Finland's Kemira Q4 net loss deepens on weak growth, divestments

07 February 2014 14:32  [Source: ICIS news]

LONDON (ICIS)--Kemira’s net loss for the fourth quarter of 2013 deepened year on year to €48.7m compared to €40.4m in the closing quarter of 2012 on the back of below-expectations growth for some assets and divestments, the Finland-based chemicals producer said on Friday.

Organic revenue growth for the quarter increased 1% year on year during the period in local currency terms, the company said, but reported revenue fell by 2% to €542.5m due to unfavourable exchange rates.

Earnings before interest and taxes (EBIT) were €34.5m, the bottom end of the revised €34-35m range announced by the company in late January. Kemira revised its fourth-quarter guidance from earlier estimates of €42-50m as a result of higher inventory costs and a below-expectations contribution from recently-acquired polyacrylide maker 3F Chimica.

Kemira CEO Wolfgang Buchele said the acquisition would eventually yield savings, but short-term issues had pushed the polyacrylamide plastics producer’s performance below-forecast.

“The profitability contribution of 3F in [the fourth-quarter 2013] was lower than expected, due to a temporary shutdown in one of the production sites and higher costs mainly related to integration. The acquisition is expected to result in substantial synergies through raw material, logistics and fixed cost savings," he said.

Performance of the company’s oil and mining division also weighed on the company’s performance, generating 3% in organic growth and “disappointing” profitability, Kemira said. Municipal and industrial division revenues were impacted by the implementation of a new business model in the Europe, Middle East and Africa (EMEA) region and several divestments, expected to improve profitability in future.

The €140m divestment of the formic acid division of subsidiary ChemSolutions is expected to be completed in the first quarter of 2014, but division revenues pre-divestment were impacted by a weak de-icing period, Kemira added.

The company’s paper chemicals business performed better, generating over 10% organic revenue growth and operative EBIT by over 20%.

Buchele said that the divestments, realignments and cost-reductions are focused on repositioning the company with a more streamlined focus.

“Divestments, combined with the Fit for Growth measures have significantly reduced complexity and strengthened our balance sheet in 2013. These measures were required to be able to compete effectively in our core businesses, as well as to support our long-term profitability,” he said.

“Once the divestments are completed, Kemira has been transformed into a pure play company focusing on water quality and quantity management,” he added.

Kemira’s full-year net loss was €25.9m compared with a €22.4m profit in 2012, while reported revenues were €2.23bn compared to €2.24bn the preceding year.

The company forecast that its 2014 revenues would be 0-5% in local currencies, excluding acquisitions and divestments, while operative EBIT for the year is likely to improved 5-15%
By: Tom Brown
+44 208 652 3214



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