ChemSolutions review

For ChemSolutions, 2012 was a year of positive development, resulting in strategic clarification and further signposts to profitable growth. The segment saw some strong market development, especially in emerging markets, and most specifically in APAC. ChemSolutions’ strategic role remains value maximization, and the segment maintains a clear focus on profitability and cash generation.

ChemSolutions’ Chemical & Pharma division experienced high demand, particularly for formic acids. Another trend that made its mark, particularly in Q2, was that of rapidly escalating raw material prices.

One of the challenges in the Food division, in regards to its bakery preservation agents, was that North American competitors achieved a stronger position due to shifts in raw material and utility pricing. This has been a growing trend in recent years, but was particularly visible during 2012.

In line with Kemira’s strategy focusing on water quality and quantity management, Kemira announced the sale of the Food and Pharma business together with the acetate based chemical business to Niacet (Niagara Falls, USA) in December, 2012. The transaction also included the production facility in Tiel, the Netherlands.

Changes for the better

Kemira’s Fit for Growth restructuring program had significant impact on the segment, with strong ramifications for its biggest production facility in Oulu. This facility’s efficiency was thoroughly examined in terms of efficiency, working methods and future orientation. The findings were implemented in Q4 and implementation will continue into 2013. Though these involve redundancies in some cases, significant improvements have been made from the portfolio point of view, including decisions which should improve ChemSolutions’ competitiveness.

As a result of this process of evaluation and improvement as well as the divestment of the Tiel facility and related businesses, ChemSolutions now has a much clearer role for the future in terms of strategic direction. The formic-acid-based business has a distinctive competitive advantage, which will be developed along with other customer successes highlighted for future focus, such as the segment’s expertise and market access in downstream applications.

Improving both products and own processes

ChemSolutions launched the Tanfor T leather-tanning agent this year, which garnered very positive customer feedback. This nonhazardous agent, designed to achieve sustainable high performance tanning, answered specific market demands in terms of composition, process, quality of results and the environmental profile.

Sustainable development is also underway in terms of the segment’s own activities. The efficiency campaign in ChemSolutions’ biggest production unit in Oulu has the energy consumption of formic acid production as a major target. Future investments will target efficiency as well as energy intake.

The way ahead

Thus far, economic development and its effects have been in ChemSolutions’ favor, and the segment has not seen impacts from the global slowdown. However, the leather and textile industries are not immune to global trends, and were they to be affected, the segment’s business may also suffer. Rapid upwards movement of key raw materials is another potential factor of concern.

For ChemSolutions, 2013 will see continued implementation of Fit for Growth, which will help to realize an optimized organization and the benefits thereof. As the efficiency improvements in Oulu will be implemented over the next two years, ChemSolutions’ true potential will continue to unfold over that time.