Kemira Drops Most in a Year on Lower-Than-Estimated Profit
Kemira retreated as much as 7 percent in Helsinki, the most since March 22. Fourth-quarter earnings before interest and taxes fell 2 percent to 33.7 million euros ($45 million), the company said today. Analysts had predicted 38.4 million euros, on average.
Chief Executive Officer Wolfgang Buechele is in the midst of a companywide overhaul, started in July, and the former BASF SE (BAS) executive will announce details of his growth ambitions for the company in April. The revamp contributed to the 71 million euros in extra costs incurred in the quarter. Kemira is also battling stagnating markets as local governments make cutbacks on municipal water projects.
“It’s a disappointing result overall, reflecting tough trading conditions,” said Martin Evans, an analyst with JPMorgan in London. “The 10 million-euro saving from the restructuring program was not enough to offset pressure from increased competition.”
Kemira is facing more competition from the “big boys” producing chemicals for the oil and gas industries as new rivals emerge through acquisitions, Buechele said on an investor call today.
The company is reviewing the final sites that have been earmarked for potential closing. Buechele’s revamp includes 600 job cuts, and the focus is now shifting to growth and strategic planning for the future.
“Our sharpened strategy is in the final stages of being planned,” the CEO said on a call. Board approval will be sought at the end of March, with details to be relayed to investors at the time of first-quarter results.
Kemira has hired workers in emerging markets to broaden its reach and expand divisions supplying water-treatment chemicals to the oil, mining and paper industries.
The loss from its associated companies last quarter came to 5.7 million euros, compared with profit of 7.2 million euros a year earlier. Titanium dioxide producer Sachtleben, a joint venture with Rockwood Holdings Inc. (ROC) of which Kemira owns 39 percent, had lower profit due to a slowdown in demand, falling prices and rising raw-material costs.
The two partners are seeking an exit from their TiO2 operation this year, Seifi Ghasemi, chief executive officer of Rockwood, said on Jan. 17. Kemira’s Buechele said the joint venture’s value has been hurt by the market environment.
“If there is an exit possible, we are definitely interested,” he said. So far, “all efforts to exit this business didn’t materialize.”
Today’s slide in shares makes Kemira among the leading decliners on the Nasdaq OMX Helsinki 25 index. About 500,000 shares traded, more than double its three-month daily average. The stock was at 11.33 euros as of 4:37 p.m. local time.
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