Kemira’s Q3 net profit falls sharply as restructuring is implemented

24 October 2012 14:25  [Source: ICIS news]

LONDON (ICIS)--Kemira’s third-quarter net profit fell steeply to €1.1m ($1.4m) from €32.9m reported in the same period last year – despite a rise in sales – following non-recurring charges, the Finland-based company said on Wednesday.

In the third quarter of 2012, non-recurring charges related to its global restructuring programme "Fit for Growth" amounted to €40m, €23m of which were asset write-downs and €17m were severance payments and external services.

The company’s revenue in the third quarter of 2012 grew by 2% year on year to €567.2m, supported by favourable currency exchange rates, while operative earnings before interest and tax (EBIT) increased by 14% to €46.5m with a margin of 8.2%, from 7.3% in the third quarter of 2011, partly because of lower fixed costs.

In the group’s paper segment sales volumes increased, especially in Asia. This, together with improved sales price management, strengthened the paper unit's operative EBIT, Kemira said.

Kemira's president and CEO Wolfgang Buchele, said: "Our third quarter was driven by a slight volume recovery and the first positive impacts from the restructuring programme Fit for Growth.”

Kemira announced with its third-quarter earnings that it has started to implement Fit for Growth, launched at the end of July, to improve the company's profitability, its internal efficiency and to accelerate the growth in emerging markets without sacrificing business opportunities in mature markets.

The restructuring programme, which may ultimately lead to a reduction of up to 600 positions globally, aims to cut annual costs by around €60m a year once it is fully implemented, with redundancies accounting for 50% of the expected savings.

“The anticipated €60m cost saving impact of the programme is expected to take place as follows: €10m in 2012, €50m in 2013 and €60m in 2014,” Kemira said. The ultimate goal of the programme is to achieve an EBIT margin of at least 10% in 2014.

Kemira said the expected total restructuring charges connected to the programme amount to €85m, of which €35m will be cash cost and €50m write-downs.

In 2012, Kemira expects revenue and operative EBIT to be at approximately the same level as in 2011.

“Looking ahead to the rest of 2012, uncertainties related to the de-icing business and current high raw material prices might have negative impact on our result, and visibility related to the demand for some of our main product lines is currently low," Buchele said.

"On the other hand, the current currency exchange rate is expected to continue to support our top line and the cost savings related to our restructuring are expected to positively impact our operative EBIT,” the CEO added.

($1 = €0.77)

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

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