Kemira 3Q 2011 results: operative EBIT decreased 4% to EUR 40.8M from 3Q 2010

HELSINKI, Oct. 27, 2011 (Press Release) - Third quarter:

• Revenue was EUR 558.3 million (554.4).
• Operative EBIT decreased 4% to EUR 40.8 million (42.5) with a margin of 7.3% (7.7%).
• Profit before tax decreased 8% to EUR 42.1 million (46.0).
• Cash flow after investments increased to EUR 56.7 million (6.6).

January-September:

• Revenue increased 3% to EUR 1,663.9 million (1,614.3).
• Operative EBIT increased 1% to EUR 123.0 million (122.1) with a margin of 7.4% (7.6%).
• Profit before taxes increased 14% to EUR 131.4 million (115.0).
• Earnings per share from continuing operations increased 12% to 0.65 (0.58).
• Gearing improved to 35% (39% as of December 31, 2010).

Kemira's President and CEO Harri Kerminen:

"Kemira's organic revenue growth in the third quarter was 6%. Sales prices were higher and sales volumes remained at the same level as in the comparable period last year. Operative EBIT improved 9% compared to the second quarter, 2011.

Raw material prices have stabilized during the quarter, but looking at the first nine months of 2011, we have seen a substantial increase in raw material prices. So far, we have been successful in offsetting higher costs with sales prices. Reasons for decreased operative EBIT compared to the third quarter in 2010 were the FWA divestment made in the latter part of 2010 and negative currency exchange effect.

Paper segment successfully implemented sales price increases to cover higher raw material costs. Operative EBIT margin was close to the level of comparable quarter last year. The Municipal & Industrial segment's revenue growth picked up in the third quarter driven by both volume growth and sales price increases. Operative EBIT margin improved significantly compared to the previous quarter. The Oil & Mining segment's organic revenue growth was over 10% with an operative EBIT margin of nearly 12% being the highest quarterly margin to date for the segment.

Kemira owns a minority stake (39%) in Sachtleben, a major titanium dioxide producer. The performance of Sachtleben continued to be very strong. Kemira's share of the Sachtleben profits tripled compared to the third quarter last year and was close to EUR 10 million in the quarter.

The visibility for upcoming quarters is not as clear as when compared to the first half of 2011. However, outlook for the full year 2011 revenue and operative EBIT remains unchanged. Kemira's revenue is expected to be slightly higher and operative EBIT higher than in 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. The company will also do investments to secure the future growth in the water treatment business.

Kemira's financial targets remain as communicated in connection with the Capital Markets Day in September 2010. The company's medium term financial targets are:

- revenue growth in mature markets > 3% per year, and in emerging markets > 7% per year
- EBIT, % of revenue > 10%
- positive cash flow after investments and dividends
- gearing level < 60%.

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.

Kemira expects the volume recovery that was seen in 2010 to continue in 2011, and Kemira's revenue is expected to be slightly higher than in 2010. Despite the rising raw material prices, Kemira expects the operative EBIT in 2011 to be higher than in 2010. Kemira expects capital expenditure to be between EUR 100-110 million in 2011.

Other events after the review period

On October 26, Kemira Board of Directors appointed Wolfgang Büchele (PhD, Chemistry) Kemira Oyj's President and Chief Executive Officer as of April 1, 2012. Büchele has been a member of Kemira's Board of Directors since 2009. He succeeds the current President and CEO, Harri Kerminen who will retire.