Kemira Oyj - Half Year financial report

Kemira Oyj's Half-Year Financial Report 2024: Considerable volume growth and profitability improvement following continued end-market recovery

Kemira Oyj, Half-Year Financial Report, July 17, 2024 at 8.30 am (EEST)

Kemira Oyj's Half-Year Financial Report 2024: Considerable volume growth and
profitability improvement  following continued end-market recovery

This is a summary of the January-June 2024 Half-Year Financial Report. The
complete report with tables is attached to this release and available at
kemira.com/investors (https://www.kemira.com/company/investors/).

Second quarter:

Kemira divested its Oil & Gas (O&G)-related portfolio on February 2, 2024. All
comparisons in this report are made to the comparison period, which includes the
Oil & Gas-related portfolio. Kemira's H1 2024 figures include around EUR 45
million of revenue and around EUR 3 million of operative EBITDA from Oil & Gas.
Kemira has also presented Oil & Gas divestment adjusted figures and performance
in the relevant parts of the report, which reflect the underlying business
performance of Kemira's Pulp & Paper and Industry & Water segments. Kemira's
management follows the Oil & Gas divestment adjusted figures. The adjusted
figures for the comparison period are also available in a separate stock
exchange release, published on February 9, 2024 and on
kemira.com/investors (https://www.kemira.com/company/investors/). Kemira's
outlook for 2024 includes the Oil & Gas-related portfolio until the closing date
of the divestment, February 2, 2024.

Q2 2024 performance, unadjusted for Oil & Gas divestment

  · Revenue decreased by 13% to EUR 733.4 million (840.1).
  · Operative EBITDA decreased by 7% to EUR 140.5 million (151.0). The operative
EBITDA margin increased to 19.2% (18.0%). The operative EBITDA margin improved
in both segments, particularly in the Industry & Water segment. EBITDA decreased
by 7% to EUR 137.1 million (147.4). The differences between operative and
reported figures are explained by items affecting comparability, which were
mainly related to the divestment of Oil & Gas.
  · Operative EBIT decreased by 7% to EUR 94.0 million (100.9). EBIT decreased
by 7% to EUR 90.7 million (97.2).
  · Cash flow from operating activities was strong at EUR 109.4 million (142.9).
  · EPS (diluted) decreased by 4% to EUR 0.40 (0.42) due to the divestment of
Oil & Gas and Kemira's decision to close its operations in Argentina.

Q2 2024 performance, Oil & Gas divestment adjusted

  · The Oil & Gas divestment adjusted revenue increased by 3% to EUR 733.4
million (709.1).  Revenue in local currencies, excluding acquisitions and
divestments, increased by 1% as growth in the Industry & Water segment
compensated for the slight decline in the Pulp & Paper segment. Sales volumes
increased considerably year-on-year while sales prices declined, particularly in
energy-intensive pulp and bleaching chemicals. Sequentially, sales volumes
increased slightly and sales prices declined slightly.
  · The Oil & Gas divestment adjusted operative EBITDA increased by 5% to EUR
140.5 million (133.3), following improvement in both segments. The Oil & Gas
divestment adjusted operative EBITDA margin increased to 19.2% (18.8%).
  · The Oil & Gas divestment adjusted operative EBIT increased by 5% to EUR
94.0 million (89.6).

January-June 2024 performance, unadjusted for Oil & Gas divestment

  · Revenue decreased by 14% to EUR 1,496.7 million (1,746.1).
  · Operative EBITDA decreased by 12% to EUR 303.0 million (343.7). The
operative EBITDA margin increased to 20.2% (19.7%), driven by improvement in the
Industry & Water segment. EBITDA decreased by 12% to EUR 291.2 million (331.5).
The differences between operative and reported figures are explained by items
affecting comparability, which were mainly related to the divestment of Oil &
Gas.
  · Operative EBIT decreased by 13% to EUR 211.6 million (242.8). EBIT decreased
by 13% to EUR 199.9 million (230.6).
  · Cash flow from operating activities was strong, at EUR 207.1 million
(239.6).
  · EPS (diluted) decreased by 13% to EUR 0.89 (1.02), mainly due to the
divestment of Oil & Gas.

January-June 2024 performance, Oil & Gas divestment adjusted

  · The Oil & Gas divestment adjusted revenue decreased by 3% to EUR 1,452.2
million (1,504.6). Revenue in local currencies, excluding acquisitions and
divestments, decreased by 4% following revenue decline in the Pulp & Paper
segment. Sales volumes increased in both segments. Sales prices decreased,
particularly in Pulp & Paper, as sales prices for energy-intensive pulp and
bleaching chemicals declined, relative to an elevated comparison period.
  · The Oil & Gas divestment adjusted operative EBITDA decreased by 1% to EUR
299.7 million (302.8) due to lower operative EBITDA in Pulp & Paper. The Oil &
Gas divestment adjusted operative EBITDA margin was strong at 20.6% (20.1%)
following improvement in Industry & Water.
  · The Oil & Gas divestment adjusted operative EBIT decreased by 3% to EUR
208.4 million (214.0).

Outlook for 2024 (upgraded on June 10, 2024)

Revenue
Kemira's revenue is expected to be between EUR 2,800 and EUR 3,200 million in
2024 (reported 2023 revenue: EUR 3,383.7 million).

Operative EBITDA
Kemira's operative EBITDA is expected to be between EUR 540 and EUR 640 million
in 2024 (reported 2023 operative EBITDA: EUR 666.7 million).

Assumptions behind the outlook (updated on June 10, 2024)
Kemira's end-market demand (in volumes) is expected to grow in 2024 following
expected gradual demand recovery in the pulp and paper market. The water
treatment market is also expected to grow in 2024. Input costs are expected to
remain rather stable during the year. The outlook assumes no major disruptions
to Kemira's manufacturing operations, supply chain or Kemira's energy-generating
assets in Finland. Foreign exchange rates are expected to remain at
approximately current levels. The outlook for 2024 includes the Oil & Gas
business until February 2, 2024, the closing date of the divestment transaction.

Previous outlook for 2024 (published on April 26, 2024)

Revenue
Kemira's revenue is expected to be between EUR 2,700 and EUR 3,200 million in
2024 (reported 2023 revenue: EUR 3,383.7 million).

Operative EBITDA
Kemira's operative EBITDA is expected to be between EUR 480 and EUR 580 million
in 2024 (reported 2023 operative EBITDA: EUR 666.7 million).

Assumptions behind the outlook
Kemira's end-market demand (in volumes) is expected to grow slightly in 2024
following expected gradual demand recovery in the pulp and paper market. The
water treatment market is expected to remain steady in 2024. Input costs are
expected to remain rather stable during the year. The outlook assumes no major
disruptions to Kemira's manufacturing operations, supply chain or Kemira's
energy-generating assets in Finland. There is uncertainty related to the
political strikes in Finland and their implications on Kemira's customers and
Kemira. Foreign exchange rates are expected to remain at approximately current
levels. The outlook for 2024 includes the Oil & Gas business until February 2,
2024, the closing date of the divestment transaction.

Kemira's President & CEO, Antti Salminen:

 "Our end-markets continued to recover during the second quarter and Kemira's
performance was solid, particularly in Industry & Water. I was pleased to see
considerable year-on-year sales volume growth as well as slight volume growth
from the previous quarter. Organic revenue growth during the quarter was 1% as
good growth in Industry & Water compensated for the slight decline in Pulp &
Paper. As in Q1 2024, sales prices declined, mainly due to lower sales prices
for energy-intensive pulp and bleaching chemicals. The Oil & Gas divestment
adjusted operative EBITDA increased to EUR 140 million during the quarter. The
operative EBITDA margin was 19.2% in Q2 2024, driven by continued strong
performance in Industry & Water. In addition, cash flow continued to be strong,
which demonstrates our resilient and cash-generative business model.

This past quarter marked my first full quarter as Kemira's President & CEO. We
continued to review our strategic initiatives and financial targets during the
quarter, to accelerate the execution of our strategy. Profitable growth remains
at the core of our strategy both organically and inorganically; a target which
is well supported by our record-strong balance sheet. In early July, we
announced our entry into the activated carbon market for micropollutant removal
by acquiring an activated carbon reactivation facility in the UK. This is our
first step in this market, which we find attractive due to its growth profile.
We are in a good position to enter this attractive growth market thanks to our
strong market positions in wastewater treatment in Europe and in the US. In
early July, we also announced a coagulant capacity expansion in Spain, to meet
increasing market needs for biogas applications and phosphorus removal in
particular. This expansion is yet another step on our way to significantly
expand our water treatment business.

The pulp and paper market continued to recover during the second quarter.
Kemira's Pulp & Paper segment's sales volumes increased by about 10% year-on
-year while sales prices declined year-on-year, particularly in energy-intensive
pulp and bleaching chemicals. As a result, our organic growth during Q2 2024 was
slightly negative. The operative EBITDA margin was 16.5%, year-on-year
improvement, but lower sequentially following seasonal patterns in pricing and
higher impact from annual maintenance breaks.

In Industry & Water, market demand continued to recover, particularly in
industrial water treatment. Kemira's Industry & Water segment's organic growth
was 3% during the quarter, driven by higher sales volumes. We saw higher sales
volumes both year-on-year and sequentially. Sales prices declined slightly, both
year-on-year and sequentially. The segment's consistently strong margin
performance continued during the quarter, with the operative EBITDA margin at
22.6%.

Going forward, we look at the rest of 2024 with confidence. We upgraded our
outlook for 2024 in mid-June, thanks to the continued recovery of our end
-markets. As announced in June, we expect revenue to be between EUR 2,800 and
3,200 million and operative EBITDA to be between EUR 540 and 640 million in
2024. In terms of the next steps in our strategy, we will host a Capital Markets
Day on September 26 where we will give an update on strategic initiatives as
well as on financial targets."

KEY FIGURES AND RATIOS

EUR million           Apr-Jun         Apr-Jun         Jan-Jun         Jan-Jun
Jan-Dec
         2024            2023            2024            2023            2023
Revenue

                        733.4           840.1         1,496.7         1,746.1
3,383.7
Revenue, O&G

divestment              733.4           709.1         1,452.2         1,504.6
2,889.0
adjusted
Operative

EBITDA                  140.5           151.0           303.0           343.7
666.7
Operative

EBITDA, O&G             140.5           133.3           299.7           302.8
595.9
divestment
adjusted
Operative

EBITDA, %                19.2            18.0            20.2            19.7
19.7
Operative

EBITDA %, O&G            19.2            18.8            20.6            20.1
20.6
divestment
adjusted
EBITDA

                        137.1           147.4           291.2           331.5
540.0
EBITDA, %

                         18.7            17.5            19.5            19.0
16.0
Operative

EBIT                     94.0           100.9           211.6           242.8
463.0
Operative

EBIT,                    94.0            89.6           208.4           214.0
415.5
O&G
divestment
adjusted
Operative

EBIT,                    12.8            12.0            14.1            13.9
13.7
%
Operative

EBIT                     12.8            12.6            14.4            14.2
14.4
%, O&G
divestment
adjusted
EBIT

                         90.7            97.2           199.9           230.6
336.4
EBIT, %

                         12.4            11.6            13.4            13.2
9.9
Net profit

for                      65.4            67.7           144.4           163.2
211.3
the period
Earnings per

share,                   0.40            0.42            0.89            1.02
1.28
diluted,
EUR

Capital

employed*             2,032.1         2,221.5         2,032.1         2,221.5
2,155.5
Capital

employed*,            1,897.8         1,879.6         1,897.8         1,879.6
1,856.0
O&G
divestment
adjusted
Operative

ROCE*, %                 21.3            21.0            21.3            21.0
21.5
Operative

ROCE,                    21.6            22.4            21.6            22.4
22.4
%, O&G
divestment
adjusted
ROCE*, %

                         15.0            20.1            15.0            20.1
15.6
Cash flow

from                    109.4           142.9           207.1           239.6
546.0
operating
activities
Capital

expenditure              35.0            48.8            61.2            77.9
204.9
excl.
acquisition
Capital

Expenditure              35.0            44.4            61.2            71.1
187.7
excl.
Acquisitions,
O&G
divestment
adjusted
Capital

expenditure              35.0            48.8            61.2            79.7
206.8
Cash flow

after                    70.4           103.3           249.2           169.8
349.3
investing
activities
Equity ratio,

%                          53              48              53              48
48
at period-end
Equity per

share, EUR              11.03           10.51           11.03           10.51
10.84
Gearing, % at

period-end                 21              41              21              41
32

*12-month rolling average

Unless otherwise stated, all comparisons in this report are made to the
corresponding period in 2023.

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

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

Financial targets

Kemira aims for above-market revenue growth, with an operative EBITDA margin of
15-18%. The target for gearing is below 75%.

Financial reporting schedule 2024 and 2025

Interim report January-September 2024
                        October 25, 2024
Financial Statements Bulletin for the year 2024
                       February 11, 2025
Interim report January-March
2025                                                                            A
pril 25, 2025
Half-year financial report January-June
2025                                                            July 18, 2025
Interim report January-September
2025                                                                    October
24, 2025

The Annual Report 2024 will be published during the week starting on February
17, 2025.
The Annual General Meeting is scheduled for Thursday, March 20, 2025.

Capital Markets Day on September 26, 2024

Kemira would like to invite institutional investors, analysts and relationship
bankers to a Capital Markets Day, which will take place in Helsinki on Thursday
September 26, 2024. Kemira will provide an update on its strategy and financial
targets at the event, which will be attended by Kemira's President & CEO Antti
Salminen, CFO Petri Castrén and other members of the Management Board. In
addition to the physical event, there will a live webcast of the presentations.
More information can be found at kemira.com/cmd (https://www.kemira.com/cmd)

Webcast and conference call for analysts, investors and media

Kemira will arrange a webcast for analysts, investors and the media on
Wednesday, July 17, 2024, starting at 10.30 am EEST (8.30 am UK time). During
the webcast, Kemira's President & CEO, Antti Salminen and CFO Petri Castrén,
will present the results. The webcast will be held in English and can be
followed at kemira.com/investors (https://www.kemira.com/company/investors/).
The presentation material and a recording of the webcast will be available on
the above-mentioned company website.

You can attend the Q&A session via conference call. You can access the
teleconference by registering on the following link:
https://palvelu.flik.fi/teleconference/?id=50047138.

After registration you will be provided with phone numbers and a conference ID
to access the conference. If you wish to ask a question please dial *5 on your
telephone keypad to enter the queue.

For more information, please contact:

Kemira Oyj
Mikko Pohjala, Vice President, Investor Relations
Tel. +358 40 838 0709
mikko.pohjala@kemira.com

Kemira is a global leader in sustainable chemical solutions for water-intensive
industries. Our customers include industrial and municipal water treatment
operators, and pulp & paper industry among others. We provide the best-suited
products and services to improve our customers' product quality, process, and
resource efficiency. Our focus is on water treatment, renewable solutions, and
digital services. In 2023, Kemira had annual revenue of around EUR 3.4 billion
and around 5,000 employees. Kemira shares are listed on the Nasdaq Helsinki Ltd.
www.kemira.com

Attachments:

Kemira Half-Year Financial Report 2024.pdf