UpdateKemira focuses on growth in expanding water chems markets

24 April 2012 10:42  [Source: ICIS news]

LONDON (ICIS)--Kemira's president and CEO Wolfgang Buchele on Tuesday said the company will focus on growth in the expanding water chemicals markets of Asia and South America in order to strengthen its financial performance.

Buchele added that the Finland-based water chemicals company will need to improve its efficiency in order to hit its earnings targets. He was appointed Kemira's new president and CEO as of 1 April 2012.

"First of all, we have to get into an accelerated mode in order to reach our EBIT [earnings before interest and tax] financial target of 10% by improving our internal efficiency. This will be achieved by reducing the complexity of our business while growing profitably at the same time," he said.

"Secondly, as the fastest growth of water-related business will be in Asia and South America, we have to substantially strengthen our position there," Buchele added.

Kemira expects revenue and operative EBIT in 2012 to be approximately at the same level as in 2011, "assuming that no major macroeconomic disruption and/or further substantial increase in oil price would occur". Buchele said that in the near term, "an uncertainty in Europe and a slowdown in global economic growth may affect the demand for our products in the customer industries".

In the medium term, the company expects revenue growth in mature markets to be above 3% a year, and above 7% a year in emerging markets. It is also targeting its EBIT to be more than 10% of its revenue. Buchele said the company will continue to invest in order to secure future growth in the water business.

His comments followed Kemira's earnings report for the first quarter of 2012 on Tuesday. The firm reported a 21% year-on-year fall in its first-quarter net profit to €29.9m ($39.3m) because of lower sales volumes and higher raw material prices.

Sales for the first three months of 2012 fell by 0.7% year on year to €552.9m, while Kemira's earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter fell by 9.6% to €61.8m, and its operative EBIT shrank by 15% to €38.2m on higher fixed costs, the company said.

"Kemira's revenue and operative EBIT improved at the beginning of the year compared to the challenging fourth quarter of 2011. Compared to the first quarter of 2011, Kemira was able to compensate the lower sales volumes and higher raw material prices with the sales price increases," said Buchele.

"However, our fixed costs increased in all segments and resulted in a decrease in the operative EBIT," he added.

($1 = €0.76)

Additional reporting by Pearl Bantillo

By: Franco Capaldo
+44 (0)20 8652 3214

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