Kemira Oyj's Interim Report January-March 2020: Good start to the year, outlook withdrawn due to an uncertain environment

Kemira Oyj
Interim Report
April 28, 2020 at 8.30 am (CET+1)

Kemira Oyj's Interim Report January-March 2020: Good start to the year, outlook withdrawn due to an uncertain environment

This is a summary of the January - March 2020 Interim report. The complete January-March 2020 Interim report with tables is attached to this release and available at www.kemira.com/company/investors.

First quarter:

• Revenue decreased by 1% to EUR 642.0 million (647.8) due to lower sales volumes. Revenue in local currencies, excluding acquisitions and divestments, decreased by 1%.
• Operative EBITDA increased by 13% to EUR 108.5 million (95.6) following favorable variable cost development. The operative EBITDA margin increased to 16.9% (14.8%). EBITDA increased by 17% to EUR 108.4 million (92.5).
• Operative EBIT increased by 21% to EUR 60.8 million (50.1). EBIT increased by 29% to EUR 60.7 million (47.0). The differences between operative and reported figures are explained by items affecting comparability.
• Cash flow from operating activities was solid at EUR 50.2 million (65.2).
• EPS, diluted, increased by 35% to EUR 0.25 (0.18) due to higher EBITDA.

Outlook for 2020 withdrawn on April 27, 2020

As announced on April 27, Kemira withdraws its outlook for 2020 and will not issue a new outlook until further notice due to the uncertainty following the COVID-19 pandemic and oil price drop.

Kemira's President and CEO Jari Rosendal:

"The first quarter of 2020 was characterized by significant events: the evolution of COVID-19 into a global pandemic and the clear drop in oil price. In addition, a two-week-strike in Finland in February impacted our Pulp & Paper customers. We mitigated the impact from these events well and had a good start to the year with all our manufacturing facilities operating throughout the quarter in all regions. In countries with government-imposed restrictions on economic activity following the COVID-19 pandemic, the chemical industry and our customer industries are almost always classified as essential industries for the society. Therefore, these industries are allowed and even expected to operate. As a result, these events had a limited impact on Kemira and our operative EBITDA improved to EUR 108.5 million with the operative EBITDA margin improving significantly to 16.9% during the quarter.

However, despite the good start to the year, there is a risk of lower demand for our products in the coming quarters, particularly in shale. As communicated on April 27, 2020, we have decided to withdraw our previous outlook for 2020 as the economic impacts and the length of the COVID-19 pandemic and the oil price drop remain uncertain. Our chemicals are consumables in industrial processes and the demand for our chemicals remains predictable as long as these essential industrial processes continue to operate. However, it is difficult to estimate whether this unprecedented market environment will materially impact our customers' or our own operations. We are monitoring the overall situation constantly and will take further action if needed.

In Pulp & Paper, the operative EBITDA margin improved to 15.9% in Q1 2020 from the prior year's level of 13.3%. Customer demand remained solid during the quarter despite the two-week-strike in Finland in February. Looking ahead, the COVID-19 pandemic creates uncertainty in the near-term and is expected to have a larger impact on printing and writing paper demand while pulp, board and tissue demand are expected to be more resilient. The ramp-up of our new AKD wax facility in China continued during January-March 2020 and it had a positive EBITDA contribution in Q1 2020.

In Industry & Water, the operative EBITDA margin improved to 18.3% in Q1 2020 compared to prior year's level of 16.8%. Demand in both municipal and industrial water treatment remained good. In Oil and Gas, the shale market declined significantly during the quarter due to the drop in oil price. We saw a clear reduction in shale customers' orders and overall visibility remains low. The ramp-up of our polymer expansion investment in the Netherlands progressed during the quarter and the investment had a positive impact on our EBITDA in Q1 2020.

Health and safety is Kemira's top priority. Due to COVID-19, we started to implement strict precautionary measures already in January in order to safeguard our employees, their families and other stakeholders. I would like to express my gratitude to our employees for their contribution and personal commitment during this difficult period. In this unprecedented environment, we are continuously working actively with our key stakeholders to ensure the business continuity of our own and our customers' operations."

KEY FIGURES AND RATIOS

EUR million	Jan-Mar 2020		Jan-Mar 2019		Jan-Dec 2019
Revenue	642.0		647.8		2,658.8
Operative EBITDA	108.5		95.6		410.0
Operative EBITDA, %	16.9		14.8		15.4
EBITDA	108.4		92.5		382.3
EBITDA, %	16.9		14.3		14.4
Operative EBIT	60.8		50.1		224.0
Operative EBIT, %	9.5		7.7		8.4
EBIT	60.7		47.0		194.4
EBIT, %	9.5		7.3		7.3
Net profit for the period	39.6		29.3		116.5
Earnings per share, diluted, EUR	0.25		0.18		0.72
Capital employed*	1,995.7		1,843.6		1,998.2
Operative ROCE*, %	11.8		10.3		11.2
ROCE*, %	10.4		8.8		9.7
Cash flow from operating activities	50.2		65.2		386.2
Capital expenditure excl. acquisition	36.1		28.3		201.1
Capital expenditure	38.7		28.3		204.1
Cash flow after investing activities	11.5		39.8		189.8
Equity ratio, % at period-end	42		39		43
Equity per share, EUR	7.82		7.39		7.98
Gearing, % at period-end	67		74		66

*12-month rolling average (ROCE, % based on the EBIT)

Kemira provides certain financial performance measures (alternative performance measures), which are not defined by IFRS. Kemira believes that alternative performance measures followed by capital markets and Kemira management, such as organic growth (revenue growth in local currencies, excluding acquisitions and divestments), EBITDA, operative EBITDA, cash flow after investing activities as well as gearing, provide useful information about Kemira's comparable business performance and financial position. Selected alternative performance measures are also used as performance criteria in remuneration.

Kemira's alternative performance measures should not be viewed in isolation to the equivalent IFRS measures and alternative performance measures should be read in conjunction with the most directly comparable IFRS measures. Definitions of the alternative performance measures can be found in the definitions of the key figures in this report, as well as at www.kemira.com > Investors > Financial information. All the figures in this interim report have been individually rounded, and consequently the sum of the individual figures may deviate slightly from the sum figure presented.

OUTLOOK

Outlook for 2020 withdrawn on April 27, 2020

As announced on April 27, 2020 Kemira withdraws its outlook for 2020 and will not issue a new outlook until further notice due to the uncertainty following the COVID-19 pandemic and oil price drop.

Previous Outlook

Kemira previously expected its operative EBITDA (2019: EUR 410 million) to increase from the prior year

FINANCIAL TARGETS

Kemira aims for above-market revenue growth with an operative EBITDA margin of 15-17%.

The target for gearing is below 75%.

Helsinki, April 27, 2020

Kemira Oyj
Board of Directors

FINANCIAL REPORTING 2020

Interim Report January-June 2020 July 17, 2020
Interim Report January-September 2020 October 27, 2020

The Annual General Meeting will be held at Hotel Kämp Symposion, Helsinki on May 5, 2020.

WEBCAST AND CONFERENCE CALL FOR PRESS AND ANALYSTS

Kemira will arrange a webcast for analysts, investors, and media on Tuesday, April 28, 2020, starting at 1.30 pm. The presentation material and a recording of the webcast will be available on the above-mentioned company website.

You can attend the Q&A session via a conference call. In order to participate in the conference, please call ten minutes before the conference begins:

FI [phone]
SE [phone]
UK [phone]
US [phone]

Conference ID: 37818631#

For more information, please contact:

Kemira Oyj
Mikko Pohjala, Vice President, Investor Relations
Tel. [phone]

Kemira is a global chemicals company serving customers in water intensive industries. We provide best suited products and expertise to improve our customers' product quality, process and resource efficiency. Our focus is on pulp & paper, oil & gas and water treatment. In 2019, Kemira had annual revenue of around EUR 2.7 billion and over 5,000 employees. Kemira shares are listed on the Nasdaq Helsinki Ltd. www.kemira.com

Attachment

• Kemira January-March 2020 Interim Report (https://ml-eu.globenewswire.com/Resource/Download/e115206c-2157-46b2-9462-acf78cdd5362)