Creating sustainable long-term value

Kemira creates value for its stakeholders by maintaining its position as an economically sound and responsible company. Starting in 2012, Kemira focused on improving its shareholder value through the Fit for Growth program. Kemira also set targets for its sustainability work, supporting long-term value creation.  

The foundation of economic responsibility is a financially sound company with a strong balance sheet and positive cash flow. A strong balance sheet and a positive cash flow enables Kemira to implement its strategy and offer different kinds of avenues for growth – thus creating value for a broad group of stakeholders:

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Kemira aims to achieve sustainable value creation throughout the value chain, from developing employee and supplier relations to focusing on sustainable R&D as a critical enabler of organic growth and further differentiation. For Kemira, it is also important to be a good corporate citizen and always conduct its business in a responsible and sustainable way. In 2012, Kemira set sustainability targets related to these topics in order to support and develop its long-term value creation for its stakeholders.


KEMIRA'S ECONOMIC IMPACT
EUR million 2012 2011
Customers 2,312.1 2,192.0
Income from customers on the basis of products and services sold, and financial income
Suppliers -1,736.5 -1,654.0
Payments to suppliers of raw materials, goods and services
Employees -340.4 -299.3
Wages, salaries and social expenses
Investors -113.8 -101.4
Interest paid and financial expenses, dividends
Taxes -30.2 -37.4
Capital expenditure on maintenance and improvement -75.6 -184.3
Deficit/Surplus 15.6 -84.4
Income from divesting assets 29.5 138.7
Capital expenditure on expansion and acquisitions -58.5 -16.9
Repayment of capital -37.4 66.9
Repayment of loans (-) and new loans (+)
Purchase of non-controlling interests 0.0 -13.2
Net change in cash -50.8 91.1

Increasing shareholder value

Kemira’s global Fit for Growth restructuring program was announced in July 2012, aiming to improve profitability, internal efficiency and accelerate growth in the emerging markets. The financial targets for revenue growth and EBIT margin set by the Board of Directors in 2008 and revised in September 2010 are the guidelines for Kemira’s financial performance.


Committed to creating shareholder value
Substantially improving earnings potential The ultimate goal for the Fit for Growth restructuring program is to achieve 10% EBIT margin in 2014. The new organization is fostering growth in relevant businesses. Kemira aims to continuously improve its cash flow management, which is vital also in order to free resources. These can then be reinvested in the business or distributed as dividend, as the considerations will be on a case-to-case basis.
Growing organically stronger than before Kemira wants to leverage the mature markets with its existing strengths. There will also clearly be much stronger focus on the emerging markets: an issue that has already developed well in the Paper business. Kemira also wants to further improve its well established  position in the U.S. oil and gas market, and is driving packaging and board related offering in Asia.
Having a strong balance sheet Kemira is currently in a good position when it comes to funding. Kemira has relevant financial assets, which can be used if seen appropriate, a reason for why mergers and acquisitions would be possible, even in the short-term, without deteriorating the balance sheet.
Continuing to pay dividend With strong focus on shareholder returns, Kemira aims to pay out 40% to 60% of the net operating profit on an annual basis.

Influencing water quality and quantity management

Kemira’s operations also have an indirect economic impact, as Kemira can offer products and concepts that improve the way its customers treat and recycle water. A deep understanding of industrial processes combined with water chemistry products and solutions enable customers to improve their water, energy, and raw material efficiency, and hence decrease their production costs. This water knowledge is reflected in Kemira’s product and application offering that improves the efficient use of different resources needed in the industrial production.

Kemira’s tax strategy

Kemira Group’s long-term strategic tax approach aims at being a responsible corporate citizen in all of the countries it operates in. Kemira’s tax management culture is based on the Group’s corporate values, Code of Conduct and tax related policies. Kemira’s tax objective is to contribute to the strategic development and growth of the Group by taking into account the uncertainty and effects of tax legislation and its interpretations. The tax approach is applied to all of Kemira Oyj as well as its subsidiaries in which Kemira has over 50% direct or indirect interest.

The strategic tax approach of Kemira is to have a fair balance between tax optimization and tax risk management, and establish itself as a sustainable and responsible tax payer. Kemira’s principle is to strictly follow local tax practices and legislation in all regions where it has a tax status. A key target for tax management is to communicate the general principles concerning tax issues within Kemira Group in order to stabilize practices and working methods for tax planning, transfer pricing, tax compliance and tax reporting as well as documentation requirements in order to reach the most optimal tax position in the Group.

Kemira does not operate in tax haven countries as defined by the OECD for taxation reasons. Kemira only has some limited operations in tax havens because of business reasons, e.g. raw material sourcing channels and locations of key customers.

Kemira’s principle is to apply the arm’s length transfer pricing principles according to OECD recommendations in all intra-group product, service, IPR and financing transactions. These transfer prices are defined based on arm’s length transfer pricing methods taking into account functions, risks and assets in group companies.


TAXES BY REGION
%
North America 51
Europe, Middle East and Africa 46
South America 2
Asia-Pacific 1