Kemira Q3 net profit up 15% to $40.6m, revenue falls 17%

28 October 2009 12:09  [Source: ICIS news]

LONDON (ICIS news)--Kemira recorded a 14.7% increase in its third-quarter net profit to €40.6m ($59.7m) year on year, due to lower variable and fixed costs and healthy demand for speciality chemicals, the Finnish chemical company said on Wednesday.

Net profit for the nine-month period from January to September rose by 8.4% to €76.2m compared with the same period last year, Kemira said.

Kemira’s third-quarter revenue fell by 17% year on year to €645.8m due to weaker demand in several customer industries, while revenue for the January-September period fell by 14% to €1,905.4m compared to the same period a year ago.

The company said that cash flows after investments in the January-September period were very strong at €175m, which was attributed to effective working capital management, higher earnings before interest, taxation, depreciation and amortisation (EBITDA), and smaller capital expenditure.

“Operational efficiency enhancement, profitability improvement and stronger cash flows and balance sheet continue to be our key focus areas, but we are gradually taking steps to also accelerate revenue growth. Our organic growth objective is 5% per year," said Harri Kerminen, Kemira's president and CEO.

“Sales volumes have declined this year as demand has shrunk in several customer industries, but this downward trend appears to have halted. Despite the fall in revenue, operating profit excluding non-recurring items in continuing businesses rose by 22% in the third quarter from the same period a year earlier,” Kerminen said.

He added this is largely due to efficiency improvement measures, fixed-cost management and lower variable costs compared with the same period last year.

The municipal and industrial segment was able to significantly strengthen its operating profit and cash flow, Kerminen added.

Looking forward, Kemira said the market situation is likely to remain challenging and that general economic developments, which include sharp fluctuations in global electricity and oil prices affecting raw material prices and the cost of logistics, will be reflected in the company’s performance.

Kemira's revenue for the fourth quarter is expected to remain behind the previous year due to reduced demand in customer industries.

At an extraordinary general meeting of shareholders scheduled to be held on 23 November 2009, Kemira will undertake a rights offering,subject to shareholder approval, to raise gross proceeds of approximately €200m through an issue of new shares.

($1 = €0.68)

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By: Franco Capaldo
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