Kemira Sets 15% Margin Target as Focus Switches to Growth

Kemira Oyj (KRA1V) said it aims to double profitability to 15 percent by the end of 2016 as Chief Executive Officer Wolfgang Buechele increases investment in additives for paper as well as the mining, oil and gas industries.

The Finnish company aims to lift sales to 2.6 billion euros ($3.4 billion) to 2.7 billion euros from 2.24 billion euros last year. Adjusted earnings before interest and taxes advanced 9 percent to 42.2 million euros in the first quarter, with a margin of 7.5 percent, Kemira reported today. The shares gained as much as 4.5 percent.

One year after taking the helm, Buechele is revising his blueprint for the company to bring in more growth elements alongside restructuring. Kemira will extend investment and research budgets for additives used in paper as well as oil and mining, while commodity-based units and ChemSolutions will be optimized for efficiency and cash flow.

“We’re rebalancing Kemira,” Buechele told investors and analysts on a call. “The industrial part of the company will play a much stronger role than in the past and the traditional water business is less important.”

In a break from the past, Kemira’s growth will be driven by oil and mining and paper -- providing additives for drilling wells or anti-scaling solutions for machinery. Those markets have better prospects than water purification for municipalities given strengthening demand for additives used in oil drilling and anti-scaling. Only 40 percent of Kemira’s product line is currently in faster-growing markets, and research budgets will be focused on those areas.

Kemira traded 4 percent higher at 11.04 euros as of 5:35 p.m. in Helsinki.

To contact the reporter on this story: Andrew Noel in London at anoel@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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