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Kemira Q1 2013 Interim Report

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Kemira Oyj published its Q1 2013 results on April 23, 2013.

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Kemira Q1 2013 Interim Report

  1. 1. Interim report January‐March 2013
  2. 2. Improved profitability supported by organic growth Organic revenue growth of 3%. Operative EBIT increased 9% to EUR 42.2 million (38.6) with a margin of 7.5% (7.0%). Earnings per share, excluding non-recurring items, decreased to EUR 0.17 (0.19) due to EUR12 million lower income from the associated companies. The reported earnings per share were reduced to EUR 0.01 (0.19) mainly due to the write-down of EUR 23 million related to the sale of Kemira’s shares in the Joint Venture Sachtleben. With the net debt of EUR 357 million (532), the gearing fell to 30% (42% at the end ofDecember, 2012) due to the proceeds of EUR 178 million received from the divestments ofKemira’s food and pharmaceuticals businesses and the shares in JV Sachtleben. Outlook for 2013 is unchanged, Kemira expects revenue in local currencies, excludingdivestments to be slightly higher than in 2012 and operative EBIT to be significantly higherthan in 2012.Kemira’s President and CEO Wolfgang Büchele:The year 2013 started with organic revenue growth of 3% and an operative EBIT improvement of9%. The growth was driven by the increased sales volumes in Paper, Municipal & Industrial andChemSolutions. Polymer sales volumes to Oil & Gas in North America recovered, but salesvolumes to Mining continued to decline and resulted in lower revenue for Oil & Mining.“Fit for Growth” cost savings for the first quarter, 2013 were EUR 9 million and, together withincreased sales volumes were the main reason for the profitability improvement. 11 of Kemira’smanufacturing sites and 2 production plants are either closed or have been decided to be closed.This and other efficiency measures have resulted in a reduction of 519 employees (including 91employees in the divested food and pharmaceutical businesses). The ultimate goal of the “Fit forGrowth” program is to reach at least 10% EBIT margin in 2014.Today, Kemira has presented its sharpened strategy “From redesign to expansion” in conjunctionwith the new financial targets for 2016. Kemira targets profitable, above-the-market growth drivenby fast growing differentiated product lines in Paper and Oil & Mining. The Municipal & Industrialsegment’s focus will be on improving profitability and together with ChemSolutions, on maximizingcash flow generation.Financial targets for 2016 are EUR 2.6 – 2.7 billion in revenue with an EBITDA margin of 15% anda gearing less than 60%.Continuous efficiency improvement is the key enabler for the successful strategy implementation.Therefore, in addition to the implementation of “Fit for Growth”, we have announced today our planto consolidate our six support function service hubs in Europe into a multifunction BusinessService Center in Gdansk, Poland. The planned center enables Kemira to serve all of itscustomers in EMEA in a unified way. We also plan to close our production facility in Vaasa,Finland, belonging to the Paper segment. The purpose for the planned closure is to optimize theutilization of our global process chemicals production network. The profitability turnaround inMunicipal & Industrial requires us to implement additional efficiency measures in order to furtherreduce fixed cost and streamline the manufacturing network.
  3. 3. 2Key figures and ratios (figures for 2012 are restated)EUR millionJan-Mar2013Jan-Mar2012Jan-Dec2012Revenue 560.9 552.9 2,240.9Operative EBITDA 63.5 62.8 249.4Operative EBITDA, % 11.3 11.4 11.1EBITDA 61.1 62.1 179.9EBITDA, % 10.9 11.2 8.0Operative EBIT 42.2 38.6 155.5Operative EBIT, % 7.5 7.0 6.9EBIT 39.2 36.4 33.1EBIT, % 7.0 6.6 1.5Share of profit or loss of associates -1.2 10.8 11.2Financing income and expenses -24.7 -10.3 -15.7thereof non-recurring items -24.2 - -Profit before tax 13.3 36.9 28.6Net profit 2.8 30.2 22.4EPS, EUR 0.01 0.19 0.12Operative EPS, EUR 0.17 0.19 0.77Capital employed* 1,595.6 1,717.0 1,673.0ROCE, %* 2.2 10.5 2.6Cash flow after investing activities 189.9 -8.1 71.8Capital expenditure 29.0 19.4 134.1Equity ratio, % at period-end 50 51 51Gearing, % at period-end 30 45 42Personnel at period-end 4,662 5,051 4,857* 12-month rolling average (ROCE, % based on the reported EBIT).Definitions of key figures are available at www.kemira.com > Investors > Financial information.Comparative 2012 figures are provided in parentheses for some financial results, whereappropriate. Operating profit, excluding non-recurring items, is referred to as Operative EBIT.Operating profit is referred to as EBIT.Financial performance in January-March 2013Kemira Group’s revenue increased 1% to EUR 560.9 million (552.9). Organic revenue growth was3% driven by sales volumes growth in Paper, Municipal & Industrial and ChemSolutions. Oil &Mining sales volumes were down due to the global mining market softness. Sales prices had asmall negative impact on revenues. Currency exchange and divestments each had a-1% impact on revenues.In the Paper segment, revenues increased 5% to EUR 259.1 million (247.9). Revenue growth inlocal currencies, excluding divestments was 5% driven by higher sales volumes, especially inEMEA and APAC. Sales prices had a negligible impact on revenues. Currency exchange impactedrevenues by -1%.In the Municipal & Industrial segment, revenues increased 2% to EUR 164.8 million (161.0).Revenue growth in local currencies, excluding divestments was 4% mainly due to the higher salesvolumes in EMEA and South America. Sales prices had a small negative impact on the revenues.Currency exchange impacted revenues by -1%.In the Oil & Mining segment, revenues decreased 10% to EUR 76.3 million (85.1) Sales volumeswere lower due to the -4% impact of continued exit of some low margin product sales combinedwith reduced demand due to the global ongoing slowdown in the mining industry. Currencyexchange did not have a material impact on revenues.
  4. 4. 3In the ChemSolutions segment, revenues increased 3% to EUR 60.7 million (58.9). Revenuegrowth in local currencies, excluding divestments was 10%, mainly due to the higher salesvolumes in all main product lines in EMEA. The divestment of the food and pharmaceuticalsbusinesses had -7% impact on revenues.Revenue, EUR millionJan-Mar2013Jan-Mar2012∆%Paper 259.1 247.9 5Municipal & Industrial 164.8 161.0 2Oil & Mining 76.3 85.1 -10ChemSolutions 60.7 58.9 3Eliminations - - -Total 560.9 552.9 1The operative EBIT increased 9% to EUR 42.2 million (38.6) mainly due to the “Fit for Growth”related cost savings of EUR 9 million, the fixed cost share of which was EUR 6 million and thevariable cost share EUR 3 million. Increased sales volumes had a positive impact of EUR 6million. Sales prices were EUR 4 million lower than in the first quarter of 2012. Variable costs,excluding the impact of “Fit for Growth” were EUR 9 million higher, mainly due to higher propylenebased raw material prices. Fixed costs, excluding the impact of “Fit for Growth” increased EUR 2million due to increased sales and marketing expenses.Currency exchange had a negative impact of EUR 1 million on the operative EBIT. In total,divestments, and other items had a positive impact of EUR 5 million (see variance analysis onpage 4). Lower depreciations in the Municipal & Industrial segment compared to the comparableperiod in 2012 were the main reason for the positive impact. The operative EBIT margin was 7.5%(7.0%).Non-recurring items affecting the operative EBIT totaled EUR -3 million (-2) and they weremainly related to the “Fit for Growth” severance payments and external service costs.).The EBIT increased to EUR 39.2 million (36.4).Operative EBITJan-Mar 2013EUR, millionJan-Mar 2012EUR, million∆% Jan-Mar 2013%-marginJan-Mar 2012%-marginPaper 19.7 18.8 5 7.6 7.6Municipal & Industrial 8.6 5.7 51 5.2 3.5Oil & Mining 5.1 8.3 -39 6.7 9.8ChemSolutions 8.8 5.8 52 14.5 9.8Total 42.2 38.6 9 7.5 7.0
  5. 5. 4Financing income and expenses totaled EUR -24.7 million (-10.3), negatively impacted by thenon-recurring EUR 22.7 million write-down related to the divestment of Kemira’s shares (39%) ofthe titanium dioxide Joint Venture Sachtleben GmbH. Changes of EUR 2.4 million (-4.6) in the fairvalues of electricity derivatives and the currency exchange differences of EUR 1.4 million (-0.1)had positive impacts on the financing income and expenses.Net profit attributable to the owners of the parent company decreased to EUR 1.8 million(29.2) and the earnings per share to EUR 0.01 (0.19), mainly due to the EUR 23 million write-downrelated to the divestment of Kemira’s JV Sachtleben shares. Earnings per share, excluding non-recurring items, decreased 11% to EUR 0.17 (0.19) due to lower income from the associatedcompanies.Variance analysis, EUR million Jan-MarOperative EBIT, 2012 38.6Sales volumes 6.2Sales prices -4.2Variable costs -6.1Fixed costs 4.0Currency exchange -1.0Others, incl. acquisitions and divestments 4.7Operative EBIT, 2013 42.2Financial position and cash flowCash flow from operating activities in Q1, 2013 increased to EUR 40.3 million (10.4) mainly due tochanges in net working capital. Cash flow after investing activities increased to EUR 189.9 million(-8.1) mainly due to the proceeds of EUR 98 million received from the divestment of the shares ofJV Sachtleben and EUR 81 million from the divestment of the food and pharmaceuticalsbusinesses. Net working capital (ratio) was 12.1% of revenue (12.8% on December 31, 2012).At the end of the period, Kemira Group’s net debt was EUR 357.0 million (532.0 on December 31,2012). Net debt decreased due to the proceeds of EUR 178 million received from the divestmentsof Kemira’s food and pharmaceuticals businesses and the shares of JV Sachtleben.At the end of the period, interest-bearing liabilities totaled EUR 575.2 million (664.7 on December31, 2012). Fixed-rate loans accounted for 58% of the net interest-bearing liabilities (56% onDecember 31, 2012). The average interest rate of the Group’s interest-bearing liabilities was 1.7%(1.6% on December 31, 2012). The duration of the Group’s interest-bearing loan portfolio was 16months (unchanged compared to December 31, 2012).
  6. 6. 5Short-term liabilities maturing in the next 12 months amounted to EUR 181.2 million, of whichcommercial papers issued on the Finnish market represented EUR 98.6 million and repaymentson the long-term loans represented EUR 53.8 million. Cash and cash equivalents totaled EUR218.2 million on March 31, 2013 (132.7).At the end of the period, the equity ratio was 50% (51% on December 31, 2012), while the gearingwas 30% (42% on December 31, 2012). Shareholder’s equity decreased to EUR 1,193.7 million(1,260.6) mainly due to the EUR 81 million dividend distribution.Capital expenditureCapital expenditure increased 49% to EUR 29.0 million (19.4) in Q1, 2013 (expansion capex 70%(18%), improvement capex 16% (41%), and maintenance capex 14% (41%)). Expansioninvestments were mainly focused on Nanjing, Dormagen and Tarragona.In Q1 2013, the Group’s depreciation and impairments decreased 15% to EUR 21.9 million (25.7)mainly due lower depreciations in Municipal & Industrial segment.Research and DevelopmentResearch and Development expenses totaled EUR 8.5 million (8.3) in Q1 2013, representing 1.5%(1.5%) of Kemira Group’s revenue.Human ResourcesAt the end of the period, Kemira Group had 4,565 permanent employees (4,762 on December,2012) and 97 temporary employees (95). Kemira employed 1,041 people in Finland (1,114), 1,585people elsewhere in EMEA (1,690), 1,275 in North America (1,279), 424 in South America (423)and 337 in Asia Pacific (351).SustainabilityDuring 2012, Kemira has defined sustainability priorities and targets as a part of its sustainabilitymanagement process. Each target is addressed with a roadmap and annual action plans, and theprogress against the set targets is monitored quarterly.Kemira launched an Ethics and Compliance hotline in the first quarter of 2013, in order to bring upissues that might violate Kemira’s Code of Conduct. The hotline is operated by an independentexternal service provider. Employees are able to report anything that is believed to be illegal orunethical either via phone (in 25 countries) or by filling in a web form, either anonymously or withcontact information. In order to help raise awareness and understanding, all Kemira employees willreceive training on the updated Code of Conduct during 2013.Safety performance for Kemira employees and contractors is reported by Total Recordable Injuries(TRI). At the end of March, 2013, the 12-month rolling average of TRI frequency for Kemiraemployees and contractors per million working hours decreased to 7.6 (10.5 at the end of March,2012).
  7. 7. 6The Kemira Code of Conduct for Suppliers, Distributors and Agents has been applied to new andrenewed contracts.Sustainability criteria have been integrated into the New Product Development process, and areapplied to all new R&D projects.Community involvement initiatives have taken place at the four major production sites.SegmentsPaperPaper has unique expertise in applying chemicals and supporting pulp & paper producers to innovate andconstantly improve their operational efficiency. We develop and commercialize new products to fulfil customerneeds and to ensure the leading portfolio of products and services for paper wet-end, focusing on packagingand board as well as tissue. We leverage our strong pulp & paper application portfolio in North America andEMEA and build a strong position in China, Indonesia and Brazil.EUR millionJan-Mar2013Jan-Mar2012Jan–Dec2012Revenue 259.1 247.9 1,005.6Operative EBITDA 30.6 29.3 117.5Operative EBITDA, % 11.8 11.8 11.7EBITDA 29.3 29.1 93.3EBITDA, % 11.3 11.7 9.3Operative EBIT 19.7 18.8 75.3Operative EBIT, % 7.6 7.6 7.5EBIT 17.8 18.2 44.7EBIT, % 6.9 7.3 4.4Capital employed* 774.4 787.2 777.2ROCE, %* 5.7 9.2 5.8Capital expenditure 18.2 7.8 72.2Cash flow after investing activities,excluding interest and taxes29.9 -0.9 8.1*12-month rolling averageFirst quarterThe Paper segment’s revenue increased 5% to EUR 259.1 million (247.9) due to the sales volumegrowth, especially in EMEA and APAC. Sales prices did not have a material impact on revenues,currency exchange had -1% impact.Kemira’s revenue in EMEA grew nearly 10% and 13% in APAC, mainly driven by increased salesvolumes of paper wet-end chemicals, especially sizing and polymers. In NAFTA, revenuesdeclined slightly as a result of the lower sales volumes of some functional chemicals andunfavorable currency exchange. In SA, revenue declined by 10% due to unfavorable currencyexchange.The operative EBIT increased 5% to EUR 19.7 million (18.8) mainly due to the sales volumesgrowth. Sales prices did not have a material impact on the operative EBIT. Higher raw materialprices resulted in the EUR 2 million higher variable costs. Higher sales and marketing expenseswere offset by EUR 4 million “Fit for Growth” cost savings. The operative EBIT margin remainedstable at 7.6% (7.6%).
  8. 8. 7Non-recurring restructuring charges, including the “Fit for Growth” program amounted to EUR 2million and were mainly related to severance payments and external services.Municipal & IndustrialM&I aims to be a leading water chemicals supplier for raw and waste water applications in EMEAand North America, as well as capture selected growth opportunities in emerging markets. Weenable our municipal and industrial customers to improve their water treatment efficiency bysupplying them with competitive, high-performing products and value adding application support.EUR millionJan-Mar2013Jan-Mar2012Jan–Dec2012Revenue 164.8 161.0 686.6Operative EBITDA 13.9 12.8 64.0Operative EBITDA, % 8.4 8.0 9.3EBITDA 13.0 12.4 34.0EBITDA, % 7.9 7.7 5.0Operative EBIT 8.6 5.7 39.2Operative EBIT, % 5.2 3.5 5.7EBIT 7.8 4.2 -16.5EBIT, % 4.7 2.6 -2.4Capital employed* 358.7 393.8 374.4ROCE, %* -3.6 7.9 -4.4Capital expenditure 7.6 6.8 31.7Cash flow after investing activities,excluding interest and taxes0.0 6.8 39.2*12-month rolling averageFirst quarterThe Municipal & Industrial segment’s revenue increased 2% to EUR 164.8 million (161.0).Organic growth was 4% as sales volumes grew in all regions, except NAFTA. Demand recoveredfrom exceptionally low levels in the comparable quarter of 2012, which partly explained the growth.SaIes prices had a small negative impact on revenues. Currency exchange had -1% impact.Revenue in EMEA increased 5% mainly driven by higher polymer sales volumes. Sales volumesof some low margin by-products were also higher than in Q1 2012. In NAFTA, revenues declinednearly 10% due to the slower demand for municipal water treatment chemicals. In SA, revenuesgrew over 10% due to increased coagulant demand. APAC revenue growth was driven byincreased polymer sales volumes to municipal customers.The operative EBIT increased 51% to EUR 8.6 million (5.7) with a margin of 5.2% (3.5%) due tothe “Fit for Growth” cost savings of EUR 4 million and higher sales volumes. Variable costsincreased as a result of higher, mainly propylene based, raw material cost.Non-recurring restructuring charges, including the “Fit for Growth” program amounted to EUR 1million and were mainly related to the severance payments and external services.Kemira has decided to close its office in Hyderabad, India. At the same time, together with its jointventure partner, Kemira is evaluating the possible future options for coagulant manufacturing jointventure facility in Vizag, India.
  9. 9. 8Oil & MiningO&M provides a unique combination of innovative chemicals and application knowledge thatimproves process efficiency and yield in oil, gas and metals recovery. We use our in-depthunderstanding of extraction processes to tailor solutions for water management and re-use.Expanding from our position in North America and EMEA, we continue to build a strong base forgrowth in South America, Middle East and Africa.EUR millionJan-Mar2013Jan-Mar2012Jan–Dec2012Revenue 76.3 85.1 321.1Operative EBITDA 8.7 11.8 40.6Operative EBITDA, % 11.4 13.9 12.6EBITDA 8.0 11.7 31.2EBITDA, % 10.5 13.8 9.7Operative EBIT 5.1 8.3 25.9Operative EBIT, % 6.7 9.8 8.1EBIT 4.3 8.2 14.2EBIT, % 5.6 9.6 4.4Capital employed* 174.4 168.5 177.7ROCE, %* 5.9 13.5 8.0Capital expenditure 2.8 2.4 20.2Cash flow after investing activities,excluding interest and taxes-2.0 -18.7 -5.3*12-month rolling averageFirst quarterThe Oil & Mining segment’s revenue decreased 10% to EUR 76.3 million (85.1), including-4% impact of the previously reported carryover on the exit of low margin product sales. Revenuesin local currencies, excluding the impact of exited product sales decreased 6%. The year-on-yeardecline was slightly lower than the comparable decline of 7% in the fourth quarter, 2012.In NAFTA, revenues decreased due to exited low margin sales. This was partly offset by a 8%increase in sales volumes for the polymer product lines, driven by the recovered natural gas price.In EMEA, revenues declined due to the lower sales volumes as the softness of the mining marketcontinued.Sales prices were slightly lower than in the comparable period of 2012. Currency exchange did nothave material impact on revenues.Revenue grew 6% compared to the fourth quarter in 2012 mainly due to sales volume growth ofdifferentiated product lines in North America Oil and Gas and Mining.The operative EBIT decreased 39% to EUR 5.1 million (8.3) mainly as a result of lower salesvolumes and slightly decreased sales prices. Variable costs increased as propylene and ethylenebased raw material prices were higher than in the comparable period of 2012. The operative EBITmargin declined to 6.7% (9.8%).
  10. 10. 9ChemSolutionsChemSolutions reliably provides customers with formic acid and high-performing derivatives aswell as environmentally sound bleaching agents. Our economy of scale, based on our world-classoperations in EMEA in combination with our people’s dedication to quality and efficiency, enableus to continuously improve our competitiveness.EUR millionJan-Mar2013Jan-Mar2012Jan–Dec2012Revenue 60.7 58.9 227.6Operative EBITDA 10.4 8.9 27.3Operative EBITDA, % 17.1 15.1 12.0EBITDA 10.9 8.9 21.3EBITDA, % 18.0 15.1 9.4Operative EBIT 8.8 5.8 15.1Operative EBIT, % 14.5 9.8 6.6EBIT 9.3 5.8 -9.3EBIT, % 15.3 9.8 -4.1Capital employed* 167.4 209.1 192.6ROCE, %* -3.5 9.4 -4.8Capital expenditure 0.4 2.4 10.0Cash flow after investing activities,excluding interest and taxes81.1 14.2 23.6*12-month rolling averageFirst quarterThe ChemSolutions segment’s revenue increased 3% to EUR 60.7 million (58.9). Organicrevenue growth was 10% driven by the sales volume growth in all core product lines, especially ofthe formic acid based products offered to the feed and chemical industries as well as for airportrunway de-icing. Sales prices were maintained at the level of the comparable quarter in 2012 anddid not have a material impact on revenues. The divestment of the food and pharmaceuticalsbusinesses had -7% impact on revenues.The operative EBIT increased 52% to EUR 8.8 million (5.8) due to the result of higher salesvolumes and “Fit for Growth” savings. The operative EBIT margin increased to 14.5% (9.8%).Kemira Oyj’s shares and shareholdersOn March 31, 2013, Kemira Oyj’s share capital amounted to EUR 221.8 million and the number ofshares was 155,342,557. Each share entitles to one vote at the Annual General Meeting.At the end of March, Kemira Oyj had 30,810 registered shareholders (30,601 at the end ofDecember, 2012). Foreign shareholders held 18.4% of the shares (17.1% at the end of December,2012) including nominee registered holdings. Households owned 15.5% of the shares (15.4% atthe end of December, 2012). Kemira held 3,309,158 treasury shares (3,301,769 at the end ofDecember, 2012) representing 2.1% (2.1% at the end of December, 2012) of all company shares.A total of 7,389 shares granted as share-based incentives were returned to Kemira during the firstquarter of 2013 in accordance with the terms of the incentive plan as employment ended.Kemira Oyj’s share closed at EUR 10.82 on the NASDAQ OMX Helsinki at the end of March, 2013(11.81 at the end of December, 2012). Shares registered a high of EUR 12.46 and a low of EUR10.69. The average share price was EUR 11.54. The company’s market capitalization, excluding
  11. 11. 10treasury shares, was EUR 1,645 million at the end of March, 2013 (1,796 at the end of December,2012).In addition to NASDAQ OMX Helsinki, Kemira shares are traded on several alternative marketplaces or multilateral trading facilities (MTF), for example at Chi-X Europe, BATS and Turquoise.In January-March 2013, a total of 7.3 million (8.5) Kemira Oyj’s shares were traded on thealternative market places or approximately 32% (26%) of the total amount of traded shares.Source: Fidessa.AGM decisionsAnnual General MeetingKemira Oyj’s Annual General Meeting, held on March 26, 2013, confirmed a dividend of EUR 0.53per share for 2012. The dividend was paid out on April 9, 2013. The Annual General Meetingelected five members (previously six) to the Board of Directors. Winnie Fok, Juha Laaksonen, JariPaasikivi, Kerttu Tuomas and Jukka Viinanen were reelected to the Board of Directors. JukkaViinanen was reelected as the Chairman of the Board and Jari Paasikivi was reelected as ViceChairman.The AGM authorized the Board of Directors to decide upon repurchase of a maximum of4,500,000 companys own shares (“Share repurchase authorization”). Shares will be repurchasedby using unrestricted equity either through a tender offer with equal terms to all shareholders at aprice determined by the Board of Directors or otherwise than in proportion to the existingshareholdings of the company’s shareholders in public trading on the NASDAQ OMX Helsinki Ltd(the “Helsinki Stock Exchange”) at the market price quoted at the time of the repurchase.The price paid for the shares repurchased through a tender offer under the authorization shall bebased on the market price of the company’s shares in public trading. The minimum price to bepaid would be the lowest market price of the share quoted in public trading during the authorizationperiod and the maximum price the highest market price quoted during the authorization period.Shares shall be acquired and paid for in accordance with the Rules of the Helsinki StockExchange 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 tobe used for the payment of the annual fee payable to the members of the Board of Directors orimplementing the company’s share-based incentive plans. In order to realize the aforementionedpurposes, 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 AGM authorized the Board of Directors to decide to issue a maximum of 15,600,000 newshares and/or transfer a maximum of 7,800,000 companys own shares held by the company(“Share issue authorization”). The new shares may be issued and the company’s own shares heldby the company may be transferred either for consideration or without consideration.The new shares may be issued and the companys own shares held by the company may betransferred to the company’s shareholders in proportion to their current shareholdings in thecompany, or by disapplying the shareholders’ pre-emption right, through a directed share issue, if
  12. 12. 11the company has a weighty financial reason to do so, such as financing or implementing mergersand acquisitions, developing the capital structure of the company, improving the liquidity of thecompany’s shares or if this is justified for the payment of the annual fee payable to the members ofthe Board of Directors or implementing the company’s share-based incentive plans. The directedshare issue may be carried out without consideration only in connection with the implementation ofthe company’s share-based incentive plan.The subscription price of new shares shall be recorded to the invested unrestricted equityreserves. The consideration payable for companys own shares shall be recorded to the investedunrestricted equity reserves.The Board of Directors will decide upon other terms related to the share issues.The Share issue authorization is valid until May 31, 2014.The AGM elected Deloitte & Touche Oy. to serve as the companys auditor, with JukkaVattulainen, Authorized Public Accountant, acting as the principal auditor.Board CommitteesIn March, 2013, the Board of Directors of Kemira Oyj elected members from among themselves forthe Audit Committee and the Compensation Committee. The Boards Audit Committee membersare Juha Laaksonen and Jari Paasikivi. The Audit Committee is chaired by Juha Laaksonen. TheBoards Compensation Committee members are Kerttu Tuomas, Jari Paasikivi and JukkaViinanen. The Compensation Committee is chaired by Jukka Viinanen.Short-term risks and uncertaintiesThere have been no significant changes in Kemira’s short-term risks or uncertainties compared toDecember 31, 2012.A detailed account of Kemira’s risk management principles and organization is available on thecompany website at http://www.kemira.com. An account of the financial risks is available in theNotes to the Financial Statements 2012. Environmental and hazard risks are discussed inKemira’s Sustainability Report that was published as part of the Kemira Annual Report 2012 onFebruary 28, 2013.Events after the review periodChanges to company managementJukka Hakkila, Group General Counsel has been appointed new deputy CEO as of May 6, 2013.Frank Wegener has been appointed as the President of Municipal & Industrial segment (previouslyPresident, ChemSolutions) and Hannu Virolainen has been appointed as the President,ChemSolutions segment (previously the President of Municipal & Industrial) as of May 1, 2013.Along with its sharpened strategy presented on April 23, 2013, Paper management has beendecided to relocate to Hong Kong, China as of September 1, 2013.On April, 23, 2013, Kemira announced a plan to establish a multifunction Business Service Centerin Gdansk, Poland to serve all of Kemira’s businesses in EMEA. In addition to cost efficiency, theplanned center enables unified service level to all our customers. The scope of the new center is
  13. 13. 12planned to include all transactional activities in the support functions. Once fully implemented, theannual cost savings for the support functions re-organizing in EMEA are expected to be close toEUR 10 million and the related non-recurring restructuring charges are expected to amountapproximately EUR 20 million.Kemira also announced that it is planning to close its production facility in Vaasa, Finland,belonging to the Paper segment. The purpose for the planned closure is to optimize the utilizationof our global process chemicals production network. The annual cost savings for the planned siteclosure are expected to reach EUR 5 million and the related non-recurring restructuring chargesare expected to be approximately EUR 15 million. Continuous efficiency improvement is the keyenabler for the successful strategy implementation.Kemira’s new financial targets for 2016, restructuring program“Fit for Growth” and outlook for 2013 (unchanged)Kemira will continue to focus on improving its profitability and reinforcing the positive cash flow.The company will also continue to invest in order to secure the future growth in the water qualityand quantity management business.Kemira’s financial targets have been revised in connection to its strategy update on April, 23,2013. The company’s new financial targets for 2016 are:- revenue EUR 2.6 – 2.7 billion (previously: revenue growth in mature markets > 3% peryear, and in emerging markets > 7% per year)- EBITDA-% of revenue 15%- gearing level < 60%.The basis for growth is the expanding market for chemicals related to the water quality andquantity management and Kemira’s strong expertise in this field. Customers’ needs to increaseoperational efficiency create opportunities for Kemira to develop new products and services forboth, current and new customers. Research and Development is a critical organic growth enablerfor Kemira and provides differentiation capabilities in the water quality and quantity managementmarkets. Kemira will invest in innovation, technical expertise (knowledge) and competencies(behavior) in targeted focus areas.Restructuring program “Fit for Growth”Kemira Oyj has started to implement its global restructuring program “Fit for Growth”, launched atthe end of July, 2012, in order to improve the company’s profitability, its internal efficiency and toaccelerate the growth in emerging markets without sacrificing business opportunities in the maturemarkets. The cost savings target with the planned program is EUR 60 million on an annualizedbasis. In 2012, the cost savings impact of “Fit for Growth” was EUR 10 million.The anticipated EUR 60 million cost saving impact of the program is expected to be as follows:EUR 10 million in 2012, EUR 50 million in 2013 and EUR 60 million in 2014. The ultimate goal ofthe program is to reach at least 10% EBIT margin in 2014. Redundancies will account for 50% ofthe expected savings. The remaining 50% will be achieved through the manufacturing networkconsolidation as well as through the leaner operations. Based on the detailed plan of measures,the cost savings estimates for the different segments, based on the detailed plan of measures, areas follows: Paper EUR 22 million, Municipal & Industrial EUR 22 million, Oil & Mining EUR 12million and ChemSolutions EUR 4 million.
  14. 14. 13Non-recurring charges related to the restructuring program are estimated to be around EUR 85million, of which EUR 45 million will be severance payments and external services related cost andEUR 40 million will be asset write-downs. EUR 71 million of the restructuring charges were bookedin 2012, EUR 2 million in the first quarter of 2013 and the balance will be booked in the secondquarter of 2013. In the first quarter of 2013, non-recurring charges related to “Fit for Growth”mainly related to severance payments and external services.The implementation may ultimately lead to a reduction of up to 600 positions globally. Kemira hasinitiated the co-determination negotiations according to each country’s local legislation. Kemirahad 4,662 employees worldwide at the end of March 2013 (5,181 at the end of June 2012).Outlook (unchanged)In 2013, Kemira expects its revenue in local currencies and excluding divestments to be slightlyhigher than in 2012 and its operative EBIT to be significantly higher than in 2012. The guidance for2013 is defined as follows.Kemira guidance DefinitionSlightly higher/lower from 0% to 5% or from 0% to -5%Higher/lower from 5% to 15% or from -5% to -15%Significantly higher/lower more than 15% or less than -15%Helsinki, April 23, 2013Kemira OyjBoard of DirectorsFinancial calendar 2013Interim report January–June 2013 July 23, 2013Interim report January–September 2013 October 22, 2013All forward-looking statements in this review are based on the management’s current expectationsand beliefs about future events, and actual results may differ materially from the expectations andbeliefs such statements contain.
  15. 15. KEMIRA GROUPCONSOLIDATED INCOME STATEMENT 1-3/2013 1-3/2012 2012EUR millionRevenue 560.9 552.9 2,240.9Other operating income 4.0 3.3 13.8Operating expenses -503.8 -494.1 -2,074.8Depreciation, amortization and impairment -21.9 -25.7 -146.8Operating profit (EBIT) 39.2 36.4 33.1Finance costs, net -24.7 -10.3 -15.7Share of profit or loss of associates -1.2 10.8 11.2Profit before tax 13.3 36.9 28.6Income tax expense -10.5 -6.7 -6.2Net profit for the period 2.8 30.2 22.4Net profit attributable to:Equity owners of the parent 1.8 29.2 17.7Non-controlling interests 1.0 1.0 4.7Net profit for the period 2.8 30.2 22.4Earnings per share, basic and diluted, EUR 0.01 0.19 0.12
  16. 16. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1-3/2013 1-3/2012 2012EUR millionNet profit for the period 2.8 30.2 22.4Other comprehensive income:Items that may be reclassified subsequently to profit or loss:Available-for-sale financial assets 0.0 0.0 5.4Exchange differences on translating foreign operations 8.9 1.8 2.3Cash flow hedges -1.1 0.8 -1.0Items that will not be reclassified subsequently to profit or loss:Actuarial losses and gains on defined benefit pension plans 2.9 0.0 -38.6Other comprehensive income for the period, net of tax 10.7 2.6 -31.9Total comprehensive income for the period 13.5 32.8 -9.5Total comprehensive income attributable to:Equity owners of the parent 12.7 31.1 -14.9Non-controlling interests 0.8 1.7 5.4Total comprehensive income for the period 13.5 32.8 -9.5
  17. 17. CONSOLIDATED BALANCE SHEETEUR millionASSETS 31.3.2013 31.12.2012Non-current assetsGoodwill 527.8 522.5Other intangible assets 60.0 60.5Property, plant and equipment 665.4 655.9Investments in associates 1.5 122.8Available-for-sale financial assets 273.1 264.0Deferred income tax assets 26.2 30.1Other investments 10.0 9.8Defined benefit pension receivables 16.4 16.5Total non-current assets 1,580.4 1,682.1Current assetsInventories 191.4 181.9Interest-bearing receivables 0.3 0.3Trade and other receivables 369.8 353.1Current income tax assets 21.9 18.9Cash and cash equivalents 218.2 132.7Total current assets 801.6 686.9Non-current assets classified as held-for-sale 0.0 93.3Total assets 2,382.0 2,462.3EQUITY AND LIABILITIES 31.3.2013 31.12.2012EquityEquity attributable to equity owners of the parent 1,179.7 1,247.4Non-controlling interests 14.0 13.2Total equity 1,193.7 1,260.6Non-current liabilitiesInterest-bearing liabilities 394.0 387.5Other liabilities 21.4 21.4Deferred income tax liabilities 36.9 39.1Pension liabilities 84.1 87.1Provisions 21.1 21.8Total non-current liabilities 557.5 556.9Current liabilitiesInterest-bearing current liabilities 181.2 277.2Trade payables and other liabilities 411.1 315.5Current income tax liabilities 17.7 17.3Provisions 20.8 23.8Total current liabilities 630.8 633.8Liabilities directly associated with the assets classified as held-for-sale 0.0 11.0Total liabilities 1,188.3 1,201.7Total equity and liabilities 2,382.0 2,462.3
  18. 18. CONDENSED CONSOLIDATED CASH FLOW STATEMENT 1-3/2013 1-3/2012 2012EUR millionCash flow from operating activitiesNet profit for the period 2.8 30.2 22.4Total adjustments 54.5 32.7 196.9Operating profit before change in working capital 57.3 62.9 219.3Change in net working capital -4.3 -42.6 -21.1Cash generated from operations 53.0 20.3 198.2Finance expenses, net and dividends received -5.7 -1.4 8.3Income taxes paid -7.0 -8.5 -30.2Net cash generated from operating activities 40.3 10.4 176.3Cash flow from investing activitiesPurchases of subsidiaries, net of cash acquired - - -Other capital expenditure -29.0 -19.4 -134.1Proceeds from sale of assets and paid in capital 178.6 0.5 29.8Change in long-term loan receivables decrease (+) / increase (-) 0.0 0.4 -0.2Net cash used in investing activities 149.6 -18.5 -104.5Cash flow from financing activitiesProceeds from non-current interest-bearing liabilities 0.1 0.4 1.6Repayments from non-current interest-bearing liabilities -0.5 -0.2 -81.5Short-term financing, net (increase + / decrease -) -96.9 26.1 43.3Dividends paid 0.0 -76.5 -85.1Other finance items 0.5 -0.3 -0.9Net cash used in financing activities -96.8 -50.5 -122.6Net increase (+) / decrease (-) in cash and cash equivalents 93.1 -58.6 -50.8Cash and cash equivalents at end of period 218.2 125.6 132.7Exchange gains (+) / losses (-) on cash and cash equivalents -1.5 1.6 2.3Cash and cash equivalents at beginning of period *) 123.6 185.8 185.8Net increase (+) / decrease (-) in cash and cash equivalents 93.1 -58.6 -50.8*) Investment of EUR 9.1 million is part of Cash and cash equivalents at year ended 31 December, 2012 has now been reclassified toAvailable-for-sale investments.
  19. 19. CONSOLIDATED STATEMENT OF CHANGES IN EQUITYEUR millionUn-Fair value restricted Non-Share Share and other equity Exchange Treasury Retained controlling Totalcapital premium reserves reserve differences shares earnings Total interests EquityReported equity at January 1, 2012 221.8 257.9 89.3 196.3 -24.6 -22.3 640.1 1,358.5 12.3 1,370.8Effect of application of IAS 19 revised - - - - - - -16.5 -16.5 - -16.5Restated equity at January 1, 2012 221.8 257.9 89.3 196.3 -24.6 -22.3 623.6 1,342.0 12.3 1,354.3Net profit for the period - - - - - - 29.2 29.2 1.0 30.2Other comprehensive income, net of tax - - 0.8 - 1.1 - - 1.9 0.7 2.6Total comprehensive income - - 0.8 - 1.1 - 29.2 31.1 1.7 32.8Transactions with ownersDividends paid - - - - - - -80.6 -80.6 - -80.6Share-based payments - - - - - - 0.4 0.4 - 0.4Transfers in equity - - - - -0.1 - 0.1 0.0 - 0.0Transactions with owners - - - - -0.1 - -80.1 -80.2 - -80.2Equity at March 31, 2012 221.8 257.9 90.1 196.3 -23.6 -22.3 572.7 1,292.9 14.0 1,306.9Reported equity at December 31, 2012 221.8 257.9 93.7 196.3 -23.1 -22.2 577.2 1,301.6 13.2 1,314.8Effect of application of IAS 19 revised - - - - - - -54.2 -54.2 - -54.2Restated equity at January 1, 2013 221.8 257.9 93.7 196.3 -23.1 -22.2 523.0 1,247.4 13.2 1,260.6Net profit for the period - - - - - - 1.8 1.8 1.0 2.8Other comprehensive income, net of tax - - -1.1 - 9.1 - 2.9 10.9 -0.2 10.7Total comprehensive income - - -1.1 - 9.1 - 4.7 12.7 0.8 13.5Transactions with ownersDividends paid - - - - - - -80.6 -80.6 - -80.6Returned to treasury shares - - - - - -0.1 - -0.1 - -0.1Share-based payments - - - - - - 0.3 0.3 - 0.3Transfers in equity - - - - - - - 0.0 - 0.0Transactions with owners - - - - - -0.1 -80.3 -80.4 - -80.4Equity at March 31, 2013 221.8 257.9 92.6 196.3 -14.0 -22.3 447.4 1,179.7 14.0 1,193.7Kemira had in its possession 3,309,158 of its treasury shares on March 31, 2013. The average share price of treasury shares was EUR 6.73 and they represented2.1% of the share capital and the aggregate number of votes conferred by all shares. The aggregate par value of the treasury shares is EUR 4.7 million.The share premium is a reserve accumulating through subscriptions entitled by the management stock option program 2001. This reserve based on the old FinnishCompanies Act (734/1978), which does not change anymore. 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 originate from local requirements of subsidiaries. The unrestricted equity reserve includes other equitytype investments and the subscription price of shares to the extent that they will not, based on a specific decision, be recognized in share capital.*) A dividend was EUR 80.6 million in total (EUR 0.53 per share) in respect of the financial year ended December 31, 2011. The annual general meeting approvedEUR 0.53 dividend on March 26, 2013. The dividend record date was April 2, 2013, and the payment date April 9, 2013.Equity attributable to equity owners of the parent*) A dividend was EUR 80.6 million in total (EUR 0.53 per share) in respect of the financial year ended December 31, 2011. The annual general meeting approvedEUR 0.53 dividend on March 21, 2012. The dividend record date was March 26, 2012, and the payment date April 2, 2012.*)*)
  20. 20. KEY FIGURES 1-3/2013 1-3/2012 2012Earnings per share, basic and diluted, EUR * 0.01 0.19 0.12Cash flow from operations per share, EUR * 0.27 0.07 1.16Capital expenditure, EUR million 29.0 19.4 134.1Capital expenditure / revenue, % 5.2 3.5 6.0Average number of shares, basic, (1,000) * 152,033 152,030 152,037Average number of shares, diluted (1,000) * 152,139 152,159 152,173Number of shares at end of period, basic (1,000) * 152,033 152,030 152,041Number of shares at end of period, diluted (1,000) * 152,198 152,181 152,090Equity per share, EUR * 7.76 8.50 8.20Equity ratio, % 50.1 50.9 51.2Gearing, % 29.9 45.4 42.2Interest-bearing net liabilities, EUR million 357.0 593.5 532.0Personnel (average) 4,759 5,020 5,043* Number of shares outstanding, excluding the number of shares bought back.REVENUE BY BUSINESS AREA 1-3/2013 1-3/2012 2012EUR millionPaper 259.1 247.9 1,005.6Municipal & Industrial 164.8 161.0 686.6Oil & Mining 76.3 85.1 321.1ChemSolutions 60.7 58.9 227.6Total 560.9 552.9 2,240.9OPERATING PROFIT (EBIT) BY BUSINESS AREA 1-3/2013 1-3/2012 2012EUR millionPaper 17.8 18.2 44.7Municipal & Industrial 7.8 4.2 -16.5Oil & Mining 4.3 8.2 14.2ChemSolutions 9.3 5.8 -9.3Total 39.2 36.4 33.1
  21. 21. CHANGES IN PROPERTY, PLANT AND EQUIPMENT 1-3/2013 1-3/2012 2012EUR millionCarrying amount at beginning of year 655.9 656.0 656.0Acquisitions of subsidiaries - - -Increases 18.2 14.4 135.3Decreases -0.2 -0.5 -2.8Disposal of subsidiaries - - -Depreciation and impairments -18.8 -22.7 -113.0Transferred to non-current assets classified as held-of-sale - - -17.2Exchange rate differences and other changes 10.3 -5.2 -2.4Net carrying amount at end of period 665.4 642.0 655.9CHANGES IN INTANGIBLE ASSETS 1-3/2013 1-3/2012 2012EUR millionCarrying amount at beginning of year 583.0 673.5 673.5Acquisitions of subsidiaries - - -Increases 2.2 1.5 8.0Decreases -0.1 - -0.1Disposal of subsidiaries - - -Depreciation and impairments -3.1 -3.0 -33.8Transferred to non-current assets classified as held-of-sale - - -57.6Exchange rate differences and other changes 5.8 -4.0 -7.0Net carrying amount at end of period 587.8 668.0 583.0CONTINGENT LIABILITIESEUR million 31.3.2013 31.12.2012Mortgages 0.5 0.5Assets pledgedOn behalf of own commitments 6.8 6.6GuaranteesOn behalf of own commitments 55.1 52.9On behalf of associates 0.7 0.7On behalf of others 3.0 3.0Operating leasing liabilitiesMaturity within one year 27.5 29.0Maturity after one year 135.0 132.4Other obligationsOn behalf of own commitments 1.3 1.3On behalf of associates 1.0 1.0Major off-balance sheet investment commitmentsMajor amounts of contractual commitments for the acquisition of property, plant and equipment on March 31, 2013 were about EUR 14.7million for plant investments in China and Europe.
  22. 22. LitigationRELATED PARTYOn August 19, 2009, Kemira Oyj received a summons stating that Cartel Damage Claims Hydrogen Peroxide SA (CDC) had filed anaction against six hydrogen peroxide manufacturers, including Kemira, for violations of competition law applicable to the hydrogenperoxide business. In its claim, Cartel Damage Claims Hydrogen Peroxide SA seeks an order from the Regional Court of Dortmund inGermany to obtain an unabridged and full copy of the decision of the European Commission, dated May 3, 2006, and demands that thedefendants, including Kemira, are jointly and severally ordered to pay damages together with accrued interest on the basis of suchdecision.Transactions with related parties have not changed materially after annual closing 2012.Cartel Damage Claims Hydrogen Peroxide SA has stated that it will specify the amount of the damages at a later stage after the full copyof the decision of the European Commission has been obtained by it. In order to provide initial guidance as to the amount of suchdamages, Cartel Damage Claims Hydrogen Peroxide SA presents in its claim a preliminary calculation of the alleged overcharge havingbeen paid to the defendants as a result of the violation of the applicable competition rules by the parties which have assigned and soldtheir claim to Cartel Damage Claims Hydrogen Peroxide SA. In the original summons such alleged overcharge, together with accruedinterest until December 31, 2008, was stated to be EUR 641.3 million.The process is currently pending in the Regional Court of Dortmund, Germany. Kemira defends against the claim of Cartel DamageClaims Hydrogen Peroxide SA.Thereafter Cartel Damage Claims Hydrogen Peroxide SA has delivered to the attorneys of the defendants an April 14, 2011 dated briefaddressed to the court and an expert opinion. In the said brief the minimum damage including accrued interest until December 31, 2010,based on the expert opinion, is stated to be EUR 475.6 million. It is further stated in the brief that the damages analysis of the expertdoes not include lost profit.Kemira Oyj has additionally been served on April 28, 2011 a summons stating that Cartel Damage Claims Hydrogen Peroxide SA hasfiled an application for summons in the municipal court of Helsinki on April 20, 2011 for violations of competition law applicable to thehydrogen peroxide business claiming from Kemira Oyj as maximum compensation EUR 78.0 million as well as overdue interest startingfrom November 10, 2008 as litigation expenses with overdue interest. The referred violations of competition law are the same as thoseon basis of which CDC has taken legal action in Germany in Dortmund. Kemira defends against the claim of Cartel Damage ClaimsHydrogen Peroxide SA.Kemira Oyjs subsidiary Kemira Chemicals Oy (former Finnish Chemicals Oy) has on June 9, 2011 received documents where it is statedthat CDC Project 13 SA has filed an action against four companies, including Kemira, asking damages for violations of competition lawapplicable to the sodium chlorate business. The European Commision set on June 2008 a fine of EUR 10.15 million on FinnishChemicals Oy for antitrust activity in the companys sodium chlorate business during 1994-2000. Kemira Oyj acquired Finnish Chemicalsin 2005. Kemira defends against the claim of CDC Project 13 SA.Kemira is currently not in a position to make any estimate regarding the duration or the likely outcome of the processes started by CartelDamage Claims Hydrogen Peroxide SA and CDC Project 13 SA. No assurance can be given as to the outcome of the processes, andunfavorable judgments against Kemira could have a material adverse effect on Kemira’s business, financial condition or results ofoperations. Due to its extensive international operations the Group, in addition to the above referred claims, is involved in a number ofother legal proceedings incidental to these operations and it does not expect the outcome of these other currently pending legalproceedings to have materially adverse effect upon its consolidated results or financial position.
  23. 23. DERIVATIVE INSTRUMENTSEUR million 31.3.2013 31.12.2012Nominal value Fair value Nominal value Fair valueCurrency instrumentsForward contracts 497.2 1.8 611.2 1.7Interest rate instrumentsInterest rate swaps 203.4 -5.6 173.2 -6.2of which cash flow hedge 203.4 -5.6 173.2 -6.2Bond futures 10.0 0.2 10.0 -0.1of which open 10.0 0.2 10.0 -0.1Other instruments GWh Fair value GWh Fair valueElectricity forward contracts, bought 1,507.0 -6.6 1,301.1 -6.7of which cash flow hedge 1,498.2 -6.1 1,257.3 -5.9FAIR VALUE OF FINANCIAL ASSETSEUR million31.3.2013 31.12.2012Fair value hierarchy Level 1 Level 2 Level 3 Total net Level 1 Level 2 Level 3 Total netAvailable-for-sale financial assets 7.1 2.0 264.0 273.1 - - 264.0 264.0Currency instruments - 4.4 - 4.4 - 3.4 - 3.4Interest rate instruments, hedge accounting - - - 0.0 - - - -Other instruments - 0.2 - 0.2 - - - -Trade receivables - 306.2 - 306.2 - 292.5 - 292.5Cash and cash equivalents - 218.2 - 218.2 7.1 125.6 - 132.7Total 7.1 531.0 264.0 802.1 7.1 421.5 264.0 692.6Level 1: Exchange traded securitiesLevel 2: Fair value determined by observable parametersLevel 3: Fair value determined by non-observable parametersLevel 3 specification Level 3 Level 3Total net Total net31.3.2013 31.12.2012264.0 256.5- 6.9Transfers - -- 0.6- -264.0 264.0FAIR VALUE OF FINANCIAL LIABILITIESEUR million31.3.2013 31.12.2012Fair value hierarchy Level 1 Level 2 Level 3 Total net Level 1 Level 2 Level 3 Total netNon-current interest-bearing liabilities - 389.5 - 389.5 - 415.9 - 415.9Repayments from non-current interest-bearingliabilities - 52.2 - 52.2 - 53.8 - 53.8Loans from financial institutions - 17.6 - 17.6 - 10.8 - 10.8Other liabilities - 135.0 - 135.0 - 213.6 - 213.6Currency instruments - 2.6 - 2.6 - 1.7 - 1.7Interest rate instruments - 5.6 - 5.6 - 6.2 - 6.2Other instruments - 6.6 - 6.6 - 6.8 - 6.8Trade payables - 142.0 - 142.0 - 157.6 - 157.6Total - 751.1 - 751.1 - 866.4 - 866.4InstrumentThe fair values of the instruments which are publicly traded are based on market valuation on the date of reporting. Other instrumentshave been valuated based on net present values of future cash flows. Valuation models have been used to estimate the fair values ofoptions.Nominal values of the financial instruments do not necessarily correspond to the actual cash flows between the counterparties, andindividual items do not therefore give a fair view of the Groups risk position.Carrying value at beginning of periodEffect on the statement of comprehensive incomePurchasedSoldCarrying value at end of period
  24. 24. QUARTERLY INFORMATIONEUR million 2013 2012 2012 2012 20121-3 10-12 7-9 4-6 1-3RevenuePaper 259.1 251.7 256.9 249.1 247.9Municipal & Industrial 164.8 175.4 176.5 173.7 161.0Oil & Mining 76.3 72.1 79.4 84.5 85.1ChemSolutions 60.7 59.3 54.4 55.0 58.9Total 560.9 558.5 567.2 562.3 552.9Operating profit (EBIT)Paper 17.8 10.0 0.8 15.7 18.2Municipal & Industrial 7.8 -28.5 -1.7 9.5 4.2Oil & Mining 4.3 -2.3 1.1 7.2 8.2ChemSolutions 9.3 -16.3 0.5 0.8 5.8Total 39.2 -37.1 0.7 33.2 36.4Operating profit (EBIT), excluding non-recurring itemsPaper 19.7 19.5 20.9 16.1 18.8Municipal & Industrial 8.6 6.3 15.2 12.0 5.7Oil & Mining 5.1 3.4 7.0 7.2 8.3ChemSolutions 8.8 4.9 3.7 0.7 5.8Total 42.2 34.1 46.8 36.0 38.6
  25. 25. DEFINITIONS OF KEY FIGURESEarnings per share (EPS) Equity ratio, %Net profit attributable to equity owners of the parent Total equity x 100Average number of shares Total assets - prepayments receivedCash flow from operations Gearing, %Cash flow from operations, after change in net working Interest-bearing net liabilities x 100capital and before investing activities Total equityCash flow from operations per share Interest-bearing net liabilitiesCash flow from operations Interest-bearing liabilities - cash and cash equivalentsAverage number of sharesEquity per share Return on capital employed (ROCE), %Equity attributable to equity owners of the parentat end of period Operating profit + share of profit or loss of associates x 100Number of shares at end of period Capital employed 1) 2)1)Average2)Capital Employed = Net working capital + property, plant and equipment available for use + intangible assets + investments inassociates
  26. 26. BASIS OF PREPARATIONACCOUNTING POLICIESThe effect on the balance sheet was as follows:Liabilitiesfor definedbenefitsplansDeferredtax assetsAssetsfor definedbenefitsplansDeferredtaxliabilities EquityBalance as reported at 1 January 2012 52.0 2.0 44.3 10.3 1,370.8Effect of application of IAS 19 revised 13.6 0.2 -2.7 0.4 -16.5Restated balance at 1 January 2012 65.6 2.2 41.6 10.7 1,354.3Balance as reported at 31 December 2012 54.9 2.7 43.6 10.7 1,314.8Effect of application of IAS 19 revised 13.6 0.2 -2.7 0.4 -16.5Effect on total comprehensive income for the period 18.6 0.2 -24.4 -5.1 -37.7Restated balance at 31 December 2012 87.1 3.1 16.5 6.0 1,260.6This unaudited condensed consolidated interim financial statements has been prepared in accordance with IAS 34 ‘Interim financialreporting’. The interim financial statements should be read in conjunction with the annual financial statements for the year ended 31December 2012, which have been prepared in accordance with IFRS.The accounting policies adopted are consistent with those of the previous financial year, except as described below.In the beginning of 2013, Kemira Group has applied revised Employee Benefits . The amendments to IAS 19 change the accounting fordefined benefit plans. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets.The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, andhence eliminate the ´corridor approach’ permitted under the previous version of IAS 19 and accelerate the recognition of past servicecosts. All actuarial gains and losses are recognized immediately through other comprehensive income in order for the net pension assetor liability recognized in the consolidated balance sheet to reflect the full value of the plan deficit or surplus. Furthermore, the interest costand expected return on plan assets in the previous version of IAS 19 are replaced with a ‘net interest’ amount under IAS 19 revised,which is calculated by applying the discount rate to the net defined benefit liability or asset. IAS 19 revised introduces certain changes inthe presentation of the defined benefit cost including more extensive disclosures in the Kemiras Financial Statements.Q1/2013 Interim financial statements is the first financial report in which the Group has applied IAS 19 revised. Consequently, the Grouphas adjusted opening equity as of 1 January 2012 and the figures for 2012 have been restated as if IAS 19 revised had always beenapplied.Taxes on income in the interim periods are accrued using the tax rate that would be applicable total annual earnings.Amendment to IAS 1 Presentation of Financial Statements (effective for reporting periods beginning on or after 1 July 2012). The mainchange is the requirement for grouping items in ‘other comprehensive income’ based on whether they are potentially reclassifiable toprofit or loss as certain conditions are fulfilled. The amendments only have an impact on the presentation of the Kemira’s FinancialStatements.IFRS 13 Fair Value Measurement (effective for reporting periods beginning on or after 1 January 2013). The standard aims to increaseuniformity by providing specific definition for fair value. It also provides both requirements for determining fair value and the requireddisclosures under the same standard. The requirements do not extend the use of fair value accounting but provide guidance on how itshould be applied where its use is already required or permitted by other standards.All the figures in this interim financial statements have been rounded and consequently the sum of individual figures can deviate from thepresented sum figure.
  27. 27. The effect on defined benefit expenses on the consolidated income statement was as follows:2012 2012 2012 2012 20121-3 4-6 7-9 10-12 1-12Reported defined benefit expense (+) / income (-) 1.6 1.6 1.6 4.7 9.5Effect of application of IAS 19 revised -0.3 -0.4 -0.3 -0.4 -1.4Restated defined benefit expense (+) / income (-) 1.3 1.2 1.3 4.3 8.1The effect on total comprehensive income was as follows:2012 2012 2012 2012 20121-3 4-6 7-9 10-12 1-12Reported total comprehensive income for the period 32.5 32.8 7.3 -44.4 28.2Effect of application of IAS 19 revised 0.3 0.4 0.3 -38.7 -37.7Restated total comprehensive income for the period 32.8 33.2 7.6 -83.1 -9.5The effect on earnings per share, EUR was as follows:2012 2012 2012 2012 20121-3 4-6 7-9 10-12 1-12Reported earnings per share 0.19 0.20 0.00 -0.28 0.11Effect of application of IAS 19 revised 0.00 0.00 0.00 0.01 0.01Restated earnings per share 0.19 0.20 0.00 -0.27 0.12CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSThe preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect theapplication of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ fromthese estimates.

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