Finland's Kemira records 33% drop in Q3 net profit

29 October 2008 10:25  [Source: ICIS news]

SINGAPORE (ICIS news)--Finland-based Kemira Group recorded a 33% plunge in its third-quarter net profits to €35.4m ($44.9m) from €52.9m year on year, the company said in a statement on Wednesday.

“The price of raw materials and energy was very high, which eroded our profitability from the same period in 2007,” said Kemira CEO and president Harri Kerminen.

Revenue on a group basis rose 7% on higher sale prices to €780m from €729.5m year on year, while operating profits fell 12% to €69.8m from €79.5m in the previous corresponding period.

Explaining the rise in revenue, the company said it was able to transfer part of the increase in variable costs to sales prices.

Variable costs, excluding the effect of acquisitions, divestments and change in volumes, grew €61m in the company’s third quarter as compared with the same period in 2007, the company said.

Revenue from the company’s specialty chemical arm dipped 12.7% to €95.8m after it transferred the titanium dioxide operations to the joint venture with Rockwood Holdings in September, while operating profits from the segment more than doubled to €21.2.

The company’s Pulp & Paper business recorded an 8.5% growth in sales but also posted a 39% drop in its operating profits to €14.5m on negative currency exchange rate effects coupled with a competitive environment for paper chemicals.

Revenue in Kemira’s Coatings business grew 6% year on year to €193.7m, while operating profits dipped 21.8% to €30.4m.

Looking forward, Kemira’s management expects growth in its continuing operations to be moderate, primarily fuelled by organic growth in the fourth quarter.

Kemira’s 2008 full-year operating profits are expected to remain well below levels achieved in 2007 due to high raw materials and energy-related costs coupled with the weakness in the US dollar, the company said.

($1 = €0.79)

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By: Bohan Loh
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