• Organic Growth: 2%, driven by industry and water segments.
• Operative EBITDA Margin: 20.3%.
• Operative EBITDA: EUR 147 million.
• Volume Growth: Over 5% year-on-year.
• Pulp and Paper Segment Margin: 17.7%, best ever Q3 for this segment.
• I&W Segment Volume Growth: Around 5% year-on-year.
• Return on Capital Employed (I&W): Above 30%.
• Leverage: 0.5 times operative EBITDA.
• Operative Cash Flow: More than EUR 300 million year-to-date.
• Revenue Outlook: EUR 2.8 billion to EUR 3.2 billion for the full year.
• Operative EBITDA Outlook: EUR 540 million to EUR 640 million for the full year.

• Warning! GuruFocus has detected 5 Warning Sign with IDDWF.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kemira Oyj (FRA:KEM) reported a solid Q3 2024 with an operative EBITDA margin of 20.3%, indicating strong financial performance.
• The company achieved organic growth of 2%, driven by robust demand in the water treatment markets.
• Kemira Oyj (FRA:KEM) announced several investments to fuel growth, including expanding coagulant capacity in Europe and exploring new bio-based chemistries.
• The company has set ambitious emission reduction targets for Scope 1, 2, and 3, positioning itself as a sustainability leader in the industry.
• Kemira Oyj (FRA:KEM) maintained its outlook for both revenue and operative EBITDA for the full year, reflecting confidence in its business strategy.

Negative Points

• The pulp and paper market showed signs of slowing recovery in Q3, impacting overall market performance.
• There is a modest increase expected in raw material costs, which could pressure margins if not managed effectively.
• Price declines were noted, particularly in the pulp and paper segment, due to market pressures.
• The company faces challenges in maintaining growth amid unpredictable pulp and paper market demands.
• Fixed cost inflationary pressures are present, requiring proactive cost management and potential price adjustments.

Q & A Highlights

Q: Can you clarify the reason behind the recent price hikes? Is it primarily to tackle rising raw material costs or to compensate for fixed cost inflation? A: The modest increase in the raw material basket is relatively stable compared to previous years. The price hikes are driven by both variable cost increases and fixed cost inflation, depending on the regions and product lines.

Q: Which raw materials are contributing to the increase in costs? A: The most significant increases are seen in hydrochloric acid and chlorine in North America. These are experiencing much higher increases compared to other materials in our basket.

Q: What does financial discipline mean for Kemira when it comes to acquisitions? A: Financial discipline involves maintaining a solid investment-grade credit profile and being prudent with acquisition costs. This means balancing growth investments while retaining profitability.

Q: Is the temporary softness in the pulp and paper market more structural due to reduced consumer spending on packaging? A: The softness is linked to the overall economic state and consumer behavior, particularly in China. However, the long-term demand for packaging is expected to recover as the global economy picks up and as the world moves away from plastic packaging.

Q: How does Kemira maintain resilience in the EMEA pulp and paper market despite challenges? A: The resilience is due to long-term partnerships and collaborations with customers, especially in the Nordic region. This includes joint R&D efforts and a focus on long-term commitments rather than short-term contracts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.