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Introduction & Market Context
Finnish chemicals company Kemira reported its first quarter 2025 results on April 25, demonstrating resilience in a challenging market environment. Despite facing increased market uncertainty and softer demand, the company maintained profitability within its target range while advancing strategic growth initiatives.
President and CEO Antti Salminen emphasized the company’s resilient business model, noting that direct impacts from potential trade tensions would be limited due to Kemira’s localized production approach, with less than 5% of group revenue coming from trade flows into the US.
Quarterly Performance Highlights
Kemira reported a decline in financial performance compared to the strong first quarter of 2024, with revenue falling 8% to EUR 708.8 million. Organic growth was negative at -2%, primarily due to weakness in the Packaging (NYSE:PKG) & Hygiene Solutions segment, while Water Solutions and Fiber Essentials segments remained stable.
As shown in the following comprehensive financial highlights table, the company’s operative EBITDA decreased 17% year-over-year to EUR 135.5 million, resulting in an operative EBITDA margin of 19.1%, which remains within Kemira’s target range of 18-21%:
The decline in profitability can be attributed to negative net impacts from sales prices and variable costs, as well as lower volumes in certain segments. Despite these challenges, Kemira maintained solid overall performance with a net profit of EUR 61.7 million and diluted earnings per share of EUR 0.38.
The following bridge chart illustrates the factors affecting Kemira’s revenue performance in Q1 2025:
Segment Performance Analysis
Kemira’s three business segments showed varying performance in the first quarter. The Water Solutions segment demonstrated resilience with stable organic growth and strong profitability, benefiting from continued demand growth across all regions.
As shown in the following chart, Water Solutions maintained revenue at EUR 304 million with 0% organic growth, while achieving an impressive operative EBITDA margin of 21.4%:
In contrast, the Packaging & Hygiene Solutions segment faced more challenging market conditions, particularly in Asia Pacific and China, with market activity also slowing in North America. This segment reported a 6% decline in organic revenue growth:
The Fiber Essentials segment delivered solid overall performance despite continued softness in bleaching chemicals following weakness in packaging demand. The segment maintained stable organic revenue growth and achieved a strong operative EBITDA margin of 26.3%:
Strategic Growth Initiatives
Despite the softer market environment, Kemira continued to advance its strategic growth initiatives during the quarter. The company announced a significant joint venture with IFF to produce biobased materials at scale, with a final investment decision made for commercial production expected to begin in late 2027. The joint venture represents an investment of approximately EUR 130 million with 50/50 ownership.
Kemira also expanded its water business through the acquisition of Thatcher Group’s iron sulfate coagulant business in the US, which generates annual revenue of less than USD 10 million. Additionally, the company is investing in expanding its paper and board chemical capacity in APAC with a multi-million euro investment in Thailand, expected to be operational by Q2 2026.
CFO Petri Castrén highlighted the company’s strong financial position, which provides flexibility for these growth investments:
The company’s solid cash flow generation, though declining from the high comparison period, continues to support its growth strategy:
Financial Position & Outlook
Kemira maintained a strong balance sheet with net debt/operative EBITDA at a record-strong level of 0.4. The company’s average interest rate on net debt excluding leases remained stable at 2.8% with a duration of 14 months.
The comprehensive key figures table below provides a detailed overview of Kemira’s financial performance:
Looking ahead, Kemira maintained its outlook for 2025 unchanged, with revenue in local currencies (excluding acquisitions and divestments) expected to be between EUR 2,800 and 3,200 million, and operative EBITDA projected between EUR 540 and 640 million. These projections are based on assumptions of increased global economic uncertainty resulting in softer volume demand, a stable raw material environment, and no major disruptions.
The Annual General Meeting approved a dividend of EUR 0.74 per share for 2024, to be paid in two installments, reflecting the company’s commitment to shareholder returns despite market challenges.
In conclusion, while Kemira faces headwinds from a softer market environment, the company’s resilient business model, strategic growth initiatives, and strong financial position position it well to navigate current market uncertainties while continuing to invest in future growth opportunities.
Full presentation:
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