2010-02-09 07:30:00 CET
2010-02-09 07:32:57 CET
REGULATED INFORMATION
Kemira Oyj - Financial Statement Release
Kemira Oyj's Financial Statements Bulletin 2009: Operating profit more than doubled, gearing halved to the target level
Kemira Group
Stock exchange release
February 9, 2010 at 8.30 am
Year 2009:
* Revenue in 2009 was EUR 2,500.1 million (2008: EUR 2,832.7 million). Revenue
from continuing business operations decreased by 7%. Demand weakened in
several customer industries.
* Operating profit excluding non-recurring items rose 32% to EUR 175.0 million
(132.6). Reported operating profit rose 113% to EUR 157.4 million (74.0).
* Cash flow after investments grew significantly to EUR 202.2 million (2.7).
Strong cash flow and the rights offering completed at the end of the year
strengthened the balance sheet and gearing fell to 53% (December
31, 2008: 107%).
* Earnings per share were EUR 0.61 (-0.01).
* The Board proposes that 86% of the shares of Tikkurila be distributed as
dividend to Kemira's shareholders. Tikkurila's shares are expected to be
listed on NASDAQ OMX Helsinki Ltd in March 2010 (please see page 21,
Dividend). The Board also proposes that the Annual General Meeting authorize
the Board to decide upon a dividend payable in cash of a maximum of EUR
0.27 per share (0.25). According to the proposal, the authorization is valid
until May 31, 2010.
* In 2010, Kemira expects demand to develop favorably as the economic
situation improves, even though there's still uncertainty with the
development of the demand. In the first quarter of the year, Kemira's
operating profit excluding non-recurring items is expected to increase from
the corresponding period in 2009.
Fourth quarter:
* Revenue in October-December 2009 amounted to EUR 594.7 million
(October-December 2008: EUR 627.6 million).
* Operating profit excluding non-recurring items rose 138% to EUR 27.8 million
(11.7).
* Cash flow after investments was EUR 26.9 million (-63.0).
* Earnings per share were EUR 0.06 (-0.52).
Kemira's President and CEO Harri Kerminen:"2009 was a very good year for Kemira, considering the weakened global economy.
Even though the market situation was challenging and demand weakened in several
customer industries, the decline in Kemira's revenue was moderate.
All of Kemira's segments reported strong cash flow and improved their operative
profitability last year. Kemira's operating profit grew 113%. The result was
supported by efficiency measures, lower costs and higher sales prices, in
particular in the first half of the year. The extremely strong cash flow and
successful rights offering cut Kemira's gearing from 107% to 53%, well within
Kemira's target of 40-80%.
Good result in Tikkurila and in the rest of Kemira in 2009 as well as the
positive market outlook are basis for the Board of Directors to propose to the
Annual General Meeting that 86% of the shares of Tikkurila be distributed as
dividend to Kemira's shareholders. The separation of Tikkurila will make Kemira
an even more focused water chemistry company.
Implementation of our strategy that focuses on water has progressed very well.
The company that used to be rather fragmented is rapidly becoming a uniform
Kemira that focuses on full utilization of our water expertise. Furthermore, we
have improved operational efficiency. The cost cutting program for fixed costs
which started in 2008 has proceeded faster than planned and it will be completed
by the end of 2010, the balance sheet is stronger and Tikkurila will be
separated. All of this creates a strong basis for the next phase which is
profitable growth."
Key figures and ratios
+------------------------------------+----------+----------+---------+---------+
|EUR million |10-12/2009|10-12/2008|1-12/2009|1-12/2008|
+------------------------------------+----------+----------+---------+---------+
|Revenue | 594.7| 627.6| 2,500.1| 2,832.7|
+------------------------------------+----------+----------+---------+---------+
|EBITDA | 38.4| 2.1| 273.7| 243.3|
+------------------------------------+----------+----------+---------+---------+
|EBITDA % | 6.5| 0.3| 10,9| 8.6|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | 27.8| 11.7| 175.0| 132.6|
|non-recurring items | | | | |
+------------------------------------+----------+----------+---------+---------+
|Operating profit | 12.6| -68.1| 157.4| 74.0|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | 4.7| 1.9| 7.0| 4.7|
|non-recurring items, % | | | | |
+------------------------------------+----------+----------+---------+---------+
|Operating profit, % | 2.1| -10.9| 6.3| 2.6|
+------------------------------------+----------+----------+---------+---------+
|Financial income and expenses | -12.1| -23.7| -49.8| -69.5|
+------------------------------------+----------+----------+---------+---------+
|Profit before tax | 1.3| -94.5| 102.9| 1.8|
+------------------------------------+----------+----------+---------+---------+
|Net profit | 9.3| -68.5| 85.5| 1.8|
+------------------------------------+----------+----------+---------+---------+
|EPS, EUR | 0.06| -0.52| 0.61| -0.01|
+------------------------------------+----------+----------+---------+---------+
|Capital employed* | 1,963.3| 2,062.8| 1,963.3| 2,062.8|
+------------------------------------+----------+----------+---------+---------+
|ROCE, %* | 7.8| 3.5| 7.8| 3.5|
+------------------------------------+----------+----------+---------+---------+
|Cash flow after investments | 27.1| -63.0| 202.2| 2.7|
+------------------------------------+----------+----------+---------+---------+
|Equity ratio, % at period-end | 45| 34| 45| 34|
+------------------------------------+----------+----------+---------+---------+
|Gearing, % at period-end | 53| 107| 53| 107|
+------------------------------------+----------+----------+---------+---------+
|Personnel at period-end | 8,493| 9,405| 8,493| 9,405|
+------------------------------------+----------+----------+---------+---------+
*12-month rolling average
Definitions of key figures can be found on www.kemira.com<http://www.kemira.com/>> Investors > Financial information. Due to the rights
offering, historical per share key figures have been adjusted with the following
calculation formula: average number of shares x 1.1
Conference for analysts and the media:
Kemira will arrange a press conference for analysts and the media today on
February 9, 2010 starting at 10:30 a.m. at Kemira House, Porkkalankatu 3,
Helsinki. The press conference will be held in Finnish. Harri Kerminen, Kemira's
President and CEO, will present the results. Tikkurila's President and CEO Erkki
Järvinen will also be present in the conference. The presentation materials will
be available on Kemira's website at www.kemira.com at 10:30 a.m.
A conference call in English will begin at 1:00 p.m. Finnish time. In order to
participate in the call, please dial +44 (0)20 7162 0025, code 856502, ten
minutes before the conference begins. The presentation materials will be
available on Kemira's website at www.kemira.com. A recording of the conference
call will be available on Kemira's website later today.
Kemira Oyj's Annual General Meeting will be held on Tuesday March 16, 2010
starting at 1:00 p.m. at Marina Congress Center, Katajanokanlaituri 6, Helsinki.
Kemira Oyj will publish its January-March interim report on Thursday April
29, 2010 at 8:30 a.m.
For further information, please contact:
CFO Jyrki Mäki-Kala
Tel. +358 10 86 21589
Päivi Antola, Senior Manager, Investor Relations and Financial Communications
Tel. +358 10 86 21140
Kemira is a global 2.5 billion euro chemicals company that is focused on serving
customers in water-intensive industries. The company offers water quality and
quantity management that improves customers' energy, water, and raw material
efficiency. Kemira's vision is to be a leading water chemistry company. Its
paints and coatings business, Tikkurila, aims to be the market leader in
decorative paints and selected wood and metal coatings in chosen markets.
www.kemira.com
The new strategy announced in June 2008 resulted in some changes to Kemira's
business structure. Financial reporting reflects the new structure from the
beginning of 2009. Kemira's reporting segments are Paper, Municipal & Industrial
(previously "Water"), Oil & Mining, Tikkurila and Other. The Other segment
consists of specialty chemicals such as organic salts and acids and the Group
expenses not charged to the segments (some research and development costs and
the costs of CEO Office).
Financial performance in October-December 2009
Kemira Group's revenue decreased 5% in October-December 2009 compared to the
corresponding period in 2008 as demand weakened in several customer industries.
Revenue in October-December 2009 amounted to EUR 594.7 million (October-December
2008: EUR 627.6 million). Acquisitions increased revenue by approximately EUR
12 million. The effect from currency exchange decreased revenue by about EUR 25
million.
+----------------------+----------+----------+---------+---------+
|Revenue, EUR million |10-12/2009|10-12/2008|1-12/2009|1-12/2008|
+----------------------+----------+----------+---------+---------+
|Paper | 229.6| 246.8| 906.4| 1,003.3|
+----------------------+----------+----------+---------+---------+
|Municipal & Industrial| 140.6| 147.0| 607.5| 583.7|
+----------------------+----------+----------+---------+---------+
|Oil & Mining | 69.4| 66.6| 235.0| 275.4|
+----------------------+----------+----------+---------+---------+
|Tikkurila | 98.5| 103.5| 530.2| 648.1|
+----------------------+----------+----------+---------+---------+
|Other* | 77.8| 81.9| 300.4| 414.8|
+----------------------+----------+----------+---------+---------+
|Eliminations | -21.2| -18.2| -79.4| -92.6|
+----------------------+----------+----------+---------+---------+
|Total* | 594.7| 627.6| 2,500.1| 2,832.7|
+----------------------+----------+----------+---------+---------+
*2008 includes the titanium dioxide business for the period of January-August.
Operating profit for October-December 2009 was EUR 12.6 million (-68.1).
Operating profit excluding non-recurring items was EUR 27.8 million (11.7) and
the operating profit margin excluding non-recurring items was 4.7% (1.9%). The
operating profit was in particular boosted by lower cost levels. Variable costs
decreased by approximately EUR 29 million in October-December 2009 compared to
the corresponding period in 2008. Fixed costs declined by about EUR 1 million.
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items, EUR million |10-12/2009|10-12/2008|1-12/2009|1-12/2008|
+------------------------------------+----------+----------+---------+---------+
|Paper | 14.6| 9.8| 44.9| 41.5|
+------------------------------------+----------+----------+---------+---------+
|Municipal & Industrial | 12.9| 6.9| 66.4| 25.0|
+------------------------------------+----------+----------+---------+---------+
|Oil & Mining | 5.5| 0.6| 14.2| 8.4|
+------------------------------------+----------+----------+---------+---------+
|Tikkurila | -4.7| -12.6| 50.1| 59.2|
+------------------------------------+----------+----------+---------+---------+
|Other* | -0.5| 7.0| -0.6| -1.6|
+------------------------------------+----------+----------+---------+---------+
|Eliminations | 0.0| 0.0| 0.0| 0.1|
+------------------------------------+----------+----------+---------+---------+
|Total* | 27.8| 11.7| 175.0| 132.6|
+------------------------------------+----------+----------+---------+---------+
*2008 includes the titanium dioxide business for the period of January-August.
The share of associates' results was EUR 0.8 million (-2.7).
The Group's net financial expenses in October-December were EUR 12.1 million
(23.7). Net financial expenses decreased from the corresponding period a year
earlier mainly due to lower debt level, lower market interest rates and smaller
exchange rate losses.
Profit before tax in October-December amounted to EUR 1.3 million (-94.5) and
net profit totaled EUR 9.3 million (-68.5). Earnings per share were EUR 0.06
(-0.52).
Financial performance in 2009
In 2009, Kemira continued its work to improve operational efficiency that had
started in 2008. The main focus areas were improving profitability and
strengthening cash flow and the balance sheet.
Kemira Group's revenue decreased by 12% in 2009 compared to 2008 due to weaker
demand in several customer industries. Revenue was EUR 2,500.1 million (2008:
EUR 2,832.7 million). Acquisitions increased revenue by approximately EUR 57
million. The figure includes the impact of the AKD wax joint venture that was
set up in China. Divestments decreased revenue by approximately EUR 3 million.
The effect from currency exchange lowered revenue by about EUR 73 million.
Establishment of the titanium dioxide joint venture in 2008 decreased revenue by
about EUR 148 million. Revenue from continuing business operations decreased by
7% from 2008.
+------------------------------+---------+--------------------------+----------+
| | | 1-12/2008 | |
|EUR million |1-12/2009| Continuing business|1-12/2008 |
| | | operations| |
+------------------------------+---------+--------------------------+----------+
|Revenue | 2,500.1| 2,685.2| 2,832.7|
+------------------------------+---------+--------------------------+----------+
|Operating profit excluding | | | |
|non-recurring items | 175.0| 126.4| 132.6|
+------------------------------+---------+--------------------------+----------+
|Operating profit excluding | | | |
|non-recurring items, % | 7.0| 4.7| 4.7|
+------------------------------+---------+--------------------------+----------+
The impact of the titanium dioxide business transferred to a joint venture has
been eliminated in the continuing business operations.
Geographically revenue was divided as follows: EMEA 65% (68%), North America
23% (23%), South America 6% (5%), and Asia Pacific 6% (4%).
Operating profit rose 113% to EUR 157.4 million (74.0). Operating profit
excluding non-recurring items rose 32% to EUR 175.0 million (132.6). The
operating profit margin excluding non-recurring items rose from 4.7% to 7.0%.
Kemira's medium term target for the operating profit margin is at least 10%.
Sales price increases were implemented in the second half on 2008 in response to
the significant increase in raw material prices. This contributed to the
increase in operating profit in 2009 compared to 2008 and compensated for the
impact of lower sales volumes on operating profit. Operating profit was also
boosted by lower cost base: fixed costs were approximately EUR 29 million lower
and variable costs approximately EUR 34 million lower than the year before.
Acquisitions increased operating profit by approximately EUR 10 million. The
currency exchange effect decreased operating profit by about EUR 7 million.
As of September 1, 2008, Kemira's share of the titanium dioxide joint venture's
results is being reported below operating profit. In 2008, the operating profit
of the titanium dioxide business was approximately EUR 6 million. In 2009,
Kemira's operating profit from continuing business operations excluding
non-recurring items rose 38%.
The annual savings target of Kemira's global cost savings program is more than
EUR 85 million, with Tikkurila accounting for EUR 25 million. The savings have
materialized faster than planned: by the end of 2009, 80% of the targeted
savings had been achieved. The full annual impact is expected to be felt from
2011 onwards. These savings will affect the entire Group and will be achieved by
streamlining the Group structure, organization and operating models.
The share of associates' results was EUR -4.7 million (-2.7).
Profit before tax amounted to EUR 102.9 million (1.8) and net profit totaled EUR
85.5 million (1.8). Taxes totaled EUR -17.4 million (0.0) representing an
effective tax rate of 17%. The taxes in the income statement are lower than
according to currently valid tax rates, mainly because some deferred tax assets
have been recorded on tax losses from previous years. Earnings per share were
EUR 0.61 (-0.01).
Financial position and cash flow
The financial position and liquidity remained good.
Cash flow from operating activities in 2009 amounted to EUR 287.8 million
(90.2). Cash flow after investments was EUR 202.2 million (2.7). Cash flow
increased due to higher EBITDA, effective working capital management and smaller
gross capital expenditure. The cash flow effect of expansion and improvement
investments was EUR -54.0 million (-124.4). Cash flow from acquisitions was EUR
-3.7 million (-180.8). The share of working capital of revenue was 14.5%
(14.9%). Kemira Oyj's shareholders were paid EUR 30.3 million (60.6) in
dividends.
At the end of 2009, the Group's net debt stood at EUR 675.6 million (EUR
1,049.1 million). Net debt declined due to stronger cash flow (effect
approximately EUR 202 million) and the rights offering arranged in the fourth
quarter (effect approximately EUR 196 million). Currency exchange rate
fluctuations reduced net debt by approximately EUR 3 million.
At year end, interest-bearing liabilities stood at EUR 950.2 million (1,168.5).
Fixed-rate loans accounted for 70% of total interest-bearing liabilities (47%).
The average interest rate on the Group's interest-bearing liabilities was 4.6%
(5.6%). The duration of the Group's interest-bearing loan portfolio was 19
months (December 31, 2008: 17 months).
The unused amount of the EUR 750 million revolving credit facility that falls
due in 2012 was EUR 548.7 million at the end of December. Short-term liabilities
maturing in the next 12 months amounted to EUR 437.6 million at year end, with
commercial papers issued on the Finnish markets representing EUR 125.4 million
and repayments of long-term loans representing EUR 299.1 million. Cash and cash
equivalents totaled EUR 274.6 million on December 31, 2009. Based on its current
structure, it is expected that the Group will not encounter any significant
refinancing needs in 2010, since the current loan arrangements cover its
financing needs. The terms of the revolving credit facility and other major
bilateral loan arrangements require that the Group's equity ratio must be more
than 25%.
At the end of the year, the equity ratio stood at 45% (December 31, 2008: 34%),
while gearing was 53% (December 31, 2008: 107%). Kemira's gearing target is
40-80%. The net impact of the rights offering on shareholders' equity was
approximately EUR 196 million and the net impact of currencies approximately EUR
28 million. Shareholder's equity declined by EUR 30.3 million due to the
dividends paid out after the Annual General Meeting in April.
The Group's net financial expenses were EUR 49.8 million (69.5). The decrease in
net financial expenses can be attributed to smaller liabilities and a lower
market interest level compared to 2008. Currency exchange rate losses decreased
by EUR 7 million.
In January 2010, Tikkurila Oy signed a 6 year TyEL repayment plan for EUR 40
million.
The Group's most significant transaction currency risk arises from the U.S.
dollar, mainly as a result of U.S. dollar denominated exports from the euro area
to overseas. At the end of the year, the U.S. dollar denominated 12-month
exchange rate risk had an equivalent value of approximately EUR 38 million. On
average, 34% of this transaction exposure was hedged. In addition, Kemira is
exposed to smaller transaction risks in relation to the Canadian dollar and the
Swedish krona with the annual exposure in both of these currencies being
approximately EUR 15 million.
Because Kemira's consolidated financial statements are compiled in euros, Kemira
is also subject to currency translation risk to the extent that the income
statement and balance sheet items of subsidiaries located outside Finland are
reported in some other currency than the euro. Kemira's main equity items
denominated in foreign currencies are in Swedish krona, US dollar, Brazilian
real, Polish zloty, Canadian dollar and Russian ruble. A weakening of the above
mentioned currencies against the euro would decrease Kemira's revenue and
operating profit through a translation risk.
A more detailed report on the Group's financial risks and their management is
published in the notes to the 2009 financial statements.
Capital expenditure
Gross capital expenditure in 2009, excluding acquisitions, amounted to EUR 82.2
million (161.0). The largest investments were the Kemira-Tiancheng Chemicals
joint venture (EUR 11.1 million), the reorganization of Tikkurila's production
site in Saint Petersburg, Russia (EUR 3.4 million) and a new coagulant
production line in France (EUR 3.2 million). Expansion investments represented
around 34% of capital expenditure excluding acquisitions, improvement
investments around 32%, and maintenance investments around 34%.
The Group's depreciation, non-recurring impairment and reversals of impairments
were EUR 116.3 million (169.4). The figure includes non-recurring impairment of
EUR 5.7 million (38.6) and reversals of impairments of EUR 8.9 million (0.0).
Cash flow from the sale of assets was EUR 2.4 million (254.3). Cash flow from
acquisitions was EUR -3.7 million (-180.8). The Group's net capital expenditure
totaled EUR 85.6 million (87.5).
Research and development
Research and development expenditure totaled EUR 47.0 million, accounting for
2.0% of all operating expenses. Research and development expenditure in 2008 was
EUR 71.1 million, accounting for 2.5% of all operating expenses, and in 2007 EUR
65.9 million, accounting for 2.4% of all operating expenses. The amount of
development costs recorded in balance sheet in the financial year was EUR 2.1
million (2008: 1.8; 2007: 3.3).
At the end of the year, the Group employed 452 persons (December 31, 2008: 520)
in R&D in 10 countries (2008: 10). 58% (2008: 62%) of the R&D personnel worked
in Finland.
In 2009 the focus of research and development moved to organic growth. The aim
is to develop products, concepts and business models that help customers improve
the efficiency of their water-intensive operations. In addition to Kemira's own
water expertise, development of such solutions also requires cooperation with
equipment manufacturers and companies that supply automation and regulation
systems.
More synergy benefits are sought through cooperation between the different parts
of the organization within Kemira which also affects R&D operations. The R&D
network focuses on developing and commercializing new innovative technologies
and products to meet the needs of global and local customers in all customer
segments. Products and solutions are offered for drinking and waste water
treatment, and for pulp and paper, oil and mining and other water intensive
customer industries.
In September 2009, Kemira opened its North American research and development
center located at Technology Enterprise Park on the campus of the Georgia
Institute of Technology in Atlanta. The Atlanta facility will have global
responsibility in Kemira's R&D network for paper tissue and recycled fiber
research, oil and mining research, as well as defomer and polymer chemistry
research. Kemira's other R&D centers are located in Espoo, Finland; Leverkusen,
Germany and Shanghai, China. A fifth center will be established in São Paulo,
Brazil during 2010.
Human resources
The number of Group employees at the end of 2009 was 8,493 (December
31, 2008: 9,405; December 31, 2007: 10,007). The average number of personnel in
2009 was 8,843 (2008: 9,954; 2007: 10,008). The cost savings program launched in
2008 continued in 2009 and the personnel was decreased in Finland, Sweden, USA,
China, Germany and France. The individuals who lost their job were supported in
accordance with good local practices.
At the end of the year, the Group employed 1,829 persons in Finland (December
31, 2008: 2,137), 4,615 persons elsewhere in EMEA (4,940), 1,298 in North
America (1,420), 405 in South America (425) and 346 in Asia Pacific (483). The
Paper segment employed 1,577 persons, Municipal & Industrial 1,193, Oil & Mining
460, Tikkurila 3,538 and the segment Other 257 persons. A total of 1,468 persons
worked for Kemira functions and joint operations.
Total salaries and wages paid in 2009 were EUR 310.6 million (2008:
354.6; 2007: 360.4). Kemira's reward system is based on performance, the
principles of internal fairness and external competitiveness. Consistent job
evaluation helps ensure compliance with these principles. Basic pay is
supplemented by performance-based bonus schemes, which cover a large share of
Group employees.
Kemira conducted a personnel survey in May-June. The objective of the survey was
to assess personnel satisfaction and commitment and identify the organization's
strengths and development areas. The response rate of 87% is very high, which is
a positive sign of the personnel's willingness to express their views on Kemira
as a workplace. The overall results for Kemira fell somewhat compared to the
previous personnel survey in 2007. The survey showed that people found their
work challenging and interesting, and felt joy of work. The main organizational
strengths were seen in the areas of management and leadership; especially in the
fields of availability, trust, recognition and competence. According to the
survey, further development was needed in communicating Kemira's strategy,
objectives and structure. The annual Group-wide personnel survey offers an
important channel for personnel participation and serves as a valuable
management tool.
The Kemira Code of Conduct specifies Group principles governing equality.
Accordingly, Kemira treats all people equally in recruitment and provides equal
working conditions irrespective of race, gender, religious beliefs, political
opinions and national and social origin. Kemira aims to achieve equal numbers of
applications for vacancies by women and men, equal opportunities for competence
development and career progression, equal placement on various organizational
levels, equal pay for equal work and equality in other employment terms and
conditions. At the end of 2009, men represented 68% (2008 and 2007: 71%) of
Kemira's employees and women 32% (2008 and 2007: 29%).
Environment and safety
Chemical products, their use, applications and manufacturing are governed by
numerous international agreements, as well as regional and national legislation
all over the world. In its financial statements, the Group treats its
environmental liabilities and risks in accordance with IFRS. The Kemira Code of
Conduct contains up-to-date environmental and health and safety guidelines,
compliance with law setting the minimum requirement. The company performs
regular internal and external audits to improve environmental and safety
performance. No material non-compliance conditions with respect to environmental
and safety permits have been brought to the management's attention.
In 2009, capital expenditure on environmental protection at company sites
totaled EUR 2.4 million (EUR 7.2 million) and operating costs EUR 14.8 million
(EUR 30.0 million). The change was mainly due to the full effect of transferring
the titanium dioxide business to a joint venture, and decreased production
caused by the economic crisis and cost cutting. No major environmental
investment projects are in progress or are being planned.
Provisions for environmental remediation measures of EUR 21.1 million (EUR 19.4
million) were mainly related to a landfill closure in Pori, Finland, and a
sediment remediation project in Vaasa, Finland, with both re-conditioning work
starting in 2009. In addition a demolition project of old factory buildings
began in Helsingborg, Sweden. There were no acquisitions and divestments that
altered the Group's overall environmental liabilities significantly. No
environmental liability cases related to previous operations, which would have a
significant effect on Kemira's financial position, have been brought to the
management's attention.
The implementation of the new EU chemicals regulation (REACH) progressed as
planned and the so-called preregistration was completed. Kemira made around
3,000 preregistrations for just over 400 manufactured and/or imported
substances. None of the substances which are candidates for authorization are
used in Kemira's products. However, acrylamide has been proposed to the
candidate list and the representatives of the industry have together taken the
issue to the General Court of European Union. Kemira manufactures acrylamide
mainly as a raw material for non-toxic polymers. The implementation of REACH is
not expected to have major effects on the Group's competitiveness, even though
the registration costs are expected to accumulate over the next few years.
The frequency of occupational incidents (LTA1) decreased significantly from the
previous year, to 3.5 incidents per million working hours (4.4), which is the
best result the Group has achieved thus far. There was one incident, which
regrettably resulted in permanent injuries for one employee. There were no
significant process accidents in 2009. Two truck transportation accidents
happened, but environmental damage and personal injuries were avoided.
Kemira publishes an annual Environmental Report verified by a third party. The
report is prepared in accordance with IFRS and the guidelines issued by the
European Chemical Industry Council (CEFIC). For example, the report deals with
emissions and effluents, waste, environmental costs, safety and product safety
as well as the use of natural resources.
Segments
Paper
We offer chemical products and integrated systems that help customers in the
water-intensive pulp and paper industry to improve their profitability as well
as their water, raw material and energy efficiency. Our solutions support
sustainable development.
+------------------------------------+----------+----------+---------+---------+
|EUR million |10-12/2009|10-12/2008|1-12/2009|1-12/2008|
+------------------------------------+----------+----------+---------+---------+
|Revenue | 229.6| 246.8| 906.4| 1,003.3|
+------------------------------------+----------+----------+---------+---------+
|EBITDA | 19.4| 2.6| 87.0| 69.4|
+------------------------------------+----------+----------+---------+---------+
|EBITDA % | 8.4| 1.1| 9.6| 6.9|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items | 14.6| 9.8| 44.9| 41.5|
+------------------------------------+----------+----------+---------+---------+
|Operating profit | 9.8| -33.5| 40.1| -2.6|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items, % | 6.4| 4.0| 5.0| 4.1|
+------------------------------------+----------+----------+---------+---------+
|Operating profit, % | 4.3| -13.6| 4.4| -0.3|
+------------------------------------+----------+----------+---------+---------+
|Capital employed* | 782.6| 826.7| 782.6| 826.7|
+------------------------------------+----------+----------+---------+---------+
|ROCE, %* | 5.1| -0.3| 5.1| -0.3|
+------------------------------------+----------+----------+---------+---------+
|Capital expenditure, excluding | | | | |
|acquisitions | 13.3| 10.6| 37.8| 51.7|
+------------------------------------+----------+----------+---------+---------+
|Cash flow after investments, | | | | |
|excluding interest and taxes | 18.8| -12.4| 75.6| 15.5|
+------------------------------------+----------+----------+---------+---------+
*12-month rolling average
October-December
The Paper segment's revenue in October-December 2009 declined by 7% to EUR
229.6 million (246.8) as demand in the paper industry weakened from the
corresponding quarter in 2008. Strong demand and a considerable price increase
in pulp enabled restarting pulp mills that had been shut down for several
months, which increased the demand for pulp chemicals. The currency exchange
effect had a EUR 7 million negative impact on revenue. In October-December,
revenue was cumulatively reclassified between segments based on customer
assignments, which decreased the revenue of the Paper segment by about EUR 1
million.
Operating profit excluding non-recurring items for October-December was EUR
14.6 million (9.8). The operating profit margin rose to 6.4% from 4.0% last year
(excluding non-recurring items). Lower fixed and variable costs compensated for
the decline in sales volumes. Variable costs decreased by about EUR 11 million
in October-December 2009 compared to the corresponding period in 2008.
Year 2009
The Paper segment's revenue in 2009 declined by 10% to EUR 906.4 million
(1,003.3) as demand in customer industries decreased markedly. The currency
exchange effect had an approximately EUR 4 million negative impact on revenue.
Reclassification of customer assignments between segments decreased revenue by
about EUR 1 million in 2009.
The consumption of paper used in magazines and newspapers and the number of
printed advertising material have fallen, particularly in the traditional
markets in Europe and North America. Management estimated that demand has
decreased by 10-25% depending on the paper grade. To adapt production to weaker
demand, the Paper segment's customers in the paper industry have cut back and
shut down capacity, and cleared stocks. The demand for packaging boards has also
weakened, although Asia and Eastern Europe showed signs of recovery in demand in
the second half of the year. The high utilization rate of pulp mills in the
second half of the year was visible as a pick-up in pulp chemical demand.
Operating profit excluding non-recurring items was EUR 44.9 million (41.5). The
operating profit margin rose to 5.0% from 4.1% a year earlier (excluding
non-recurring items). Higher average prices and lower fixed and variable costs
compensated for the decline in sales volumes. Variable costs decreased by about
EUR 6 million compared to 2008.
At the beginning of the year, Kemira and the Chinese company Tiancheng Ltd. set
up a joint venture, Kemira-Tiancheng Chemicals (Yanzhou) Co., Ltd., to produce
AKD wax, and adhesives derived from its wax, for the paper and board industry.
The company's operations have started as planned, and the company's home market
in China shows healthy demand for the products.
Kemira has been taking measures for over a period of several years to adjust its
paper and pulp chemicals business to the increasingly challenging market. In
addition to temporary production shut-downs, AKD wax production in Vaasa,
Finland was shut down in March 2009. Over the last few years, six North American
production facilities have been closed.
Municipal & Industrial
We offer water treatment chemicals for municipalities and industrial customers.
Our strengths are high-level application know-how, a comprehensive range of
water treatment chemicals, and reliable customer deliveries.
+------------------------------------+----------+----------+---------+---------+
|EUR million |10-12/2009|10-12/2008|1-12/2009|1-12/2008|
+------------------------------------+----------+----------+---------+---------+
|Revenue | 140.6| 147.0| 607.5| 583.7|
+------------------------------------+----------+----------+---------+---------+
|EBITDA | 17.7| 4.7| 91.7| 41.0|
+------------------------------------+----------+----------+---------+---------+
|EBITDA % | 12.6| 3.2| 15.1| 7.0|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items | 12.9| 6.9| 66.4| 25.0|
+------------------------------------+----------+----------+---------+---------+
|Operating profit | 6.3| -13.3| 59.8| 5.3|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items, % | 9.2| 4.7| 10.9| 4.3|
+------------------------------------+----------+----------+---------+---------+
|Operating profit, % | 4.5| -9.0| 9.8| 0.9|
+------------------------------------+----------+----------+---------+---------+
|Capital employed* | 349.4| 342.7| 349.4| 342.7|
+------------------------------------+----------+----------+---------+---------+
|ROCE, %* | 17.1| 1.6| 17.1| 1.6|
+------------------------------------+----------+----------+---------+---------+
|Capital expenditure, excluding | | | | |
|acquisitions | 11.8| 6.7| 21.0| 29.7|
+------------------------------------+----------+----------+---------+---------+
|Cash flow after investments, | | | | |
|excluding interest and taxes | 9.4| -3.3| 93.5| -13.8|
+------------------------------------+----------+----------+---------+---------+
*12-month rolling average
October-December
The Municipal & Industrial segment's (formerly Water segment) revenue decreased
4% in October-December 2009 to EUR 140.6 million (147.0) from the same period a
year earlier. In October-December, revenue was cumulatively reclassified between
segments based on customer assignments, which decreased the revenue of the
Municipal & Industrial segment by about EUR 8 million. The comparable revenue
rose by 1% in the fourth quarter. The total delivery volumes rose slightly
compared to the previous year although demand remained at a low level as
utilization rates have fallen in certain customer industries. The currency
exchange effect had an approximately EUR 7 million negative impact on revenue.
Acquisitions had an approximately EUR 2 million positive impact on revenue.
Operating profit excluding non-recurring items rose 87% to EUR 12.9 million
(6.9), despite a drop in average sales prices. The operating profit margin rose
to 9.2% from 4.7% last year (excluding non-recurring items). Variable costs
decreased by about EUR 10 million in October-December 2009 compared to the
corresponding period in 2008.
Year 2009
The Municipal & Industrial segment's revenue in 2009 was EUR 607.5 million
(583.7). Reclassification of customer assignments between segments decreased
revenue by about EUR 8 million in 2009. Comparable revenue increased by 5% from
2008. Acquisitions had an approximately EUR 22 million positive impact on
revenue while divestments had an approximately EUR 3 million negative effect on
revenue. The currency exchange effect decreased revenue by about EUR 7 million.
Overall steady demand continued in the municipal water treatment business
despite a decrease in delivery volumes in certain market areas. In the
industrial water treatment business, demand decreased in some customer
industries due to lower capacity utilization rates, but in other industries,
such as the food industry and power production, demand for water treatment
chemicals was stable. Total delivery volumes were lower than in 2008, but prices
were higher on average.
Operating profit excluding non-recurring items was EUR 66.4 million (25.0). The
operating profit margin rose to 10.9% from 4.3% in 2008 (excluding non-recurring
items). Operating profit was boosted by higher sales prices compared to 2008,
particularly in the first half of the year, and by lower variable and fixed
costs. Variable costs decreased by approximately EUR 26 million from 2008. There
was a shortage of many recycled industrial raw materials during the first half
of the year in particular, which increased variable and fixed costs as
production had to use other raw materials. Acquisitions had an approximately EUR
5 million positive impact on operating profit.
In September, Kemira and Akzo Nobel agreed that Kemira will take over Akzo
Nobel's water treatment iron coagulant business in Scandinavia (Sweden, Norway
and Denmark). The business deal did not involve any transfer of personnel or
production facilities.
Kemira has revised its strategy in Asia, especially in China, and divested its
coagulation chemicals unit during the year. In September 2008, Kemira announced
its intention to acquire a water chemical company operating in the Shandong
province in China, but the deal fell through and will no longer be completed.
The segment was renamed Municipal & Industrial in September. The name replaced
the previous name "Water". The new name describes the segment's customer base,
which ranges from small municipalities to big cities and various industries.
Oil & Mining
We offer a large selection of innovative chemical extraction and process
solutions for the oil and mining industries, where water plays a central role.
Utilizing our expertise, we enable our customers to improve efficiency and
productivity.
+------------------------------------+----------+----------+---------+---------+
|EUR million |10-12/2009|10-12/2008|1-12/2009|1-12/2008|
+------------------------------------+----------+----------+---------+---------+
|Revenue | 69.4| 66.6| 235.0| 275.4|
+------------------------------------+----------+----------+---------+---------+
|EBITDA | 8.0| -2.1| 23.6| 15.3|
+------------------------------------+----------+----------+---------+---------+
|EBITDA % | 11.5| -3.2| 10.1| 5.6|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items | 5.5| 0.6| 14.2| 8.4|
+------------------------------------+----------+----------+---------+---------+
|Operating profit | 11.2| -7.7| 19.9| 1.9|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items, % | 7.9| 0.9| 6.0| 3.1|
+------------------------------------+----------+----------+---------+---------+
|Operating profit, % | 16.1| -11.6| 8.5| 0.7|
+------------------------------------+----------+----------+---------+---------+
|Capital employed* | 148.9| 160.4| 148.9| 160.4|
+------------------------------------+----------+----------+---------+---------+
|ROCE, %* | 13.4| 1.2| 13.4| 1.2|
+------------------------------------+----------+----------+---------+---------+
|Capital expenditure, excluding | | | | |
|acquisitions | 2.0| 1.3| 4.7| 8.8|
+------------------------------------+----------+----------+---------+---------+
|Cash flow after investments, | | | | |
|excluding interest and taxes | 7.6| -2.5| 20.8| 14.3|
+------------------------------------+----------+----------+---------+---------+
*12-month rolling average
October-December
The Oil & Mining segment's revenue in October-December 2009 rose by 4% to EUR
69.4 million (66.6). In October-December, revenue was cumulatively reclassified
between segments based on customer assignments, which increased the revenue of
the Oil & Mining segment by about EUR 9 million. The comparable revenue
decreased by 10% in the fourth quarter. Demand remained at a low level and
delivery volumes decreased from the corresponding period in 2008. The chemicals
demand in oil and gas industries recovered slightly towards year end as oil and
gas prices rose. In the mining industry, the demand for chemicals by metal
industry customers started to strengthen at the end of the year as metal demand
and prices rose. The currency exchange effect had an approximately EUR 4 million
negative impact on revenue.
Operating profit excluding non-recurring items for October-December was EUR 5.5
million (0.6). The operating profit margin rose to 7.9% from 0.9% last year
(excluding non-recurring items). The decrease in sales volume was compensated by
an approximately EUR 7 million drop in variable costs.
Year 2009
The Oil & Mining segment's revenue in 2009 fell by 15% to EUR 235.0 million
(275.4). The decline was result of weaker demand, particularly in the mining
industry. The currency exchange effect had an approximately EUR 6 million
positive impact on revenue. Reclassification of customer assignments between
segments increased revenue by about EUR 9 million.
In the oil and gas industry, chemical demand was weak as a consequence of cuts
in exploration, drilling and production services. In the mining industry,
customer demand and prices were also low due to the economic recession. Signs of
recovery were visible in oil and gas industry in the last quarter as the prices
for oil and gas rose. In the mining industry, the demand for chemicals by metal
industry customers started to strengthen towards year end as metal demand and
prices rose.
Operating profit excluding non-recurring items for was EUR 14.2 million (8.4).
The operating profit margin rose to 6.0% from 3.1% last year (excluding
non-recurring items). The decrease in sales volumes was compensated by lower
variable costs that decreased by about EUR 19 million from the previous year.
Oil & Mining segment is based on Kemira's water competence and water treatment
product range. Its strategy is to focus on extraction and process solutions for
oil and mining industries where water quality and quantity management plays a
central role for the customers. Oil & Mining implements its strategy by
leveraging Kemira's global presence, production footprint as well as research
and development network.
Tikkurila
Our product range consists of decorative paints and coatings for the wood and
metal industries. We provide consumers, professional painters and industrial
customers with branded products and expert services in approximately 40
countries.
+------------------------------------+----------+----------+---------+---------+
|EUR million |10-12/2009|10-12/2008|1-12/2009|1-12/2008|
+------------------------------------+----------+----------+---------+---------+
|Revenue | 98.5| 103.5| 530.2| 648.1|
+------------------------------------+----------+----------+---------+---------+
|EBITDA | 0.0| -7.9| 66.5| 78.2|
+------------------------------------+----------+----------+---------+---------+
|EBITDA % | 0.0| -7.6| 12.5| 12.1|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items | -4.7| -12.6| 50.1| 59.2|
+------------------------------------+----------+----------+---------+---------+
|Operating profit | -4.7| -12.6| 47.7| 59.2|
+------------------------------------+----------+----------+---------+---------+
|Operating profit excluding | | | | |
|non-recurring items, % | -4.8| -12.2| 9.5| 9.1|
+------------------------------------+----------+----------+---------+---------+
|Operating profit, % | -4.8| -12.2| 9.0| 9.1|
+------------------------------------+----------+----------+---------+---------+
|Capital employed* | 304.0| 323.6| 304.0| 323.6|
+------------------------------------+----------+----------+---------+---------+
|ROCE, %* | 15.7| 18.3| 15.7| 18.3|
+------------------------------------+----------+----------+---------+---------+
|Capital expenditure, excluding | | | | |
|acquisitions | 2.5| 14.2| 13.5| 32.1|
+------------------------------------+----------+----------+---------+---------+
|Cash flow after investments, | | | | |
|excluding interest and taxes | 8.9| -3.8| 61.4| 52.2|
+------------------------------------+----------+----------+---------+---------+
*12-month rolling average
October-December
Tikkurila's revenue in October-December decreased by 5% and totaled EUR 98.5
million (103.5). The currency exchange effect had an approximately EUR 5 million
negative impact on revenue. Acquisitions increased revenue by about EUR 2
million.
Operating profit excluding non-recurring items for October-December was EUR -4.7
million (-12.6). An increase in average selling prices and a decrease in the
cost base compensated for lower sales volumes. Variable costs decreased by about
EUR 2 million compared to the corresponding period in 2008, and also fixed costs
decreased. The currency exchange effect had an approximately EUR 2 million
positive impact on operating profit.
Year 2009
Tikkurila's revenue in 2009 decreased by 18% to EUR 530.2 million (648.1). The
decrease is associated with the general economic recession, which caused a
slowdown in both new construction and the sales of building materials and
resulted in more sluggish housing sales in all key markets. The currency
exchange effect had an approximately EUR 70 million negative impact on revenue,
in particular due to weakening of the Russian ruble, the Swedish krona and the
Polish zloty. Acquisitions increased revenue by about EUR 9 million.
Operating profit excluding non-recurring items was EUR 50.1 million (59.2). The
operating profit margin rose to 9.5% from 9.1% in the previous year (excluding
non-recurring items). A decrease in sales volume decreased operating profit but
on the other hand the average price of sold products increased from 2008.
Variable costs increased by about EUR 17 million, but fixed costs decreased. The
currency exchange effect had an approximately EUR 5 million negative impact on
operating profit.
Erkki Järvinen took over the position as the President and CEO of Tikkurila Oy
on January 1, 2009. Before taking over the post at Tikkurila, Järvinen worked as
President and CEO of Rautakirja Corporation, which belongs to Sanoma Oyj.
A new Board of Directors was appointed for Tikkurila in January. Harri Kerminen,
President and CEO of Kemira Oyj, was reappointed as the Chairman of the Board
and Jari Paasikivi and Petteri Walldén as members. New members that were
appointed were Eeva Ahdekivi, Ove Mattsson and Pia Rudengren.
In January, Tikkurila announced a savings program in order to secure its future
competitiveness. The aim is to save EUR 25 million annually. On April 15, 2009
the co-determination negotiations were finished in Finland. The savings program
resulted in a personnel reduction of 163 employees in Finland. Implementation of
the savings program progressed according to plan in other operating countries as
well. In connection with Tikkurila's savings program, EUR 2.4 million in
non-recurring costs was recognized in the second quarter of 2009.
The operations of the logistics and service center in Mytishchi near Moscow,
which came on stream in February, have started out well. The center houses all
of Tikkurila's decorative paints and industrial paints operations in the Moscow
region and features facilities for customer training. The center will further
improve Tikkurila's customer services in Moscow and the surrounding area.
In May, Tikkurila purchased the remaining 30% of the shares in St
Petersburg-based industrial coatings companies from the founders and previous
management of the companies. OOO Gamma Industrial Coatings manufactures metal
industry coatings and OOO Tikkurila Powder Coatings manufactures powder
coatings. After the deal, Tikkurila owns 100% of both companies.
In August, Tikkurila announced its intentions to acquire the 50% stake of the
Slovenian JUB coatings company in the trading company Tikkurila JUB Romania SRL.
Ownership was transferred on September 1, 2009, with 100% ownership now by
Tikkurila. The name of the company was changed to Tikkurila SRL. Tikkurila JUB
Romania SRL was established in May 2008 for marketing, selling and distributing
Tikkurila's and JUB's decorative paints in Romania. In addition to decorative
paints, the service concept of Tikkurila SRL will also include Tikkurila's
industrial coatings. With an office and warehouse in Bucharest, the company
employs around 10 people.
The key elements of Tikkurila's strategy are customer focus, profitable growth,
geographic focus, strong brands, and one unified Tikkurila. To improve customer
services and efficiency, Tikkurila changed its organization as of December
31, 2009 to reflect the geographic division. The four new strategic business
units are East, Finland, Scandinavia and Central Eastern Europe.
In 2008, Kemira announced a plan to separate Tikkurila and list Tikkurila's
shares on NASDAQ OMX Helsinki Ltd in early 2009. The aim of separating Tikkurila
is to increase the shareholder value for Kemira's shareholders. Kemira is
focusing on water chemistry. As the capital, debt and paints markets weakened,
Kemira decided in February 2009 to postpone the listing. The Board of Directors
of Kemira proposes to the Annual General Meeting that 86% of the shares of
Tikkurila be distributed as dividend to Kemira's shareholders. Tikkurila intends
to seek listing of its shares on NASDAQ OMX Helsinki Ltd as from the end of
March, 2010. Kemira does not intend to raise cash proceeds for Kemira nor issue
new shares of Tikkurila in connection with Tikkurila's separation. Kemira will
retain a 14% minority holding in Tikkurila.
Other
The Other segment consists of specialty chemicals such as organic salts and
acids and the Group expenses not charged to the segments (some research and
development costs and the costs of CEO Office).
The demand and price level of specialty chemicals was good. Products are
delivered for instance to the food industry, feed industry and pharmaceutical
industry.
Parent company's financial performance
The revenue of the parent company was EUR 296.9 million (285.3). Operating
profit was EUR 14.1 million (37.9). The parent company bears the cost of Group
management and administration as well as a portion of research costs.
The parent company's net financial expenses came to EUR 14.9 million (16.9). Net
profit totaled EUR 23.2 million (54.7). Capital expenditure totaled EUR 12.6
million (EUR 192.5 million, including the formation of the titanium dioxide
joint venture), excluding investments in subsidiaries.
Kemira Oyj's shares and shareholders
On December 31, 2009, Kemira Oyj's share capital amounted to EUR 221.8 million
and the number of shares was 155,342,557. Each share entitles to one vote at the
general meeting.
At the end of 2009, Kemira Oyj had 26,495 registered shareholders (December
31, 2008: 21,333). Foreign shareholders held 10.9% of the shares (12.8%),
including nominee registered holdings. Households owned 15.5% of the shares
(12.4%).
At the year-end, Kemira held 3,854,711 treasury shares (3,854,465), representing
2.5% (3.1%) of all company shares. A total of 306 shares granted as share-based
incentives were returned to Kemira during the year in accordance with the terms
of the incentive plan as employment ended.
Kemira Oyj's share closed at EUR 10.39 at the NASDAQ OMX Helsinki Ltd at the end
of 2009 (2008: 5.40. Due to the rights offering, NASDAQ OMX Helsinki has
adjusted the historical prices prior to November 24, 2009 with the following
calculation formula: old price / 1.1). The share price rose 92% during the year
while OMX Helsinki Cap index rose 36%. Shares registered a high of EUR 11.63
(EUR 13.43) and a low of EUR 3.87 (EUR 4.93). The average share price was EUR
7.64 (7.91). The company's market capitalization, excluding treasury shares, was
EUR 1,574 million at the year-end (720 million).
In 2009, Kemira Oyj's share trading volume on NASDAQ OMX Helsinki Ltd totaled
77.2 million (117.4 million) and was valued at EUR 634.2 million (EUR 1,028.4
million). This represents 62% of the share capital. The average daily trading
volume was 307,657 (464,022) shares.
Rights offering
On November 23, 2009, the Board of Directors decided on a rights offering based
on an authorization given by the Extraordinary General Meeting on the same day.
Kemira's shareholders were able to subscribe for one new share for every four
shares held on the record date on November 26, 2009. The subscription price was
EUR 6.60 per share and the subscription period was between December 1 and
18, 2009. As a result of the rights offering Kemira's total number of shares
rose to 155,342,557 shares. The shares subscribed for in the rights offering
entitle to any possible dividends and profit distribution and generate all other
shareholder rights.
Trading with temporary shares corresponding with the shares subscribed for with
the subscription rights began as its own series on December 21, 2009. The
temporary shares were combined with Kemira shares on December 30, 2009 and
trading with the new shares commenced.
Kemira raised net capital of approximately EUR 196 million from the rights
offering. The proceeds of the rights offering are to support Kemira's growth
strategy and vision to be a leading water chemistry company, to enable the
separation and listing of Tikkurila and to strengthen Kemira's balance sheet.
Share-based incentive plan for the strategic management board
In February, Kemira Oyj's Board of Directors decided on a new share-based
incentive plan aimed at Strategic Management Board members. The plan is divided
into three one-year performance periods: 2009, 2010 and 2011. Payment depends on
the achievement of the set operating profit targets. The program also includes a
three-year goal, which is tied to the development of operating profit as a
percentage of revenue by the end of 2011. Any payments will be paid as a
combination of Kemira shares and cash payments covering the payable taxes, in
accordance with the achievement of set goals. The combined value of shares and
cash payments paid out in the course of the three-year share-based incentive
plan may not exceed the individual's gross salary for the same period. Shares
transferable under the plan comprise treasury shares or Kemira Oyj shares
available in public trading.
In addition to the new share-based incentive plan aimed at Strategic Management
Board members, Kemira has a share-based incentive plan for key personnel, from
which the members of the Strategic Management Board were excluded when the new
plan was introduced. The share-based incentive plans aim at aligning the goals
of the Group's shareholders and key personnel in order to increase the Company's
value, motivate key personnel and provide them with competitive,
shareholding-based incentives.
AGM and EGM decisions
Annual General Meeting
Kemira Oyj's Annual General Meeting, held on April 8, 2009, confirmed a dividend
of EUR 0.25 per share for 2008. The dividend was paid out on April 22, 2009.
The AGM decided that Article 13 of the current Articles of Association be
amended to read as follows: "Notices to the general meeting of shareholders and
other communications to the shareholders shall be communicated by the Board of
Directors by publishing an announcement in at least two nationwide newspapers,
determined by the Board of Directors, no earlier than two months and no later
than 21 days before the general meeting of shareholders."
The Annual General Meeting authorized the Board of Directors to decide upon the
repurchase of a maximum of 2,395,229 treasury shares ("Share repurchases
authorization"). Shares will be repurchased by using unrestricted equity either
through a direct offer with equal terms to all shareholder at a price determined
by the Board of Directors or otherwise than in proportion to the existing
shareholdings of the Company's shareholders in public trading on the NASDAQ OMX
Helsinki Ltd ("Stock Exchange") at the market price quoted at the time of the
repurchase. Shares shall be acquired and paid for in accordance with the Rules
of Stock Exchange and Euroclear Finland Ltd. Shares may be repurchased to be
used in implementing or financing mergers and acquisitions, developing the
Company's capital structure, improving the liquidity of the Company's shares or
implementing the Company's share-based incentive plans. In order to realize the
aforementioned purposes the shares acquired may be retained, transferred further
or cancelled by the Company. The Board of Directors will decide upon other terms
related to share repurchase. The Share repurchase authorization is valid until
the end of the next Annual General Meeting. The authorization has not been
exercised.
The Annual General Meeting authorized the Board of Directors to decide to issue
a maximum of 12,500,000 new shares and transfer a maximum of 6,250,000 treasury
shares held by the Company ("Share issue authorization"). The new shares may be
issued and the Company's own shares held by the Company may be transferred
either against payment or, as part of the implementation of the Company's
share-based incentive plans, without payment. Said new shares may be issued and
said Company's own shares held by the Company may be transferred to the
Company's shareholders in proportion to their current shareholdings in the
Company, or through a directed share issue if the Company has a weighty
financial reason to do so, such as financing or implementing mergers and
acquisitions, developing its capital structure, improving the liquidity of the
Company's shares or if this is justified for the purpose of implementing the
Company's share-based incentive plans. The directed share issue may be carried
out without payment only in connection with the implementation of the Company's
share-based incentive plan. The subscription price of new shares shall be
recognized under unrestricted equity capital fund. The consideration payable for
Company's own shares shall be recognized under unrestricted equity capital fund.
The Board of Directors will decide upon other terms related to share issue. The
Share issue authorization is valid until the end of the next Annual General
Meeting. The authorization has not been exercised.
The AGM elected KPMG Oy Ab to serve as the Company's auditor, with Pekka Pajamo,
Authorized Public Accountant, acting as the principal auditor.
Extraordinary General Meeting
The Extraordinary General Meeting held on November 23, 2009 authorized the Board
of Directors to decide on a share issue for consideration in such a manner that
the shareholders shall be entitled to subscribe for new shares in proportion to
their prior shareholding. More detailed information on the share issue can be
found under "Kemira Oyj's shares and shareholders".
Other events during the review period
In August 2009, Kemira Oyj received a summons where it was stated that Cartel
Damage Claims Hydrogen Peroxide SA (CDC) had filed an action against six
hydrogen peroxide manufacturers, including Kemira, for violations of competition
law applicable to the hydrogen peroxide business.
On December 31, 2009 Kemira Oyj's statutory employees' pension insurance (TyEL)
was transferred from Kemira's Pension Fund to Varma Mutual Pension Insurance
Company. The transfer has no effect on the level of employees' pension security
or its coverage. Due to the transfer, Kemira recorded non-recurring expenses of
EUR 13.7 million in its October-December result. Kemira Oyj also has employees'
pension insurance in Ilmarinen Mutual Pension Insurance Company.
Corporate Governance and Group structure
Kemira Oyj's corporate governance is based on the Articles of Association, the
Finnish Companies Act and NASDAQ OMX Helsinki Ltd's rules and regulations on
listed companies. Furthermore, the Company complies with the Finnish Corporate
Governance Code, with the exception that the Nomination Committee primarily
consists of members outside the Company's Board of Directors which is not in
line with the Governance Code's recommendation 22. According to the view of the
Company's Board of Directors, it is in the best interest of the Company and its
shareholders that the biggest shareholders participate in preparing nomination
and compensation issues related to the Board of Directors. The company's
corporate governance is presented as a separate statement on the company's
website. The statement is also attached to this financial statements bulletin.
Board of Directors
On April 8, 2009, the AGM reelected members Elizabeth Armstrong, Juha Laaksonen,
Pekka Paasikivi, Kaija Pehu-Lehtonen, Jukka Viinanen and Jarmo Väisänen to the
Board of Directors and Wolfgang Büchele was elected as a new member. Pekka
Paasikivi was re-appointed as the Chairman of the Board and Jukka Viinanen was
appointed Vice Chairman. The remuneration paid to the members of the Board
remained unchanged. In 2009, the Board of Directors met 13 times.
Kemira Oyj's Board of Directors has appointed three committees: the Audit
Committee, the Compensation Committee and the Nomination Committee. The Audit
Committee is chaired by Juha Laaksonen and has Kaija Pehu-Lehtonen and Jarmo
Väisänen as members. In 2009, the Audit Committee met 5 times. The Compensation
Committee is chaired by Pekka Paasikivi and has Kaija Pehu-Lehtonen and Jukka
Viinanen as members. In 2009, the Compensation Committee met 3 times.
To the Nomination Committee the Board of Directors of Kemira Oyj invited the
representatives of the three largest shareholders as of May 31, 2009, and the
Chairman of Kemira Oyj's Board of Directors as an expert member. The Nomination
Committee prepares a proposal for the next Annual General Meeting concerning the
composition and remuneration of the Board of Directors. The members of the
Nomination Committee are Jari Paasikivi, Managing Director of Oras Invest Oy;
Kari Järvinen, Managing Director of Solidium Oy; Risto Murto, Chief Investment
Officer, Varma Mutual Pension Insurance Company; and the Chairman of the Board
of Directors Pekka Paasikivi as an expert member. In 2009, the Nomination
Committee met once.
Changes to company management
In August, Kemira Oyj's CFO Jyrki Mäki-Kala was appointed new Deputy CEO as of
September 1, 2009 following the retirement of the previous Deputy CEO Esa
Tirkkonen.
Structure
The acquisitions made during the year are discussed under segment information.
Short-term risks and uncertainty factors
Kemira's key risks and uncertainty factors are related to general economic
development and its effect on the demand for Kemira's products.
Powerful fluctuations in the world market prices of electricity and oil are
reflected in Kemira's financial results, via raw material prices and logistics
costs.
Capacity cuts among raw material suppliers may affect Kemira's production costs.
As a result of general economic development some of our cooperation partners,
for instance logistics companies, may face difficulties, which in turn may have
a temporary effect on Kemira's operations.
Introduction of REACH legislation may decrease the available raw material
options and suppliers and thus increase Kemira's raw material costs. REACH
registration of Kemira's own products may also be more expensive than estimated,
in particular if Kemira is not able to divide the costs with other companies.
Acrylamide which Kemira uses as a raw material for polymers has been proposed to
the list of candidates for authorization. If acrylamide was added to the list of
substances subject to authorization under REACH, this would hinder its use.
Changes in the exchange rates of key currencies can affect Kemira's financials.
A detailed account of Kemira's risk management principles and organization is
available at the company website at www.kemira.com. An account of financial
risks will be available in the notes to the financial statements 2009.
Materialized environmental and hazard risks will be handled in Kemira's
environmental report, to be published in spring.
Events after the review period
In January 2010, Kemira reversed the decision to shut down the polymer
manufacturing site in Columbus Georgia USA as the demand for water treatment
chemicals in the oil and gas industries is expected to increase. Previously the
site was primarily serving customers in the paper industry. Last year's decision
to shut down the Columbus site was part of the refocusing of Kemira's paper
chemicals business, where the offering of paper chemicals is being adapted
regionally to local customer needs. The operations at the site have now been
retooled to offer a tailored product mix to meet the needs of customers in the
oil and gas industry.
In January 2010, Metso and Kemira entered into a three-year research and
development partnership agreement, by which Kemira will handle the chemical
control of Metso's pilot paper machines. The aim is to combine Metso's leading
competence in paper and board machine processes, automation and technology with
Kemira's know-how in water and fiber chemistry to produce optimal overall
solutions for pulp and paper industry customers.
Dividend
On December 31, 2009, Kemira Oyj's distributable funds totaled EUR 394,164,178
of which net profit for the period accounted for EUR 23,172,560. No material
changes have taken place in the company's financial position after the balance
sheet date.
Kemira Oyj's Board of Directors proposes to the Annual General Meeting to be
held on March 16, 2010 that dividend on the basis of the adopted balance sheet
for the financial year ended December 31, 2009 shall be paid in Tikkurila Oyj's
shares as follows:
Each four Kemira's shares entitle their holder to receive one share of Tikkurila
Oyj as a dividend. Kemira shall distribute to its shareholders as dividend an
aggregate of 37.933.097 shares of Tikkurila, which represents 86% of the shares
in Tikkurila and the number of voting rights carried by them.
The dividend payable in Tikkurila's shares will be paid to each shareholder who
is registered in the Company's Shareholder Register maintained by Euroclear
Finland Ltd on the record date, March 19, 2010. The Board of Directors proposes
that the dividend be paid on March 26, 2010.
The distribution of the dividend is conditional upon the approval of Tikkurila's
shares to trading on the official list of NASDAQ OMX Helsinki by May 31, 2010.
If this condition is not fulfilled, the decision to distribute dividend will
lapse.
Board proposal for dividend authorization
Kemira Oyj's Board of Directors proposes to the Annual General Meeting on March
16, 2010 that the Annual General Meeting authorize the Board to decide upon a
dividend payable in cash on the basis of the adopted balance sheet for the
financial year ended December 31, 2009 under the following terms and conditions:
* Under the authorization, the Board of Directors may decide upon a dividend
payable in cash of a maximum of EUR 0.27 per share.
* The Board of Directors will decide upon the other terms related to the
dividend payable in cash in accordance with the Rules of the Helsinki Stock
Exchange and Euroclear Finland Ltd. The authorization to decide upon a
dividend payable in cash is valid until May 31, 2010.
Outlook
Kemira's vision is to be a leading water chemistry company. Kemira will continue
to focus on improving profitability and reinforcing positive cash flow, but the
company will increase its actions to boost growth.
Kemira's financial targets remain unchanged. The company's medium term financial
targets are:
* organic revenue growth > 5% per year
* EBIT, % of revenue > 10%
* positive cash flow after investments and dividends
* return on capital employed (ROCE), %: continuous improvement, and
* targeted gearing level 40-80%.
The basis for growth are the growing water chemicals markets and Kemira's strong
know-how in water quality and quantity management. Increasing water shortage,
tightening legislation and customers' needs to increase operational efficiency
create opportunities for Kemira to develop new water applications for both new
and current customers. Investment in research and development is a central part
of Kemira's strategy. The focus of Kemira's research and development activities
is on the development and commercialization of new innovative technologies for
Kemira's customers globally and locally.
The global cost savings program started in 2008 has proceeded faster than
planned and it will be completed by the end of the year. The full annual impact
is expected to be felt from 2011 onwards.
In 2010, Kemira expects demand to develop favorably as the economic situation
improves, even though there's still uncertainty with the development of the
demand. In the first quarter of the year, Kemira's operating profit excluding
non-recurring items is expected to increase from the corresponding period in
2009.
Helsinki, February 8, 2010
Kemira Oyj
Board of Directors
Financial key figures, definitions of key figures as well as information on
shareholders, management shareholding and related parties' events are presented
in the financial statements and in the notes to the financial statements which
will be published on the company's website February 22, 2010.
All forward-looking statements in this review are based on the management's
current expectations and beliefs about future events, and actual results may
differ materially from the expectations and beliefs such statements contain.
APPENDIX: Corporate Governance Statement
DISCLAIMER
Laws of certain jurisdictions may impose restrictions on the distribution of
this release and the share dividend. This release does not constitute an offer
to sell or a solicitation to buy any shares in any jurisdiction to any person to
whom it is unlawful to make such an offer in such jurisdiction. No actions have
been taken to register or qualify the share dividend or otherwise to permit a
public offering of the Tikkurila shares in any jurisdiction outside of Finland.
Persons into whose possession this release comes must inform themselves of and
observe all such restrictions. In particular, the dividend shares have not been,
and will not be, registered under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), or under the securities laws of any state of the United
States and, accordingly, may not be offered or sold, directly or indirectly, in
or into the United States (as defined in Regulation S), unless registered under
the Securities Act or where such registration is not required.
SEB Enskilda is acting exclusively for Kemira and Tikkurila and no one else in
connection with the share dividend. It will not regard any other person (whether
or not a recipient of this release) as its client in relation to the share
dividend and will not be responsible to anyone other than Kemira and Tikkurila
for providing the protections afforded to its clients, nor for giving advice in
relation to the share dividend or any transaction or arrangement referred to
herein. No representation or warranty, express or implied, is made by SEB
Enskilda as to the accuracy, completeness or verification of the information set
forth in this release, and nothing contained in this release is, or shall be
relied upon as, a promise or representation in this respect, whether as to the
past or the future. SEB Enskilda assumes no responsibility for its accuracy,
completeness or verification and, accordingly, disclaim, to the fullest extent
permitted by applicable law, any and all liability which it may otherwise be
found to have in respect of this release or any such statement.
KEMIRA GROUP
The figures are audited.
All figures in this financial report have been rounded and consequently the
sum of individual figures can deviate from the presented sum figure.
This Interim Consolidated Financial Statement has been prepared in compliance
with IAS 34.
The accounting policies adopted are consistent with those of the Group's
annual financial statement, added with the following changes.
Changes to the accounting policies as of January 1, 2009:
- IFRS 8 Operating Segments. The adoption of the standard has changed the way
in which segment information is presented. The segment information in the
financial statements changed at the beginning of 2009 owing to the
reorganization of the Group. The comparative figures have been published with
separate release March 2009.
- IAS 23 Borrowing costs. The adoption of the amended standard ment a change
to the consolidated financial statements' accounting policies but had no
material effect on the future financial statements.
- IAS 1 Presentation of Financial Statements. The amendment of the standard
has changed the presentation of the income statement and the statement of
changes in equity.
INCOME STATEMENT 10-12/2009 10-12/2008 2009 2008
EUR million
Revenue 594.7 627.6 2,500.1 2,832.7
Other operating income 3.8 11.6 15.0 51.5
Expenses -560.1 -637.0 -2,241.4 -2,640.8
Depreciation, impairments
and reversals of impairments -25.8 -70.3 -116.3 -169.4
Operating profit 12.6 -68.1 157.4 74.0
Financial income and expenses,
net -12.1 -23.7 -49.8 -69.5
Share of profit or loss of
associates 0.8 -2.7 -4.7 -2.7
Profit before tax 1.3 -94.5 102.9 1.8
Income tax 8.0 26.0 -17.4 -
Net profit for the period 9.3 -68.5 85.5 1.8
Attributable to:
Equity holders of the parent 8.4 -68.6 81.8 -1.8
Minority interest 0.9 0.1 3.7 3.6
Net profit for the period 9.3 -68.5 85.5 1.8
Earnings per share, basic
and diluted, EUR 0.06 -0.52 0.61 -0.01
STATEMENT OF COMPREHENSIVE INCOME
EUR million 10-12/2009 10-12/2008 2009 2008
Net profit for the period 9.3 -68.5 85.5 1.8
Other comprehensive income, net of tax:
Available-for-sale
- change in fair value 3.7 -23.9 3.7 35.3
Exchange differences 5.6 -61.3 28.1 -74.2
Hedge of net investment in
foreign entities -0.5 6.8 -3.0 9.1
Cash flow hedging 8.0 -21.3 10.0 -22.0
Other changes -0.2 2.0 -0.4 2.1
Other comprehensive income,
net of tax 16.6 -97.7 38.4 -49.7
Total comprehensive income 25.9 -166.2 123.9 -47.9
Attributable to:
Equity holders of the parent 25.0 -164.3 119.9 -49.4
Minority interest 0.9 -1.9 4.0 1.5
Total comprehensive income 25.9 -166.2 123.9 -47.9
BALANCE SHEET
EUR million
ASSETS 31.12.2009 31.12.2008
Non-current assets
Goodwill 658.0 655.1
Other intangible assets 102.2 111.6
Property, plant and equipment 761.5 765.7
Holdings in associates 131.1 135.6
Available-for-sale investments 166.2 159.8
Deferred tax assets 18.8 12.7
Other investments 13.2 11.5
Defined benefit pension receivables 35.3 54.0
Total non-current assets 1,886.3 1,906.0
Current assets
Inventories 246.5 319.3
Interest-bearing receivables 1.4 7.6
Accounts receivables and other receivables 400.6 493.0
Current tax asset 7.3 14.4
Money market investments 202.1 87.1
Cash and cash equivalents 72.5 32.3
Total receivables 930.4 953.7
Total assets 2,816.7 2,859.7
EQUITY AND LIABILITIES 31.12.2009 31.12.2008
Equity attributable to equity
holders of the parent 1,249.5 962.8
Minority interest 19.3 13.2
Total equity 1,268.8 976.0
Non-current liabilities
Interest-bearing non-current liabilities 512.6 609.2
Deferred tax liabilities 90.1 89.9
Pension liabilities 70.4 67.5
Provisions 55.6 61.8
Total non-current liabilities 728.7 828.4
Current liabilities
Interest-bearing current liabilities 437.6 559.3
Interest-free current liabilities 369.1 479.7
Current tax liabilities 0.5 5.5
Provisions 12.0 10.8
Total current liabilities 819.2 1,055.3
Total liabilities 1,547.9 1,883.7
Total equity and liabilities 2,816.7 2,859.7
CONSOLIDATED CASH FLOW STATEMENT
EUR million 10-12/2009 10-12/2008 2009 2008
Cash flow from operating activities
Profit for the period 8.4 -68.5 81.8 -1.8
Total adjustments 53.1 78.1 206.9 218.8
61.5 9.6 288.7 217.0
Change in net working capital 26.2 35.9 74.4 -28.7
87.7 45.5 363.1 188.3
Financing items -23.2 -26.7 -49.0 -74.2
Taxes paid -3.5 -5.7 -26.3 -23.9
Total cash flow from operating activities 61.0 13.1 287.8 90.2
Cash flow from investing activities
Capital expenditure for acquisitions -0.1 -40.4 -3.7 -180.8
Other capital expenditure -31.7 -44.7 -82.2 -161.0
Proceeds from sale of assets -0.2 9.0 2.4 254.3
Change in other investments -2.1 - -2.1 -
Cash flow after investing activities -34.1 -76.1 -85.6 -87.5
Cash flow before financing activities 26.9 -63.0 202.2 2.7
Cash flow from financing activities
Proceeds from non-current
interest-bearing liabilities 197.5 234.3 228.3 470.0
Repayments from non-current
interest-bearing liabilities -142.4 -10.8 -249.7 -43.4
Short-term financing,
net (increase +, decrease -) -220.4 -107.7 -183.6 -282.1
Dividends paid - - -33.5 -64.2
Share issue 200.0 - 200.0 -
Other financing items -0.9 12.2 -11.3 -7.8
Net cash used in financing activities 33.8 128.0 -49.8 72.5
Net change in cash and cash equivalents 60.7 65.0 152.4 75.2
Cash and cash equivalents at end of period 274.6 119.4 274.6 119.4
Exchange gains (+) / losses (-)
on cash and cash equivalents -1.0 7.5 -2.8 8.4
Cash and cash equivalents
at beginning of period 212.9 61.9 119.4 52.6
Net change in cash and cash equivalents 60.7 65.0 152.4 75.2
STATEMENT OF CHANGES IN EQUITY
EUR million
Equity attributable to equity holders of the parent
Capital Un-
paid-in in Fair value restricted
Share excess of and other equity
capital par value reserves reserve
Shareholders' equity at
January 1, 2008 221.8 257.9 68.2 -
Net profit for the period - - - -
Other comprehensive
income, net of tax - - 12.7 -
Total comprehensive income - - 12.7 -
Dividends paid - - - -
Share-based compensations - - - -
Transfer between
restricted
and non-restricted equity - - 0.5 -
Shareholders' equity at
December 31, 2008 221.8 257.9 81.4 -
Shareholders' equity at January 1, 2009 221.8 257.9 81.4 -
Net profit for the period - - - -
Other comprehensive income, net of tax - - 13.8 -
Total comprehensive income - - 13.8 -
Dividends paid - - - -
Share issue - - - 196.3
Share-based compensations - - - -
Changes due to business combinations - - - -
Transfer between restricted
and non-restricted equity - - 0.6 -
Shareholders' equity at December 31, 2009 221.8 257.9 95.8 196.3
Equity attributable to
equity holders of the
parent
Exchange Treasury Retained
differences shares earnings
Shareholders' equity at
January 1, 2008 -41.1 -25.9 591.1
Net profit for the period - - -1.8
Other comprehensive income,
net of tax -63.5 - 3.3
Total comprehensive income -63.5 - 1.5
Dividends paid - - -60.6
Share-based compensations - - 0.7
Transfer between restricted
and non-restricted equity - - -0.5
Shareholders' equity at
December 31, 2008 -104.6 -25.9 532.2
Shareholders' equity at January 1, 2009 -104.6 -25.9 532.2
Net profit for the period - - 81.8
Other comprehensive income, net of tax 24.7 - -0.3
Total comprehensive income 24.7 - 81.5
Dividends paid - - -30.3
Share issue - - -
Share-based compensations - - 0.8
Changes due to business combinations - - -
Transfer between restricted
and non-restricted equity - - -0.6
Shareholders' equity at December 31, 2009 -79.9 -25.9 583.6
Minority
interests Total
Shareholders' equity at January 1, 2008 15.3 1,087.3
Net profit for the period 3.6 1.8
Other comprehensive income, net of tax -2.2 -49.7
Total comprehensive income 1.4 -47.9
Dividends paid -3.5 -64.1
Share-based compensations - 0.7
Transfer between restricted
and non-restricted equity - 0.0
Shareholders' equity at December 31, 2008 13.2 976.0
Shareholders' equity at January 1, 2009 13.2 976.0
Net profit for the period 3.7 85.5
Other comprehensive income, net of tax 0.2 38.4
Total comprehensive income 3.9 123.9
Dividends paid -3.2 -33.5
Share issue - 196.3
Share-based compensations - 0.8
Changes due to business combinations 5.3 5.3
Transfer between restricted
and non-restricted equity - 0.0
Shareholders' equity at December 31, 2009 19.2 1,268.8
Kemira had in its possession 3,854,711 of its treasury shares on December
31, 2009. Of shares granted based on the share-based incentive program 306
shares were returned to Kemira in 2009. The average share price of treasury
shares was EUR 6.73 and they represented 2.5% of the share capital and the
aggregate number of votes conferred by all shares. The aggregate par value of
the treasury shares is EUR 5.5 million.
The capital paid-in in excess of par value is a reserve accumulating through
subscriptions entitled by the Management stock option program 2001 and is
based on the Finnish Companies Act (734/1978), which does no longer change.
According to IFRS, the Fair Value reserve is a reserve accumulating based on
available-for-sale financial assets (shares) measured at fair value and hedge
accounting. Other reserves are required by local legislation. The unrestricted
equity reserve includes other equity type investments and the subscription
price of shares to the extent that it will not, based on a specific decision,
be recognized in share capital.
On November 23, 2009, the Board of Directors decided on a rights offering
based on an authorization given by the Extraordinary General Meeting on the
same day. As a result of the offering, Kemira's total number of shares
increased to 155,342,557 shares. The funds generated from the rights offering
less the costs related to the offering amounting to EUR 196.3 million was
included in the unrestricted equity reserve.
KEY FIGURES 10-12/2009 10-12/2008 2009 2008
Earnings per share, basic and
diluted, EUR ** 0.06 -0.52 0.61 -0.01
Cash flow from operations
per share, EUR ** 0.45 0.10 2.13 0.68
Capital expenditure, EUR million 31.8 85.1 85.9 341.8
Capital expenditure / revenue, % 5.3 13.6 3.4 12.1
Average number of shares (1000),
basic * 134,824 121,191 134,824 121,191
Average number of shares (1000),
diluted * 135,085 121,191 135,085 121,191
Number of shares at end
of period (1000), basic * 151,488 121,191 151,488 121,191
Number of shares at end of
period (1000), diluted * 151,748 121,191 151,748 121,191
Equity per share, attributable to
equity holders of the parent, EUR 8.25 7.94
Equity ratio, % 45.1 34.1
Gearing, % 53.2 107.5
Interest-bearing net liabilities, EUR million 675.6 1,049.1
Personnel (average) 8,843 9,954
* Number of shares outstanding, excluding the
number of shares bought back.
** Rights offering restatement
REVENUE BY BUSINESS AREA 10-12/2009 10-12/2008 2009 2008
EUR million
Paper external 229.2 246.4 905.2 987.6
Paper Intra-Group 0.4 0.4 1.2 15.7
Municipal & Industrial external 140.6 146.8 607.3 582.2
Municipal & Industrial Intra-Group - 0.2 0.2 1.5
Oil & Mining external 69.2 66.0 234.4 273.3
Oil & Mining Intra-Group 0.2 0.6 0.6 2.1
Tikkurila external 98.5 103.5 530.2 648.1
Tikkurila Intra-Group - - - -
Other external 57.2 64.8 223.0 341.5
Other Intra-Group 20.6 17.1 77.4 73.3
Eliminations -21.2 -18.2 -79.4 -92.6
Total 594.7 627.6 2,500.1 2,832.7
OPERATING PROFIT BY BUSINESS AREA 10-12/2009 10-12/2008 2009 2008
EUR million
Paper 9.8 -33.5 40.1 -2.6
Municipal & Industrial 6.3 -13.3 59.8 5.3
Oil & Mining 11.2 -7.7 19.9 1.9
Tikkurila -4.7 -12.6 47.7 59.2
Other -10.0 -1.0 -10.1 10.1
Eliminations - - - 0.1
Total 12.6 -68.1 157.4 74.0
CHANGES IN PROPERTY, PLANT AND EQUIPMENT 2009 2008
EUR million
Carrying amount at beginning of year 765.7 984.3
Acquisitions of subsidiaries 0.1 6.3
Increases 76.1 127.9
Decreases -2.0 -9.4
Disposal of subsidiaries
Depreciation, impairments - -168.1
and reversals of impairments
Exchange rate differences and -88.9 -144.5
other changes 10.5 -30.8
Net carrying amount at end of period 761.5 765.7
CHANGES IN INTANGIBLE ASSETS 2009 2008
EUR million
Carrying amount at beginning of year 766.7 738.9
Acquisitions of subsidiaries 2.4 36.3
Increases 11.6 24.3
Decreases -0.1 -
Disposal of subsidiaries - -8.1
Depreciation and impairments
Exchange rate differences and -27.6 -24.9
other changes 7.2 0.2
Net carrying amount at end of period 760.2 766.7
CONTINGENT LIABILITIES 31.12.2009 31.12.2008
EUR million
Mortgages 37.5 43.3
Assets pledged
On behalf of own commitments 5.5 5.2
Guarantees
On behalf of own commitments 45.2 14.1
On behalf of associates 1.0 1.2
On behalf of others 9.2 5.5
Operating leasing liabilities
Maturity within one year 26.0 20.9
Maturity after one year 137.3 115.0
Other obligations
On behalf of own commitments 1.7 2.6
On behalf of associates 1.8 1.9
Major off-balance sheet investment
commitments
There were no major contractual commitments for the acquisition of property,
plant and equipment on December 31, 2009.
Litigation
On August 19, 2009, Kemira Oyj received a summons stating that Cartel Damage
Claims Hydrogen Peroxide SA (CDC) had filed an action against six hydrogen
peroxide manufacturers, including Kemira, for violations of competition law
applicable to the hydrogen peroxide business. In its claim, Cartel Damage
Claims Hydrogen Peroxide SA seeks an order from the Regional Court of
Dortmund in Germany to obtain an unabridged and full copy of the decision of
the European Commission, dated May 3, 2006, and demands that the defendants,
including Kemira, are jointly and severally ordered to pay damages together
with accrued interest on the basis of such decision.
Cartel Damage Claims Hydrogen Peroxide SA states that it will specify the
amount of the damages at a later stage after the full copy of the decision of
the European Commission has been obtained by it. In order to provide initial
guidance as to the amount of such damages, Cartel Damage Claims Hydrogen
Peroxide SA presents in its claim a preliminary calculation of the alleged
overcharge having been paid to the defendants as a result of the violation of
the applicable competition rules by the parties which have assigned and sold
their claim to Cartel Damage Claims Hydrogen Peroxide SA. Such alleged
overcharge, together with accrued interest until December 31, 2008, is stated
to be approximately EUR 641.3 million. The process is currently pending in
the Regional Court of Dortmund, Germany, and Kemira's response to the claim
of Cartel Damage Claims Hydrogen Peroxide SA is due to be submitted until the
end of April 2010.
Kemira intends to defend vigorously against the claim of Cartel Damage Claims
Hydrogen Peroxide SA. However, Kemira is currently not in a position to make
any estimate regarding the duration or the likely outcome of the process. No
assurance can be given as to the outcome of the process, and an unfavorable
judgment against Kemira could have a material adverse effect on Kemira's
business, financial condition or results of operations. Due to its extensive
international operations the Group, in addition to the CDC claim, is involved
in a number of other legal proceedings incidental to these operations and it
does not expect the outcome of these other currently pending legal
proceedings to have materially adverse effect upon its consolidated results
or financial position.
RELATED PARTY
Transactions with related parties have not changed materially
after annual closing 2008.
DERIVATIVE INSTRUMENTS
EUR million
31.12.2009 31.12.2008
Nominal Fair Nominal Fair
value value value value
Currency instruments
Forward contracts 549.5 1.5 427.6 11.7
of which hedges of
net investment in a foreign
operation - - - -
Currency options
Bought - - - -
Sold - - - -
Currency swaps 29.3 -3.9 27.6 -5.6
Interest rate instruments
Interest rate swaps 354.7 -9.4 338.8 -6.9
of which cash flow hedge 307.8 -7.4 304.4 -6.5
Interest rate options
Bought 10.0 - 110.0 -0.1
Sold - - - -
Bond futures 10.0 0.2 10.0 -
of which open 10.0 0.2 10.0 -
Other instruments
GWh GWh
Electricity forward
contracts, bought 1,156.7 1.2 1,431.5 -10.7
of which cash flow hedge 1,051.6 1.1 1,378.9 -9.7
Electricity forward
contracts, sold - - 52.6 1.2
of which cash flow hedge - - - -
K tons K tons
Natural gas hedging 14.8 -0.2 15.6 -2.0
of which cash flow hedge 14.8 -0.2 15.6 -2.0
Salt derivatives 160.0 - 212.8 2.0
The fair values of the instruments which are publicly traded are based on
market valuation on the date of reporting. Other instruments have been
valuated based on net present values of future cash flows. Valuation models
have been used to estimate the fair values of options.
Nominal values of the financial instruments do not necessarily correspond to
the actual cash flows between the counterparties and do not therefore give a
fair view of the risk position of the Group.
BUSINESS COMBINATION
Tikkurila announced its intentions to acquire the 50% stake of the Slovenian
JUB coatings company in the trading company Tikkurila JUB Romania S.R.L..
Ownership was transferred on September 1, 2009, with 100% ownership now by
Tikkurila. The name of the company was changed to Tikkurila S.R.L. Acquisition
was not significant to the group and no goodwill was recorded.
Kemira acquired Akzo Nobel's iron coagulant business in the Nordic countries
(Sweden, Norway and Denmark). Iron coagulants are used in water treatment. The
transaction represents approximately 20% of the Swedish iron coagulant
markets. The agreement took force on November 2, 2009. No personnel or
production facilities were transferred under the agreement. Acquisition was
not significant to the group and no goodwill was recorded.
QUARTERLY INFORMATION 2008 2008 2008 2008
EUR million Q4 Q3 Q2 Q1
Revenue
Paper external 246.4 263.0 234.7 243.5
Paper Intra-Group 0.4 4.7 6.4 4.2
Municipal & Industrial external 146.8 155.9 143.7 135.8
Municipal & Industrial Intra-Group 0.2 0.1 0.7 0.5
Oil & Mining external 66.0 73.6 66.7 67.0
Oil & Mining Intra-Group 0.6 0.9 0.1 0.5
Tikkurila external 103.5 193.7 205.7 145.2
Tikkurila Intra-Group - - - -
Other external 64.8 93.9 90.7 92.1
Other Intra-Group 17.1 10.4 21.1 24.7
Eliminations -18.2 -16.2 -28.3 -29.9
Total 627.6 780.0 741.5 683.6
Operating profit
Paper -33.5 10.9 7.6 12.4
Municipal & Industrial -13.3 7.3 4.7 6.6
Oil & Mining -7.7 3.4 2.4 3.8
Tikkurila -12.6 30.4 29.7 11.7
Other -1.0 17.5 -4.9 -1.5
Eliminations - 0.3 -0.2 -
Total -68.1 69.8 39.3 33.0
Operating profit, excluding non-recurring items
Paper 9.8 11.7 7.6 12.4
Municipal & Industrial 6.9 7.3 4.6 6.2
Oil & Mining 0.6 3.5 2.4 1.9
Tikkurila -12.6 30.4 29.7 11.7
Other 7.0 3.3 -6.9 -5.0
Eliminations - 0.3 -0.2 -
Total 11.7 56.5 37.2 27.2
QUARTERLY INFORMATION 2009 2009 2009 2009
EUR million Q4 Q3 Q2 Q1
Revenue
Paper external 229.2 229.9 222.2 223.9
Paper Intra-Group 0.4 0.3 -0.6 1.1
Municipal & Industrial external 140.6 155.6 160.4 150.7
Municipal & Industrial Intra-Group - -0.1 0.3 -
Oil & Mining external 69.2 55.9 52.3 57.0
Oil & Mining Intra-Group 0.2 0.1 2.9 -2.6
Tikkurila external 98.5 158.1 162.4 111.2
Tikkurila Intra-Group - - - -
Other external 57.2 46.3 53.6 65.9
Other Intra-Group 20.6 19.4 18.1 19.3
Eliminations -21.2 -19.7 -20.7 -17.8
Total 594.7 645.8 650.9 608.7
Operating profit
Paper 9.8 14.8 8.0 7.5
Municipal & Industrial 6.3 24.9 18.2 10.4
Oil & Mining 11.2 3.5 3.2 2.0
Tikkurila -4.7 26.3 22.1 4.0
Other -10.0 -4.2 -0.1 4.2
Eliminations - - - -
Total 12.6 65.3 51.4 28.1
Operating profit, excluding non-recurring items
Paper 14.6 14.8 8.0 7.5
Municipal & Industrial 12.9 24.9 18.2 10.4
Oil & Mining 5.5 3.5 3.2 2.0
Tikkurila -4.7 26.3 24.5 4.0
Other -0.5 -4.2 -0.1 4.2
Eliminations - - - -
Total 27.8 65.3 53.8 28.1
DEFINITIONS OF KEY FIGURES
Earnings per share (EPS): Equity ratio, %:
Net profit attributable to Total equity x 100 /
equity holders Total assets - prepayments
of the parent / received
Average number of shares
Cash flow from operations: Gearing, %:
Cash flow from operations, Interest-bearing net
after change in liabilities x 100 /
net working capital Total equity
and before investing
activities
Cash flow from operations Interest-bearing net liabilities:
per share: Interest-bearing liabilities -
Cash flow from operations / money market investments -
Average number of shares cash and cash equivalents
Equity per share: Return on capital employed
Equity attributable to equity (ROCE), %:
holders of the parent at Operating profit + share of profit
end of period / or loss of associates x 100 /
Number of shares at (Net working capital +
end of period property, plant and equipment
available for use + intangible
assets + investments in
associates) *
*( )Average
[HUG#1381839]
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