Financial performance, full year 2012
Kemira Group revenue increased 2% to EUR 2,240.9 million (2,207.2). Revenues in local currencies and excluding divestments remained stable at the level of 2011. In local currencies, the main positive impact on revenues came from price increases, compensating the corresponding raw material price inflation. Excluding the exit of about EUR 20 million in low margin product sales, sales volumes were close to the level of 2011. Recovered sales volumes, especially with pulp and municipal customers compensated for the decreased sales volumes to the oil & gas and mining customer segments. ChemSolutions sales volumes were close to the level of 2011. The divestments of the hydrogen peroxide plant in Maitland, Canada in November, 2011 and Galvatek in October, 2011 had a negative impact of EUR 23 million on revenues. Most of the main foreign currencies affecting Kemira’s financials, such as US dollar, Swedish krona, and Canadian dollar, appreciated against the euro compared to the previous year. Currency exchange had 2% or approximately EUR 50 million positive impact on revenues.
In the Paper segment, revenues increased 3% to EUR 1,002.0 million (973.3). Revenue growth in local currencies and excluding divestments was 2%. Currency exchange impacted revenues by +3% and divestments by -2%.
In the Municipal & Industrial segment, revenues increased 3% to EUR 686.6 million (664.7). Revenue growth was 2% in local currencies and excluding divestments. Currency exchange impacted revenues by +2% and divestments by -1%.
In the Oil & Mining segment, revenues decreased 4% to EUR 321.0 million (335.7). Revenues declined 2% in local currencies, excluding the impact of exited low margin product sales. Exited low margin product sales impacted revenues by -6% and currency exchange impacted revenues by +4%.
Geographically, the revenue was split as follows: EMEA 55% (57%), North America 31% (30%), South America 8% (7%), and Asia Pacific 6% (6%). Revenues increased 1% (3%) in the mature markets and 9% (0%) in the emerging markets in 2012. Kemira group’s mid-term revenue target set in September 2010 is to increase revenues by 3% in the mature markets and by 7% in the emerging markets.
|Revenue, EUR million||Jan–Dec 2012||Jan–Dec 2011||∆%|
|Municipal & Industrial||686.6||664.7||3|
|Oil & Mining||321.1||335.7||-4|
|of which ChemSolutions||186.0||183.6||1|
The EBIT was impacted by non-recurring charges of EUR -122 million (1) and amounted to EUR -31.7 million (158.3). The operative EBIT decreased 2% to EUR 154.1 million (157.3) with a margin of 6.9% (7.1%). In 2008, Kemira set a mid-term target for the operative EBIT margin to be at least 10%. In order to reach the EBIT margin target of 10% in 2014, Kemira launched its “Fit for Growth” restructuring program in July, 2012, targeting at cost savings of EUR 60 million.
Fit for Growth cost savings totaled EUR 10 million in 2012, of which EUR 5 million impacted variable costs and EUR 5 million fixed costs. Fixed costs, including the positive impact of Fit for Growth were EUR 15 million higher than in 2011 mainly due to higher manufacturing, maintenance and personnel related expenses.
Variable costs were EUR 18 million higher than in 2011, mainly due to higher raw material prices and freight costs. Raw material price inflation was more than offset by corresponding price adjustments.
Lower sales volumes had less than a EUR 10 million negative impact on operative EBIT.
Currency exchange had a positive impact of EUR 5 million on the operative EBIT. In total, divestments and other items had a EUR 5 million negative impact (see variance analysis).
|Operative EBIT||Jan–Dec 2012 EUR, million||Jan–Dec 2011 EUR, million||∆%||Jan–Dec 2012 %-margin||Jan–Dec 2012 %-margin|
|Municipal & Industrial||42.3||46.9||-10||6.2||7.1|
|Oil & Mining||37.3||36.2||3||11.6||10.8|
|of which ChemSolutions||14.6||20.8||-30||7.8||11.3|
|Variance analysis, EUR million||Jan–Dec|
|Operative EBIT, 2011||157.3|
|Sales volumes and prices||29.9|
|Others, incl. acquisitions and divestments||-5.1|
|Operative EBIT, 2012||154.1|
Non-recurring items, mainly relating to the restructuring program Fit for Growth, affected the EBIT in 2012 by EUR -122 million (1). Fit for Growth severance payments and costs related to external services totaled EUR 41 million and asset write-downs EUR 30 million. Other, not Fit for Growth related, non-recurring items included the write-down of EUR 18 million from the divestment of Kemira’s food and pharmaceutical businesses and charges of EUR 33 million related to environmental liabilities, efficiency improvements, as well as streamlining of Kemira’s current operations (see non-recurring items table).
Non-recurring items in 2011 included a capital gain related to the sale of a hydrogen peroxide plant (Paper segment) in Canada, asset write-downs related to the discontinued calcium sulphate business in Finland and site consolidation activities in Spain and North America in Municipal.
|Non-recurring items, EUR million||Jan–Dec 2012||Jan–Dec 2011|
|Municipal & Industrial||-26.8||-1.3|
|Oil & Mining||-5.1||-0.2|
|Within Depreciation, amortization and impairment losses||-52.8||-5.4|
|Municipal & Industrial||-24.1||-1.9|
|Oil & Mining||-1.9||-1.1|
Income from associated companies decreased to EUR 11.2 million (31.0) as a result of lower net profits of the specialty TiO2 producer JV Sachtleben, of which Kemira owns 39%. The result of JV Sachtleben was negatively impacted by a significant slowdown in demand, decreasing titanium dioxide prices in the latter part of 2012, and higher raw material costs.
In June, 2012 Kemira Oyj’s and Rockwood Holdings Inc.’s titanium dioxide joint venture Sachtleben GmbH completed the re-financing with a new facility agreement in the aggregate amount of EUR 430 million. The proceeds of the facility have been used to repay the outstanding balance of the existing facility agreement, pay a dividend to the joint venture partners and for other corporate purposes. The facility has a maturity of five years. Also in June, 2012, Sachtleben GmbH reached an agreement to acquire the TiO2 production assets and inventory of crenox GmbH, based in Krefeld, Germany. The acquisition was closed in July, 2012, and added over 100,000 metric tons of TiO2 production, increasing total capacity to approximately 340,000 metric tons.
Financing income and expenses totaled EUR -15.7 million (-20.9). Financing expenses included changes of EUR -2.3 million in fair values of electricity derivatives and dividends of EUR 7.6 million received from PVO in the second quarter of 2012.
Profit before tax decreased to EUR 27.2 million (168.4). Lower financial expenses and lower taxes partly compensated for the lower EBIT and the reduced income from associated companies. The EBIT was lower mainly due to the non-recurring items related to the “Fit for Growth” restructuring program and other non-recurring items.
Taxes were EUR 5.7 million (28.1) and the reported tax rate was 21.0% (16.7%). Non-recurring items affecting the EBIT and higher profits, especially in North America increased the reported tax rate. The tax rate, excluding non-recurring items affecting the EBIT and income from associated companies was 20.6% (20.8%). In addition, changes in deferred tax assets and liabilities had material effects in the total taxes.
Net profit attributable to the owners of the parent company decreased to EUR 16.8 million (135.6) and the earnings per share to EUR 0.11 (0.89). Non-recurring items had EUR 0.66 negative impact on the EPS. Earnings per share, excluding non-recurring items, decreased 13% to EUR 0.77 (0.89).