
EUR 58.2 million, on April 26, 2007.
As proposed by the Nomination Committee, the AGM re-elected the
seven-member Board of Directors for a one-year term, with Anssi
Soila, M.Sc. (Eng.) and M.Sc. (Econ.), continuing as Chairman and
Eija Malmivirta, M.Sc. (Eng.), as Vice Chairman. Other re-elected
Board members include Elizabeth Armstrong, Heikki Bergholm, Ove
Mattsson, Kaija Pehu-Lehtonen and Markku Tapio.
The AGM re-elected Aulis Ranta-Muotio Chairman of the Supervisory
Board, with Mikko Elo as First Vice Chairman and Heikki A. Ollila as
Second Vice Chairman, and re-elected Pekka Kainulainen, Mikko
Långström, Susanna Rahkonen, Risto Ranki and Katri Sarlund members of
the Supervisory Board.
The AGM elected KPMG Oy Ab, Authorized Public Accountants, the
Company's auditor, with Pekka Pajamo, Authorized Public Accountant,
acting as chief auditor.
The AGM decided on the following amendments to the Company's Articles
of Association:
* Article 3 concerning the minimum and maximum share
capital, the minimum and maximum number of shares and voting rights
conferred by Company shares shall be deleted;
* Article 4 shall include a reference to Company shares
belonging to the book-entry system, and Article 5 concerning the
procedure governing the dividend record date shall be deleted;
* Article 7 concerning the term of Supervisory Board members
shall be amended in such a way that their term terminates at the
close of the Annual General Meeting following their election,
instead of one year;
* Article 10 concerning the Supervisory Board's duties shall
be amended in such a way that the Supervisory Board's duty shall be
to supervise the Company's administration for which the Board of
Directors and the Managing Director bear responsibility;
* Article 13 shall be amended in such a way that "to sign
the Company's business name" becomes "the right to represent the
Company";
* Article 15 shall be amended in such a way that the Company
shall have one auditor, who must be a firm of Authorized Public
Accountants. In addition, the stipulation on the age limit shall be
deleted from Article 15;
* A reference to Article 31 concerning the obligation to
redeem shares shall be deleted from Article 17;
* Clause 2 of Article 18 shall be deleted;
* The terminology of Article 20 concerning the Annual
General Meeting shall be specified as required by the new Companies
Act and the amendments to the Articles of Association;
* Articles 21-36 concerning share redemption shall be
deleted;
* Article 37 "In other respects, the regulations of the
Companies Act currently in force shall be observed" shall be
deleted;
The AGM authorized the Board of Directors to decide to issue a
maximum of 12,500,000 new shares and/or transfer a maximum of
3,848,877 treasury shares held by the Company either against payment
or, as part of the implementation of the Company's share-based
incentive plan, without payment ("Share issue authorization"). Said
new shares may be issued and said treasury shares may be transferred
to the Company's shareholders in proportion to their current
shareholdings in the Company, or through a private placement if the
Company has a cogent financial reason for doing so, such as financing
or implementing mergers and acquisitions, developing its capital
structure, improving the liquidity of the Company's shares or if this
is justified for the purpose of implementing the Company's
share-based incentive plan. Private placement may be carried out
without payment only in connection with the implementation of the
Company's share-based incentive plan. The subscription price of new
shares and the amount payable for treasury shares shall be recognized
under invested unrestricted equity reserve. The share issue
authorization will remain valid until the end of the next Annual
General Meeting.
The AGM decided that a Nomination Committee be re-established for
Kemira to prepare proposals for Board member candidates and Board
emoluments for the next AGM. The right of appointing Nomination
Committee members, representing Company shareholders, will rest with
the three largest shareholders who account for the largest share of
the votes conferred by all of the Company's shares on November 1
preceding the Annual General Meeting. The Chairman of the Board of
Directors will act as the Committee's expert member.
OUTLOOK
Full-year revenue, operating profit and earnings per share for 2007
are expected to increase from their 2006 levels. Raw material and
energy prices as well as transportation costs are projected to behave
more moderately than in 2006. Operational risks were presented in the
Annual Report and no significant changes have occurred.
Since the production-capacity utilization rates of Kemira
Pulp&Paper's customers are expected to be high, the business area's
revenue and operating profit are anticipated to grow from the
previous year's levels. Kemira has successfully integrated companies
acquired in 2006 as part of the Group's global pulp and paper
chemicals operations and their favorable contribution to profit
performance will be reflected in the growing Far Eastern and South
American markets. In March, Kemira Pulp&Paper concluded two new
significant supply agreements, which will boost the business area's
organic growth. A chemical plant under construction at the site of a
pulp mill in Uruguay will be phased in as the customer's pulp
production begins during the second half.
Kemira Water is expected to increase its revenue and operating profit
from 2006 levels, due in particular to its previous acquisitions, and
demand for its water treatment chemicals is anticipated to remain at
a good level. During 2007, Kemira Water will focus on the integration
of acquirees in particular.
Kemira Specialty's revenue and operating profit are anticipated to be
in line with their 2006 levels, despite first-quarter market
developments. Competition is expected to remain tough in the titanium
dioxide market. Although demand for titanium dioxide is projected to
increase slightly this year, its euro prices are anticipated to
remain lower than a year ago. Specialty pigments are expected to
further increase their share of Kemira's total sales. The business
area's sales of organic acids and acid derivatives are anticipated to
show favorable development in most of the areas. Sales of sodium
percarbonate, used in detergents, should remain at their 2006 level
and prices should decline slightly.
Kemira Coatings is expected to generate higher revenue due to demand
remaining at a good level in all market areas, with the strongest
growth anticipated in Russia and other CIS countries. Operating
profit for 2007 is expected to grow year on year (excluding EUR 16.4
million in non-recurring income in operating profit for 2006),
spurred by favorable developments in sales and recent years'
restructuring.
Helsinki, May 2, 2007
Board of Directors
All forward-looking statements in this review are based on the
management's current expectations and beliefs about future events,
and actual results may differ materially from the expectations and
beliefs such statements contain.
KEMIRA GROUP
The figures are
unaudited.
All figures in this financial report have been rounded and
consequently the sum of individual figures can deviate from the
presented sum figure.
This Interim Consolidated Financial Statement has been prepared in
compliance with IAS 34. Kemira Group has corrected a previous year
error in accordance
with IAS 8. The nature of the error is
described in the end of the report.
Changes to the accounting
policies as of January 1, 2007:
- IFRS 7 (Financial Instruments: Disclosures) has
been adopted by the Group in 2007
- Revised IAS 1 (Disclosures about capital) has been
adopted by the Group in 2007
The Group assesses that the adoption of the revised standards will
not have any material effect on its future financial statements.
However, the resulting
changes will add disclosures to
the Financial Statements.
INCOME STATEMENT EUR 1-3/2007 1-3/2006 2006 *
million
Revenue 673.3 552.9 2,522.5
Other income from 6.8 7.8 59.2
operations
Expenses -597.5 -485.8 -2,264.5
Depreciation -33.7 -29.4 -123.5
Operating profit 48.9 45.5 193.7
Financial income and -12.2 -7.1 -37.2
expenses
Income from associates 0.6 -0.9 -2.3
Profit before tax 37.3 37.5 154.2
Income tax -10.0 -10.9 -42.0
Net profit for the 27.3 26.6 112.2
period
Attributable to:
Equity holders of the 26.4 25.8 108.6
parent
Minority interest 0.9 0.8 3.6
Net profit for the 27.3 26.6 112.2
period
BALANCE SHEET EUR
million
ASSETS 31.3.2007 31.12.2006
Non-current assets
Goodwill 632.8 581.0
Other intangible assets 110.3 108.9
Property, plant and 973.8 987.1
equipment
Holdings in associates 9.1 8.1
Available-for-sale 84.3 84.3
investments
Deferred tax assets 4.8 7.7
Defined benefit pension 23.9 24.6
receivables
Other investments 9.0 9.5
Total non-current assets 1,848.0 1,811.2
Current assets
Inventories 304.9 293.2
Receivables
Interest-bearing 7.6 9.1
receivables
Interest-free 603.4 565.4
receivables
Total receivables 611.0 574.5
Money market investments 20.8 35.0
- cash equivalents
Bank and cash 35.7 41.1
Total current assets 972.4 943.8
Non-current assets held 3.5 14.4
for sale
Total assets 2,823.9 2,769.4
EQUITY AND LIABILITIES 31.3.2007 31.12.2006
*
Equity attributable to 1,091.6 1,069.9
equity holders of the
parent
Minority interest 13.5 12.6
Total equity 1,105.1 1,082.5
Non-current liabilities
Interest-bearing 580.4 395.1
non-current liabilities
Deferred tax liabilities 123.3 105.9
Pension liabilities 65.5 66.8
Provisions 24.7 63.3
Total non-current 793.9 631.1
liabilities
Current liabilities
Interest-bearing current 440.9 508.5
liabilities
Interest-free current 469.9 522.9
liabilities
Provisions 14.1 15.5
Total current 924.9 1,046.9
liabilities
Liabilities directly
associated with
non-current
assets classified as - 8.9
held for sale
Total liabilities 1,718.8 1,686.9
Total equity and 2,823.9 2,769.4
liabilities
Non-current assets held for sale
include US- and Canada-based
factory sites.
* Prior year correction
included
CONSOLIDATED CASH FLOW EUR million 1-3/2007 1-3/2006 2006
STATEMENT
Cash flows from operating
activities
Adjusted operating 81.6 59.5 232.0
profit
Interests -5.6 -6.1 -30.4
Dividend income - 0.9 2.0
Other financing items - 1.6 -1.3
Income taxes paid -7.8 -10.6 -45.1
Total funds from 68.2 45.3 157.2
operations
Change in net working -98.2 -65.6 59.6
capital
Total cash flows from -30.0 -20.3 216.8
operating activities
Cash flows from investing
activities
Capital expenditure -78.3 -57.5 -462.0
Proceeds from sale of -32.5 6.0 102.9
assets
Net cash used in -110.8 -51.5 -359.1
investing activities
Cash flow after investing -140.8 -71.8 -142.3
activities
Cash flows from financing
activities
Change in long-term loans (increase 118.9 48.1 173.4
+, decrease -)
Change in long-term loan receivables 1.4 0.7 1.5
(decrease +, increase -)
Short-term financing, net (increase - 74.1 33.8
+, decrease -)
Dividends paid - - -46.3
Other 0.8 0.6 -0.2
Net cash used in financing 121.1 123.5 162.2
activities
Net change in cash and -19.7 51.7 19.9
cash equivalents
Cash and cash 56.5 108.0 76.2
equivalents at end of
period
Cash and cash equivalents at 76.2 56.3 56.3
beginning of period
Net change in cash and -19.7 51.7 19.9
cash equivalents
STATEMENT OF CHANGES IN
EQUITY
Equity attributable to equity holders of the
parent
Share Share Capital Other Fair
value
capital issue paid-in reserves reserve
in
excess
of par value
Shareholders' equity at 221.3 0.0 257.8 2.8 64.3
January 1, 2006
Net profit for the - - - - -
financial year
Dividends paid - - - - -
Treasury shares issued to - - - - -
target group
Share-based compensation - - - - -
Options subscribed - 0.1 - - -
for shares
Exchange differences - - - -0.1 -
Hedge of net investments - - - - -
in foreign entities
Cash flow hedging: amount
entered in
shareholders' equity - - - - 11.5
Acquired minority interest - - - - -
Transfer between - - - 0.4 -
restricted and
non-restricted equity
Other changes - - - - -
Shareholders' equity at 221.3 0.1 257.8 3.1 75.8
March 31, 2006
Shareholders' equity at 221.6 0.0 257.9 3.1 59.6
January 1, 2007
Net profit for the - - - - -
financial year
Dividends paid - - - - -
Treasury shares issued to - - - - -
target group
Share-based compensation - - - - -
Options subscribed 0.1 - - - -
for shares
Exchange differences - - - - -
Hedge of net investments - - - - -
in foreign entities
Cash flow hedging: amount
entered in
shareholders' equity - - - - -4.3
Acquired minority interest - - - - -
Transfer between - - - - -
restricted and
non-restricted equity
Other changes - - - 0.1 -
Shareholders' equity at 221.7 0.0 257.9 3.2 55.3
March 31, 2007
Equity attributable to equity holders of the
parent
Exchange Treasury Retained Minority
differences shares earnings interests Total
Shareholders' equity at -33.9 -27.5 520.7 13.7 1,019.2
January 1, 2006
Net profit for the - - 25.8 0.8 26.6
financial year
Dividends paid - - - - 0.0
Treasury shares issued to - 0.7 -0.7 - 0.0
target group
Share-based compensation - - - - 0.0
Options subscribed - - - - 0.1
for shares
Exchange differences -2.6 - - 0.2 -2.5
Hedge of net investments 2.3 - - - 2.3
in foreign entities
Cash flow hedging: amount
entered in
shareholders' equity - - - - 11.5
Acquired minority interest - - - 0.3 0.3
Transfer between - - -0.4 - 0.0
restricted and
non-restricted equity
Other changes - - -0.2 0.2 0.0
Shareholders' equity at -34.2 -26.8 545.2 15.2 1,057.5
March 31, 2006
Shareholders' equity at -30.8 -26.8 585.3 12.6 1082.5
January 1, 2007
Net profit for the - - 26.4 0.9 27.3
financial year
Dividends paid - - - - 0.0
Treasury shares issued to - 0.9 -0.9 - 0.0
target group
Share-based compensation - - 0.4 - 0.4
Options subscribed - - - - 0.1
for shares
Exchange differences -4.0 - - - -4.0
Hedge of net investments 2.8 - - - 2.8
in foreign entities
Cash flow hedging: amount
entered in
shareholders' equity - - - - -4.3
Acquired minority interest - - - - 0.0
Transfer between - - - - 0.0
restricted and
non-restricted equity
Other changes - - 0.2 - 0.3
Shareholders' equity at -32.0 -25.9 611.4 13.5 1,105.1
March 31, 2007
At the end of the year 2006 there were 3,979,670 treasury shares. Of the
shares that were granted in connection with the share-based
incentive plan 13,350 were returned to Kemira in 2007. A total of 144,143
shares were issued to key persons based on the incentive plan
on February 23, 2007. The total equivalent book value of the shares issued
amounted to approx. EUR 255,133. The issue does not materially
affect the distribution of ownership and voting power in
the company.
Kemira had in its possession 3,848,877 of its treasury shares at March 31,
2007. Their average acquisition share price was EUR 6.73 and
the treasury shares represented 3.1% of the share capital and of the aggregate
number of votes conferred by all the shares. The equivalent
book value of the treasury shares is
EUR 6.9 million.
KEY FIGURES 1-3/2007 1-3/2006 2006
Earnings per 0.22 0.21 0.90
share, basic and
diluted, EUR
Cash flow from -0.25 -0.17 1.79
operations per
share, EUR
Capital 78.3 57.5 462.0
expenditure, EUR
million
Capital 11.6 10.4 18.3
expenditure /
revenue, %
Average number 121,091 120,759 120,877
of shares
(1000), basic *)
Average number 121,197 121,028 121,051
of shares
(1000), diluted
*)
Number of shares 121,152 120,861 120,988
at the end of
the period
(1000), basic *)
Number of shares 121,191 121,033 121,204
at the end of
the period
(1000), diluted
*)
Equity per 9.01 8.62 8.85
share,
attributable to
equity holders
of the parent,
EUR
Equity ratio, % 39.2 42.4 39.2
Gearing, % 87.3 65.4 76.4
Net liabilities, 964.5 690.6 827.4
EUR million
Personnel 9,431 8,357 9,186
(average)
*) Number of shares
outstanding, adjusted by
the number of shares
bought back.
REVENUE BY EUR 1-3/2007 1-3/2006 2006
BUSINESS AREA million
Kemira 255.3 209.5 993.3
Pulp&Paper
Kemira Water 170.0 92.3 467.6
Kemira Specialty 103.5 118.6 456.2
Kemira Coatings 135.8 118.6 562.8
Other and 8.7 13.9 42.6
Intra-Group
sales
Total Group 673.3 552.9 2,522.5
OPERATING PROFIT 1-3/2007 1-3/2006 2006
BY BUSINESS AREA
Kemira 23.0 26.0 90.8
Pulp&Paper
Kemira Water 11.9 6.4 35.3
Kemira Specialty 10.3 11.3 45.8
Kemira Coatings 12.8 9.6 72.1
Other and -9.1 -7.8 -50.3
eliminations
Total Group 48.9 45.5 193.7
CHANGES IN EUR 1-3/2007 1-3/2006 2006
PROPERTY, PLANT million
AND EQUIPMENT
Carrying amount 987.1 864.9 865.0
at beginning of
year
Acquisitions of 17.0 17.9 151.9
subsidiaries
Increases 1.8 28.6 154.4
Decreases -2.7 -1.9 -42.0
Depreciation and -28.4 -25.3 -43.3
impairments
Exchange rate -1.0 -26.2 -98.9
differences and
other changes
Net carrying 973.8 858.0 987.1
amount at end of
period
CHANGES IN EUR 1-3/2007 1-3/2006 2006
INTANGIBLE million
ASSETS
Carrying amount 689.8 629.7 629.7
at beginning of
year
Acquisitions of 6.2 26.5 71.8
subsidiaries
Increases 53.3 2.1 18.1
Decreases -0.6 -0.1 -0.4
Depreciation and -4.3 -4.0 -17.2
impairments
Exchange rate -1.3 -3.5 -12.1
differences and
other changes
Net carrying 743.1 650.7 689.9
amount at end of
period
CONTINGENT EUR 31.3.2007 31.12.2006
LIABILITIES million
Mortgages 61.1 64.8
Assets pledged
On behalf of 19.2 19.5
own commitments
Guarantees
On behalf of 6.5 6.4
own commitments
On behalf of 33.2 32.6
associates
On behalf of 3.6 1.4
others
Operating
leasing
liabilities
Maturity 14.8 14.9
within one year
Maturity after 115.2 118.1
one year
Other
obligations
On behalf of 0.3 0.4
own commitments
On behalf of 2.4 2.3
associates
Litigation
The Group has extensive international operations and is
involved in a number of legal proceedings incidental to
these operations.
The Group does not expect the outcome of any legal proceedings
currently pending to have a materially adverse effect upon the
Group's
consolidated
result.
Kemira Chemicals, Inc. has received a grand jury subpoena to
produce documents in connection with an investigation by the
United States
Department of Justice's Antitrust Division, relating to
the hydrogen peroxide business in the US. Kemira Oyj,
Kemira Chemicals, Inc. and
Kemira Chemicals Canada, Inc. have recently received
claims or were named in class action lawsuits filed by
direct and indirect
purchasers of hydrogen peroxide and
persalts in US federal and state
courts and in Canada.
In these civil actions it is alleged that the US
plaintiffs suffered damages resulting from a cartel among
hydrogen peroxide suppliers.
The existence of the United States Departments of Justice's
Antitrust Division's investigations and the European Commission's
ruling in a case
of infringement of competition law
in May 2006 are relied upon in
support of the allegations.
RELATED PARTY
Related party
transactions have not
changed materially after
annual closing 2006.
DERIVATIVE EUR
INSTRUMENTS million
31.3.2007 31.12.2006
Nominal Fair Nominal Fair value
value value value
Currency
instruments
Forward 397.8 2.2 389.4 5.5
contracts
of which - - 19.6 2.2
hedges of net
investment in a
foreign
operation
Currency options
Bought 38.9 0.1 42.8 -
Sold 35.6 - 45.3 0.2
Currency swaps 148.8 5.5 115.9 8.4
Interest rate
instruments
Interest rate 125.8 4.2 109.2 4.7
swaps
of which cash 93.2 3.8 83.8 4.2
flow hedge
Interest rate
options
Bought - - - -
Sold - - - -
Bond futures 10.0 - 10.0 -0.2
of which open 10.0 - 10.0 -0.2
Other instuments Fair Fair value
value
Electricity GWh 1076.8 4.6 GWh 1,227.0 10.4
forward
contracts
of which cash GWh 1076.8 4.6 GWh 1,227.0 10.4
flow hedge
Propane swap Tons - - Tons 1,000.0 -0.1
contracts
The fair values of the instruments which are publicly traded are
based on market valuation on the date of reporting. Other
instruments have
been valuated based on net present values of future cash
flows. Valuation models have been used to estimate thefair values of options.
Nominal values of the financial instruments do not necessarily
correspond to the actual cash flows between the counterparties and
do not
therefore give a
fair view of the
risk position of
the Group.
BUSINESS
COMBINATIONS
The Cytec water
treatment
business
Kemira acquired the Cytec Industries, Inc.'s water treating and
acryl amide business on October 1, 2006. Cytec's water treatment
chemicals
product line consists of water treatment solutions for industrial
and municipal water treatment plants. The acquisition includes
five production
plants of which three are located in the US
(Mobile/Alabama, Longview/Washington, and
Fortier/Louisiana), and two in Europe
(Bradford /UK
and Botlek/the
Netherlands).
The acquisition of Cytec's water treatment chemicals business is
in line with Kemira's growth strategy. It also enables the Group
to significantly
broaden its current product portfolio and gain greater
geographical presence in key markets and inside key
customer segments. The
acquired business'
market regions include
the US, South America,
Asia and Europe.
The total price of the acquisition is approx. EUR 197 million but the amount
is subject to the adjustment of net working capital. Capitalized acquisition
costs
directly attributed to the combination were EUR 2.9 million March 31, 2007.
The acquisition was financed with Kemira Group's own cash assets and through
existing
financing
agreements.
In addition to the purchase of the business (asset purchase
agreement) which was closed October 1, 2006, Kemira signed a share
purchase
agreement to buy the shares of Cytec
Manufacturing BV. The closing and payment of
the share purchase was on January
11, 2007. Kemira has also signed transition service agreements
with nine Cytec companies concerning certain transition services
with respect of
the products of the business (Overseas units). The assets related
to these transition service agreements will be transferred to
Kemira and paid gradually
starting on
April 1 and
ending on July
1, 2007.
The control over the whole Cytec water treatment business
was transferred to Kemira on October 1, 2006. The purchase
price allocation
of the Cytec water treatment business has been made for the March
31, 2007 financial statements. The fair values of the business
combination's intangible
assets consist of global patents,
customer related assets and
manufacturing knowhow.
Business combination has been done preliminarily since the
business transfers of the Overseas units are still on-going
according to the plan.
Fair values Carrying
recorded on amounts
prior
business to business
combination combination
Intangible 15.5 -
assets
Property, plant 91.0 54.7
and equipment
Inventories 35.0 33.3
Trade 34.9 34.9
receivables and
other
receivables
Cash and cash 0.3 0.3
equivalents
Total assets 176.7 123.2
Interest bearing - -
current
liabilities
Other 12.9 12.8
liabilities
Deferred tax 18.0 -
liabilities
Total 30.9 12.8
liabilities
Net assets 145.8 110.4
Cost of business 197.1
combination
(net)
Goodwill 51.3
Acquisition cost 197.1
Overseas units -12.5
Cash and cash -0.3
equivalents in
subsidiary
acquired
Cash outflow on 184.3
acquisition
The revenue of the acquired unit for January 1 - March 31,
2007 totaled EUR 69.7 million and operating profit EUR 3.2
million.
DEFINITIONS OF
KEY FIGURES
Earnings per
share (EPS)
Net profit
attributable to
equity holders
of the parent
Average number
of shares
Cash flow from
operations
Cash flow from
operations,
after change in
net working
capital and
before investing
activities
Cash flow from
operations per
share
Cash flow from
operations
Average number
of shares
Equity per share
Equity
attributable to
equity holders
of the parent
at end of
quarter
Number of shares
at end of
quarter
Equity ratio, %
Shareholders'
equity x 100
Total assets -
prepayments
received
Gearing, %
Interest-bearing
net liabilities
x 100
Shareholders'
equity
Net liabilities
Liabilities -
bank and cash -
money market
investments
PRIOR PERIOD
ERROR
An error was discovered related to the financial statements of
2006 and has been corrected retrospectively according to IAS 8.
The error was related to
the calculation of the provision made for the closure of the Water
Soluble business unit and as a result of this the provision was
reported 8 million euro
too low. This has been corrected to the fourth quarter result of
2006. The income statement of full year 2006 and the balance sheet
at December 31, 2006
were changed as
follows:
INCOME EUR Reported Corrected 2006
STATEMENT million 2006
Revenue 2,522.5 2,522.5
Other income 59.2 59.2
from operations
Expenses -2,256.5 -2,264.5
Depreciation -123.5 -123.5
Operating profit 201.7 193.7
Financial income -37.2 -37.2
and expenses
Income from -2.3 -2.3
associates
Profit before 162.2 154.2
tax
Income tax -42.0 -42.0
Net profit for 120.2 112.2
the period
Attributable to:
Equity holders 116.6 108.6
of the parent
Minority 3.6 3.6
interest
Net profit for 120.2 112.2
the period
KEY FIGURES Reported Corrected 2006
2006
Earnings per 0.96 0.90
share, basic and
diluted, EUR
BALANCE SHEET EUR Reported Corrected
million
31.12.2006 31.12.2006
Equity 1,077.9 1,069.9
attributable to
equity holders
of the parent
Total equity 1,090.5 1,082.5
Provisions 55.3 63.3
Total 623.1 631.1
non-current
liabilities
Retrospective restated quarterly
figures are presented as appendix to
this interim report.
QUARTERLY
EARNINGS
PERFORMANCE
2007 2006
(Unaudited 1-3 1-3 4-6 7-9 10-12 Total
figures)
Revenue
Kemira 255.3 209.5 257.9 261.9 264.0 993.3
Pulp&Paper
Kemira Water 170.0 92.3 102.1 101.7 171.5 467.6
Kemira 103.5 118.6 107.6 112.8 117.2 456.2
Speciality
Kemira Coatings 135.8 118.6 170.3 164.6 109.3 562.8
Other and 8.7 13.9 9.6 11.6 7.5 42.6
intra-Group
sales
Total 673.3 552.9 647.5 652.6 669.5 2,522.5
Operating profit
Kemira 23.0 26.0 20.4 24.3 20.1 90.8
Pulp&Paper
Kemira Water 11.9 6.4 9.6 9.0 10.3 35.3
Kemira 10.3 11.3 11.7 11.7 11.1 45.8
Speciality
Kemira Coatings 12.8 9.6 25.0 39.0 -1.5 72.1
Other -9.1 -7.8 -15.2 -8.9 -18.4 -50.3
including
eliminations
Total 48.9 45.5 51.5 75.1 21.6 193.7
Financial income -12.2 -7.1 -5.8 -11.6 -12.7 -37.2
and expenses
Share of 0.6 -0.9 -0.6 0.3 -1.1 -2.3
associates'
results
Profit before 37.3 37.5 45.1 63.8 7.8 154.2
tax
Income tax -10.0 -10.9 -13.1 -17.9 -0.1 -42.0
Net Profit 27.3 26.6 32.0 45.9 7.7 112.2
Attributable to
Equity holders 26.4 25.8 31.0 45.0 6.8 108.6
of the parent
Minority 0.9 0.8 1.0 0.9 0.9 3.6
interests
Net Profit 27.3 26.6 32.0 45.9 7.7 112.2
Earnings per 0.22 0.21 0.26 0.37 0.12 0.90
share, diluted,
EUR
Capital 1,924.6 1,876.6
employed,
rolling
ROCE, % 10.2 % 10.2 %
For further information, please contact:
Kemira Oyj
Timo Leppä, Executive Vice President, Group Communications
Tel. 010 862 1700
Kemira Oyj
Andreas Langhoff, Investor Relations Manager
Tel. 010 862 1140
Kemira will hold a press conference on its January-March 2007 results
for the media and analysts at its head office (Porkkalankatu 3)
today, starting at 10:30 a.m. A conference call in English will be
held at 1:00 p.m. We kindly request that participants call us around
10 minutes before the conference begins, on +44 (0)20 7162 0025.
Kemira is a chemicals group made up of four business areas: Kemira
Pulp&Paper, Kemira Water, Kemira Specialty and Kemira Coatings.
Kemira is a global group of leading chemical businesses with a unique
competitive position and a high degree of mutual synergy.
In 2006, Kemira recorded revenue of around EUR 2.5 billion and had a
payroll of 9,000 employees. The company operates in 40 countries.
