PETRI CASTRÉN, INTERIM PRESIDENT & CEO, CFO
OCTOBER 24, 2023
Continued strong profitability driven by record quarter in Industry & Water
JANUARY - SEPTEMBER 2023
Jari Rosendal in Memoriam
- Kemira's long-serving President & CEO Jari Rosendal passed away unexpectedly after a short illness on July 31, 2023
- Jari served as Kemira's President & CEO since 2014
-
Jari's legacy will remain with Kemira.
Under his leadership, Kemira's profitability improved significantly, and the strategic focus shifted towards sustainable profitable growth. Jari's main focus was always the safety and wellbeing of employees, and he will be greatly missed.
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Summary of Q3 2023
- Resilience of business model demonstrated by another strong quarter
- Excellent profitability development: Margin at the strong level of 19.3%, sequential improvement from Q2 2023
- Revenue declined following lower sales volumes in Pulp & Paper. Operative EBITDA improved y/y and sequentially.
- Record quarter in Industry & Water in terms of absolute operative EBITDA and margin
- Net promoter score (NPS) improved further to 54 (2022: 53)
- Strategic review of the Oil & Gas business ongoing
- Second dividend installment of EUR 0.31 to be paid on November 2, 2023
- 2023 outlook upgraded on October 10, 2023
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Financial highlights of Q3 2023
Revenue declined from high comparison period
- Decline driven by lower sales volumes and lower sales prices for energy-intensive pulp and bleaching chemicals
- Organic revenue growth -9% in Q3 2023; +2% in 1-9 2023
- Sequential volume improvement in both segments
Strong operative EBITDA in Q3 2023
- Operative EBITDA margin at the strong level of 19.3%, both y/y and sequential improvement
- Record margin in Industry & Water, solid performance in Pulp & Paper despite weak market
Very strong cash flow from operations
Earnings per share EUR 0.46 in Q3 2023; EUR 1.48 in 1-9 2023
EUR million | Q3 | Q3 | Δ% | 1-9 | 1-9 | Δ% | FY |
(except ratios) | 2023 | 2022 | 2023 | 2022 | 2022 | ||
Revenue | 828.7 | 971.9 | -15% | 2,574.8 | 2,601.3 | -1% | 3,569.6 |
Operative EBITDA | 160.3 | 152.5 | +5% | 504.0 | 394.6 | +28% | 571.6 |
of which margin | 19.3% | 15.7% | - | 19.6% | 15.2% | - | 16.0% |
Operative EBIT | 107.6 | 99.5 | +8% | 350.4 | 238.1 | +47% | 361.6 |
of which margin | 13.0% | 10.2% | - | 13.6% | 9.2% | - | 10.1% |
Net profit | 75.2 | 60.3 | +25% | 238.4 | 149.4 | +60% | 239.7 |
EPS diluted, EUR | 0.46 | 0.38 | +23% | 1.48 | 0.93 | +59% | 1.50 |
Cash flow from | 173.1 | 114.8 | +51% | 412.7 | 145.4 | +183% | 400.3 |
operating activities | |||||||
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Pulp & Paper: Early signs of market
bottoming
Market environment in Q3 2023
- Market remained weak at Q2 2023 levels due to weak economic activity and inventory destocking. Market weak particularly in EMEA.
- Early signs that market has reached the bottom, no meaningful recovery in sight yet
Organic growth Q3 2023: -19%;1-9 2023: -7%
- Sales volumes declined following weak market volumes, sequentially volumes increased modestly
REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y)
EUR million | 488 | 537 | 556 | 505 | ||||||
420 | 447 | 421 | 404 | |||||||
370 | 378 | 391 | ||||||||
2% | 9% | 11% | 11% | 17% | 22% | 29% | 28% | 12% | -10% | -19% |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2021 | 2022 | 2023 |
OPERATIVE EBITDA AND OPERATIVE EBITDA-%
- Market prices for energy-intensive pulp and bleaching chemicals declined following normalization of electricity prices
Operative EBITDA EUR 68.9 million
- Operative EBITDA margin rather stable at 17.1% with sequential improvement -excellent achievement in a challenging market environment
EUR million | 110.9 | 109.4 | ||||||||
92.3 | 21.7% | |||||||||
63.5 | 71.3 | 73.6 | 19.9% | 65.2 | 68.9 | |||||
62.9 | 57.8 | 60.5 | ||||||||
17.2% | ||||||||||
17.0% | 15.3% | 16.2% | 16.0% | 15.5% | 17.1% | |||||
15.1% | ||||||||||
14.4% | ||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2021 | 2022 | 2023 |
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Industry & Water: Record-high operative
EBITDA
Market environment in Q3 2023
- Water treatment: solid demand in municipal water treatment, softness in industrial demand
- Solid Oil & Gas market, shale market consolidation continuing
Organic growth Q3 2023: +3%; 1-9 2023: +13%
- Organic growth driven by Oil & Gas. Revenue in water treatment decreased by 5%, in Oil & Gas increased by +4%.
REVENUE AND ORGANIC REVENUE GROWTH (Y-ON-Y)
EUR million | 435 | 419 | 425 | |||||||
412 | 402 | |||||||||
374 | ||||||||||
322 | ||||||||||
279 | 301 | 298 | ||||||||
237 | ||||||||||
-7% | 28% | 23% | 23% | 31% | 26% | 33% | 32% | 24% | 14% | 3% |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2021 | 2022 | 2023 |
- Sales prices increased, while sales volumes were stable. Sales volumes increased in Oil & Gas following successful product launches; water treatment sales volumes declined.
Record-high operative EBITDA: EUR 91.5 million
- Operative EBITDA margin improved to 21.5% following strong performance in water treatment
- Continued year-on-year margin improvement in the Oil &
Gas business
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OPERATIVE EBITDA AND OPERATIVE EBITDA-%
EUR million | 83.3 | 85.8 | 91.5 | |||||||
60.3 | 66.1 | |||||||||
49.5 | 52.3 | 48.8 | ||||||||
41.7 | 37.3 | 48.5 | 20.7% | 20.5% 21.5% | ||||||
17.6% 17.7% 17.4% | 15.2% | 13.0% 13.9% 16.1% | ||||||||
12.5% | ||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2021 | 2022 | 2023 |
6
Profitable growth is at the heart of our strategy
FASTER-THAN-MARKET GROWTH
GROWTH POCKETS | NEW OPPORTUNITIES | M&A | ||||
INSIDE EXISTING | ||||||
BUSINESSES | ||||||
STRONG FOUNDATION AND ROBUST EXISTING BUSINESSES | ||||||
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We have three strategic priorities
EXPAND IN WATER
Significantly grow our water business by expanding to additional technologies and/or geographies both organically and inorganically
BUILD A LEADING RENEWABLE SOLUTIONS PORTFOLIO* Enable sustainability transformation in our existing markets and leverage our capabilities in new circularity- driven markets
CREATE A SIGNIFICANT
DIGITAL SERVICES
BUSINESS
Strengthen our value add for existing and new customers by continuing to build and scale digital services
*Previously called biobased strategy. Biobased is the most common and readily available renewable feedstock, but other renewable feedstocks like recycling-based or carbon dioxide- based are also becoming available at scale in the market in the future.
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8
Our renewable solutions strategy* is progressing
BIOMASS-BALANCED POLYMERS GAINING TRACTION
BIOMASS-BALANCED POLYMER REVENUE GROWING STRONGLY -ALBEIT FROM A LOW BASE
- Kemira introduced biomass-balanced polymers in early 2022 with first commercial customer shipments in Finland in 2022
- Aim to offer a sustainable solution for water treatment and paper & board customers where the majority of fossil based raw materials have been replaced by ISCC PLUS certified biobased feedstocks
- Strong customer momentum in 2023:
- Growing sustainability focus at municipal water treatment facilities
- Kemira delivering currently to around 20 customers, such as to the City of Barcelona
- First customers shipments outside the Nordics during 2023
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January | February | March | April | May | June | July | August | September |
2022 2023
*Previously called biobased strategy. Biobased is the most common and readily available renewable feedstock, but other renewable feedstocks like recycling-based or carbon dioxide-based are also becoming available at scale in the market in the future.
9
Financials
Q3 2023
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Kemira Oyj published this content on 24 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 October 2023 05:38:37 UTC.