Earnings call transcript: Kemira Q3 2025 shows strategic growth amid EPS miss

Kemira Oyj reported its third-quarter earnings for 2025, revealing a slight miss on earnings per share (EPS) against forecasts, but the market reacted positively with a 2.77% increase in stock price. The company posted an EPS of €0.38, just shy of the forecasted €0.3948, while maintaining a stable operative EBITDA margin of 20%. According to InvestingPro analysis, the company currently appears undervalued, with a "GREAT" overall financial health score of 3.09 out of 5. Despite a 5% decline in revenue year-on-year, strategic initiatives and a strong cash flow improvement contributed to investor confidence.

Key Takeaways

• EPS was slightly below expectations at €0.38 versus the forecast of €0.3948.
• Stock price rose by 2.77% post-earnings announcement.
• Revenue declined by 5% year-on-year, with organic growth at -3%.
• Strong cash flow from operations improved by €132 million.
• Strategic acquisitions and partnerships signal future growth potential.

Company Performance

Kemira’s overall performance in Q3 2025 reflects a mixed picture. While the company experienced a decline in revenue and organic growth, it maintained a robust operative EBITDA margin of 20%. This stability in profitability, coupled with strategic moves such as acquisitions and partnerships, demonstrates Kemira’s focus on long-term growth despite current market challenges.

Financial Highlights

• Revenue: Declined by 5% year-on-year.
• Earnings per share: €0.38, slightly below the forecast.
• Operative EBITDA margin: Maintained at 20%.
• Cash flow from operations: Improved by €132 million from the previous year.

Earnings vs. Forecast

The actual EPS of €0.38 fell short of the forecasted €0.3948, representing a minor miss. This deviation, though small, suggests areas for improvement but is not expected to significantly impact long-term investor sentiment given the company’s strategic initiatives.

Market Reaction

Kemira’s stock price increased by 2.77% to €20.02 following the earnings release. With a beta of 0.5, the stock has historically demonstrated low volatility, making it potentially attractive for stability-focused investors. This positive movement reflects investor confidence in the company’s strategic direction and robust cash flow, despite the slight EPS miss and revenue decline. InvestingPro data reveals the company maintains a healthy current ratio of 1.72 and an impressive Altman Z-Score of 7.93, indicating strong financial stability.

Outlook & Guidance

Kemira remains committed to its long-term targets, including an organic growth rate of over 4% annually and an EBITDA performance range of 18-21%. The company’s focus on strategic mergers and acquisitions, particularly in the water treatment sector, is expected to drive future growth and profitability. For comprehensive analysis of Kemira’s growth potential and detailed financial metrics, access the full Pro Research Report available exclusively on InvestingPro, covering over 1,400 top stocks with expert insights and actionable intelligence.

Executive Commentary

CEO Antti Salminen stated, "We maintained good profitability in the weak end market environment," highlighting the company’s resilience. He also noted, "The megatrends that are supporting the strategy stay intact," underscoring confidence in Kemira’s strategic direction.

Risks and Challenges

• Continued economic slowdown globally, particularly in Europe, could impact future revenue.
• Weak demand in the water treatment market poses a challenge.
• The negative organic growth rate indicates potential areas for improvement.
• Market softness in the pulp and packaging sectors could affect profitability.
• Maintaining pricing power in a weak market environment requires careful management.

Q&A

During the earnings call, analysts inquired about the potential of the PFAS removal market, challenges in the Fiber Essentials segment, and profitability improvements in Packaging and Hygiene Solutions. The management addressed these concerns, emphasizing ongoing strategic initiatives to navigate economic challenges effectively.

Full transcript - Kemira Oyj (KEMIRA) Q3 2025:

Kiira Fröberg, Head of Investor Relations, Kemira: Good morning, everyone, and welcome to Kemira’s Q3 earnings webcast. My name is Kiira Fröberg and I’m the Head of Investor Relations at Kemira. We reported our Q3 interim report today and maintained good profitability in the weak end market environment. Here with me today, I have our President and CEO, Antti Salminen, and our CFO, Petri Castrén. Antti will start by covering our group level performance and our progress on the strategy, as well as the outlook. After that, Petri will discuss the business unit performance and will also share some more details on the financials. At the end of the presentation, before the Q&A, Antti will also give a short introduction to our new CFO, Tuomas Mäkipeska. Now, Antti, please, the stage is yours.

Antti Salminen, President and CEO, Kemira: Thank you, Kiira, and good morning and welcome on my behalf as well. Happy to report here on our strong profitability in the weak end market environment. The market indeed has been quite subdued for a long time already. We saw that first, already in the beginning of the year or at the end of the previous year, hitting the performance of our Packaging and Hygiene Solutions business unit, as that is the one that gets most directly the impact from the weak end market, as consumers are not consuming, trade is not flowing globally, so less packaging material is consumed, thus less Kemira chemicals go into the production of packaging material. In Q2, we mentioned that we clearly see now the impact of the weaker economy trickling up the value chain to the pulp producers, our customers in that area. Now it’s visible in Q3 clearly.

We have seen a lot of prolonged maintenance breaks and curtailments in that industry, so that is hitting the Fiber Essentials unit. We’ve also now started to see the kind of a prolonged slow global economy impacting the overall industrial activity. Lower run rates at any industrial segment, especially here in Europe, which is then translated into less water consumption by industry and thus less consumption of our water treatment chemicals in the industrial side of our Water Solutions business. All this has led to the situation where basically now the revenues declined 5% year on year, 3% in terms of organic development decline. You see that there’s quite a significant amount of foreign exchange rate impact there, as we have significant business in the U.S. This decline, as mentioned now in Q3, was hitting all three of our business units.

Nevertheless, we keep the outlook unchanged as we changed the outlook in Q2. The good news is that profitability is good in Q3. We maintained the 20% operative EBITDA performance, which I think, kind of comparing to the chemical industry in Europe, comparing to the looking at the environment that we operate in and the declined top line, is a good performance. I’m really thankful for the whole organization for pulling it together. We maintained high profitability in the backbone of our business, i.e., Water Solutions unit, but we managed to improve also the profitability in the Packaging and Hygiene Solutions. Impact coming both from favorable product mix, but also from the cost management program or profitability improvement program that we launched in the springtime for the Packaging and Hygiene Solutions. Even if the markets are soft, we continue to invest into our strategy execution.

We have a clear growth strategy, and the megatrends that are supporting the strategy stay intact. Longer-term viability and growth potential of the fiber economy and the need for clean water are there. Thus, we continue to invest into the execution of strategy. We also continue to have a strong balance sheet, which enables that. I will talk later a little bit more about a couple of key steps in terms of continuing the strategy execution. As mentioned, the revenues were weak in Q3. The U.S. dollar had a significant impact, but overall the demand also was weaker. We retained our market position in all the business units. Basically, this is overall a decline in demand that is impacting the top line here. Year on year, we saw a decline in volumes, as I mentioned, but prices remained stable.

That is the kind of good news and showing again our pricing power there. Sequentially, sales volumes actually increased from Q2. That is mainly driven by the Water Solutions unit, and Petri will talk more about it later. We saw some decline in sales prices from Q2 to Q3. Looking at the profitability, which I mentioned, it’s fair to say is on a good level. The 20% operative EBITDA margin, we actually are very close to 24% EBITDA margin levels, which were the all-time high for Kemira. Really good performance in terms of profitability. Profitability remains strong in Water Solutions, especially the urban air side of the Water Solutions, which is the resilient, steady, profitable backbone of our business. As mentioned, we managed to improve in Packaging and Hygiene Solutions quite significantly. The profitability of Fiber Essentials unit declined as a consequence of the clearly declining volumes from the market.

This kind of a weakness of the market and the weaker demand, of course, puts a lot of pressure on us. We need to continue to focus on profitability improvement, the operational excellence, cost containment, so that we can continue to operate on this good, healthy profitability level. Those actions we have defined, we have started, as we communicated in spring, from the Packaging and Hygiene Solutions. We have a clear program there, which aims to impact both the top line and the bottom line items. We are progressing really well with that program, and some of the impacts of it are visible in the good result of the Packaging and Hygiene Solutions, which also was helped by the favorable product mix in this quarter. We are stepping into the next phase in that profitability improvement program.

We are starting to, as of today, assess the operating model that we have in Packaging and Hygiene Solutions. The aim there is to differentiate the service levels so that we can better serve the global and regional key customers that we have, introduce faster new innovations to the marketplace, and provide better service for our key customers, and at the same time, optimize the cost-to-serve levels for the more transactional customer base. That program will start, and the impacts of that will be visible in 2027. No impacts expected for the last quarter of this year. The earnings per share came out at €0.38 per share. As I mentioned, we continue to invest into our strategy execution.

The megatrends are there, and we are in a really good position to also maybe capitalize on the weaker market environment because a big part of our strategy is based on M&A-driven inorganic growth. There are a couple of key cornerstones for our strategy, and I will touch on three of them here when I talk about the strategy execution. First of all, our aim is to grow significantly in the water business. There are two subdomains which are really important for this: micropollutant removal, PFAS, pharmaceutical residuals, and so forth, microplastics. This is a fast-growing subsegment of the water market, which is just developing as we speak. We have a clear strategy on how do we enter that part of the market. The other part, which we have been relatively weak historically, is the industrial water services.

That is also a subsegment of the water market that is growing much faster than the base business. We have taken now clear steps regarding entering both of these lucrative growth market areas. I will talk a little bit about our kind of progress with the renewable chemistry, which is another key area of our strategy execution. During Q3, we announced the investment into our site in Helsingborg, Sweden, for a reactivation facility for activated carbon. That is the first reactivation facility in the Nordics, serving the whole Nordic market and helping us to enter via the activated carbon service into this micropollutant removal because activated carbon is a well-tested, predominant method for capturing micropollutants and PFAS from wastewaters, especially from the raw waters for drinking water production. That is a key part of our entry there. We need to amend that with other more specific innovative technologies.

Our partnership with CASP AI, a Cambridge, UK-based AI startup, is of key importance. We started in June a joint development project to develop new-to-the-world type of adsorbent materials, and we are progressing very well with the project. The aim is to come up with completely new solutions, very specific targeted solutions for PFAS capture. These both are in the micropollutant removal area of the water strategy. Before I go to the industrial water services, our earlier announced joint venture with IFS, the world leader in the area, is supporting us with development via enzymatic route, with development of new-to-the-world bio-based polymers. We announced this JV. We are currently working on the project. The engineering phase is ongoing. We are looking at different engineering options regarding the manufacturing site itself. There is some delay to the project.

Unlike we earlier informed that the production would be up and running by the end of 2027, it is rather on the side of 2028 that we now plan to be up and running. That said, we have industrial-level volumes available from our taller in Finland, and we are currently running several industrial-scale test trials with our customers, both in the Water Solutions area and in Packaging and Hygiene Solutions. Many of these application tests actually look very promising at the moment. We are confident that when we actually have the new joint venture manufacturing facility up and running, we have a good existing customer base already for those solutions. As mentioned, the second area within the Water Solutions, which is one of our key growth drivers, is the entry to the industrial water services.

We announced this morning that we closed the transaction on acquiring Water Engineering in the U.S. That is our first significant step into that area. Water Engineering is a water service specialist with expertise in boiler and cooling tower water treatment, as well as wastewater treatment in industrial facilities. They’re mostly focusing on food and beverage manufacturing and healthcare industries. They’re based out of Nebraska, and they have built a really strong presence in the Middle States in the U.S., grown quite quickly during the past years. This provides us a good platform for future growth, both organically, but also inorganically, because their growth method has largely been a kind of programmatic bolt-on M&A path. I think we can capitalize and continue on that path and continue growing that business.

The business itself, as I said, the rationale of entering that is that it is a faster-growing market than the wastewater treatment market. Plus, it is asset light in terms of business model. There’s not a consequent significant CapEx going into maintenance and improvement and expansion of the production facilities. We can largely utilize also our existing product portfolio to serve these customers. There’s good cross-selling opportunities with this acquisition. The expected pro forma revenue of the company is north of $60 million, and the purchase price, as we have communicated, was roughly $150 million. I warmly welcome all the new colleagues from Water Engineering to the big global Kemira family. I think we will have a great future together. Now, to close this off, we have introduced a new slide here, which should be providing a bit more transparency and trackability in terms of our long-term financial targets.

It is very clear that we are disappointed with the performance in terms of organic growth. The aim is long-term, on average, to grow more than 4% organically a year. Clearly, the markets have proven to be much softer than we anticipated when we set out this target and communicated in the CMD a year ago. I still believe, and we are confident that long-term, this growth potential is there, as the megatrends are supporting, and as we are entering these faster-growing new domains within the water. It will provide us acceleration. Clearly, the start on that journey has been slower than we anticipated. In terms of operative EBITDA: we are operating comfortably within the 18% to 21% EBITDA performance range that we communicated as a target. In terms of return on capital employed, we are above the 16% target that we set.

That said, the kind of a declining trend on both of these is not satisfactory. We are having diligent actions and programs in place in terms of improving the profitability and making sure that we hit these long-term targets as we progress with our strategy execution. The outlook for the rest of the year remains unchanged, so no reason to comment that further. With this, I will then hand it over to Petri, who will comment in more detail the business unit-specific performance and some other financial ratios. Petri, the floor is yours.

Petri Castrén, CFO, Kemira: Thank you, Antti. I’ll do as Antti said, and I think I’ll usually start with the sort of key points. I think really our ability to support and defend the profitability, as well as the Packaging and Hygiene Solutions business unit profitability improvement, are indeed the key points in this report. As Antti said, clearly, the Water Engineering acquisition is an important step. Let’s start. Top line is almost a development, is almost an exact repeat from Q2. $40 million decline, half of which is driven by FX changes. Again, mostly it’s the U.S. dollar that has continued to weaken year on year. Organic growth also -3% exactly as it was negative in Q2. We have been able to maintain prices well, again, considering the weak market environment. Indeed, prices and actually variable cost have pretty much been stable throughout the year. The change is in essence zero.

Also, what I think is important from the profitability point of view, that in essence we have been able to kill inflation. The fixed cost change is zero. We all know that there is a salary inflation ongoing. There’s an inflation in many other areas. This is part of the way how we have been able to defend profitability. This is very good. Obviously, we cannot be happy about the top line development or the absolute level of profit generated. The net impact from the variable cost is really flat. As you can see, almost the last four quarters, it has been pretty much flat.

Now the focus is really much more driving the volume compared to a period between 2021 and 2023, when really a lot of our profitability was that how can we defend against inflation, how we are coping with inflation, and how we are passing the inflatory raw material costs to our customers. Now it’s really about volumes. I’ll start the business unit comments with Water Solutions. Excluding the FX impact, there was a 2% decline against a pretty strong last comparison period. You notice that in the comparison period, we had 5% organic growth. It was a stronger comparison period. Regarding the water treatment markets, Antti already mentioned that the urban market continues to be really strong. Even in this world, the business unit is declining. The urban market is stable, and it continues to grow.

The growth in Europe is more than offsetting the small decline in America’s urban market. The weakness was on the industrial side. There, like Antti was talking about, it’s both the general industrial activity, the weakness in it, but it’s also the fact that we have this one large tolling customer, and their volumes were reduced compared to a year ago. Sequentially, from Q2 to Q3, both volumes and revenues increased despite modest FX impact. Again, operative EBITDA very strong at 23.1%, very close to last year’s level. On Packaging and Hygiene Solutions, challenging market continued to impact the unit. Antti already covered the sort of underlying or behind the factors impacting the business unit. I think the key point is it wasn’t actually getting any worse in Q3. Year on year, volumes were in essence flat, and sequentially, they even increased modestly, very modestly.

The market looked a bit more positive in Americas, and there was positive development in APAC as well. However, weakness continued in Europe, in EMEA, and you may have seen some of our customers’ reports yesterday, which were indicating that. Year on year, we saw some price decline, but sequentially, prices were flat. Profitability improved to 13.6%, which is actually quite a sequential improvement from below 10% in Q2. This was driven by cost containment topics, like Antti was talking about. We also had a very good mix of product in Q3. That helped there as well. I’d like to remind that we did have an extended maintenance break in one of our key facilities in China in Q2, which depressed the Q2 result even more. Regionally, both Americas and EMEA are at 15% EBITDA or above. It is the APAC that is still diluting the overall business unit margin.

We’ll continue those profitability improvements. Antti talked about the business unit business model change that we will be implementing now. This implementation will take well through to the next year. On fiber side, the market was weak. We already updated our business assumptions in Q2. We highlighted that we are seeing some additional weakness in the pulp industry. This is what happened. The market, the softness was really driven by the Nordics softness here. A lot of market-related downtime by our customers. Volumes declined year on year and sequentially, whereas prices were up year on year. However, on this area, we did see some pressure on variable cost as well. That did not help the margin either. We do have some base chemicals in our portfolio: caustic soda, sulfuric acid, and some of the global market prices of these products were also declining during the quarter. That depressed profitability more.

Now I move to balance sheet. Again, not a whole lot of change in our balance sheet. Net debt at exactly year-end level and approximately at the same level as in June of 2025. During the quarter, which is noteworthy, is that we implemented or started our share buyback program. We were able to buy back almost €40 million worth of our shares during the quarter. As a reminder, this program, when it was approved and initiated, set a maximum of 5 million shares that we will buy back or €100 million. At the current level, which is, of course, limited by our daily liquidity, we will be hitting the end of the program around the year end. Maybe in December, maybe some early days in December. That is sort of at the current level what it looks like.

Antti already showed the trend reports on return on capital and regarding our financial targets. Yes, the lower EBIT, which is with the result of the weaker market, is impacting our capital efficiency. Cash flow from operations, €132 million improvement from the year ago. We did have a net working capital decline. I think I mentioned that in Q2 that we had a little bit of a buildup in net working capital. This indeed, we’ve been able to address that to a large extent during Q3. I’d like to remind that typically our cash flow is more weighted towards the second half of the year, particularly towards Q4, as you can see from the previous three years, which we have here on a quarterly breakdown. I hope to expect to see that sort of a seasonal pattern this year as well. No change to our CapEx guidance.

We expect our CapEx to increase over the last year. You do the math, you’ll see that the CapEx will increase significantly from the quarterly run rate during Q4. With that, I’ll stop my comments and will turn to Antti. Antti will be able to announce my successor. Antti, there you go.

Antti Salminen, President and CEO, Kemira: Thank you.

Petri Castrén, CFO, Kemira: Is it okay if I...

Antti Salminen, President and CEO, Kemira: I’ll stay here for the Q&A.

Petri Castrén, CFO, Kemira: Okay, very good. Yes, indeed, happy day for both of us probably that we have now been able to announce Petri’s successor. Tuomas Mäkipeska will start latest sometime in May as our CFO. Tuomas has a strong background both in terms of business unit leadership and of CFO position. Now last position with YIT, the Finnish construction company, and before that at Lassila & Tikanoja. Brings us plenty of experience and good positive energy as well. I warmly welcome Tuomas to Kemira Troops and look forward to working with him in the future.

Antti Salminen, President and CEO, Kemira: Very good.

Kiira Fröberg, Head of Investor Relations, Kemira: Thank you, Antti, and thank you, Petri, as well. I think it’s time for the Q&A. You can ask your questions either through the telco or you can send them to us through the webcast formula or chat function. Maybe we can start to take the questions. Operator, please go ahead.

Operator: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Martin Rhodiger from Kepler Cheuvreux. Please go ahead.

Hello, good morning, and thanks for taking my three questions. I would like to ask them one by one to make it easier for you. Antti, the first question is for you. It’s about the strategy. After the acquisition of Water Engineering, will you continue with acquisitions with a similar size in the next couple of months? The reason I’m asking is that your target mid-size deals with an enterprise value of €200 to €250 million, which enables you to finance the deals from your cash flow. In Water Engineering is clearly below that price tag.

Antti Salminen, President and CEO, Kemira: First of all, what I have communicated when I’ve indicated the size, kind of we target mostly small and mid-sized targets because that’s the kind of, I think, the most credible way to build the growth in M&A. As you mentioned, I just indicatively given that they have to be below $250 million to qualify for this. $150 million is below $250 million, so it’s in that range. We have a strong pipeline of different targets which we are working on. Yes, we will, of course, tell about them when the time comes.

Okay. The second question is for Petri. Regarding the Packaging and Hygiene Solutions business, you mentioned the reasons for the strong earnings increase year over year, sales mix, and cost savings. Can you provide more color on that? How big were the cost savings in that segment, and where did the mix effect come from?

Petri Castrén, CFO, Kemira: We don’t specifically give out product line and product line profitability. I think I’ll shy away from giving exact guidance on that one. I think it’s also what you compare against. Please don’t compare to Q2 because Q2 top bottom was sort of, I would say, arbitrary, too low because the maintenance break in China actually impacted it quite a fair amount. If we sort of say that the last quarter’s average is somewhere between 11% and 12% EBITDA, from that, it’s probably an equal split between the three areas, so mix and some market recovery, particularly in North America, and then also cost saving actions.

Okay. The final question is about Fiber Essentials, which was below market expectation. I wonder, did you have also cost savings here? Related to the comparison to last year, did you over-earn last year so that we should be aware that last year’s high margin in Fiber Essentials, especially for Q4, is not a good proxy for Q4 this year?

I don’t think that there was any sort of over-earning in 2024 in fiber. There was over-earning particularly in the high electricity cost years and high caustic price years, 2021, 2022, and 2023, but really not throughout the year. Now, memory serves me badly in terms of individual quarters, but there tends to be a little bit of a seasonal pattern that electricity costs are higher during the winter months. As you can see, there is a link of we benefit of these higher electricity costs. We tend to have some seasonal pattern of Q4 being stronger in terms of profitability for our pricing of our electricity-dependent products, mostly sodium chloride.

I think, Martin, I encourage you to rather look at sort of trend lines through the year and not individual quarters, because in each quarter there can be some minor, some sort of one-off impacts, whether it’s product mix or some cost item came through that may impact the cost of a margin of a business unit point or this way or that way. I rather encourage you to look at the trends, because our customers are also, they are the same customers, particularly in fiber. There’s a very, very solid track record of maintaining customers. I encourage you to look over the longer period of time, not individual quarters.

Antti Salminen, President and CEO, Kemira: If I may build on that a bit, you referred to the kind of a shortfall of Fiber Essentials compared to the expectations. Maybe we were not clear enough in Q2 when we communicated expectations to be lowered because we already saw then the announcements from our key customers, especially in Nordics, about taking downtime at the pulp mills. That translated now to weaker performance in our Fiber Essentials, clearly in Q3, as we expected already in Q2.

Kiira Fröberg, Head of Investor Relations, Kemira: Yes.

The downtimes are now over.

Antti Salminen, President and CEO, Kemira: You should not talk to us about that, but rather look at our customers and what they announce. I’ll leave it to that.

Petri Castrén, CFO, Kemira: Sometimes we know a little bit more than our customers openly communicate. That’s why we need to be mindful that we respect and talk about our position only.

Okay, thank you very much.

Kiira Fröberg, Head of Investor Relations, Kemira: Thank you, Martin. Let’s now take the next question, please.

Operator: The next question comes from Antti Rousi from SEB. Please go ahead.

Yes, hi all, and thank you for the presentation. I continue on the Water Solutions segment. The seasonality there changed a bit last year. How should we think about it now going into the last quarter of the year? Also, on Q4 last year as a comparison period, is there anything to highlight or worth reminding there?

Antti Salminen, President and CEO, Kemira: Thank you. If I start from the seasonality, if you look at the Water Solutions as such, I don’t think there’s any major change in the typical seasonality over the years. Basically, that remains. Fundamental phenomena that impact the demand of water chemicals is not changing. Typically, the first and last quarter are the weakest, and the mid-quarters are the strongest in that business. If you remember what we have communicated, we have this one big tolling customer within the Water Solutions whose demand has quarter-to-quarter comparison, quite significant impacts if they take less or more material than we have expected. That can then distort the kind of reported typical seasonality pattern. The underlying base water treatment business, the seasonality is as it is because even if the climate is changing, it has not changed that dramatically in that short period.

Okay, got it. Thanks. Maybe continuing on this Packaging and Hygiene Solutions segment and this change in product mix. How would you describe the current mix in Q3? You mentioned that it improved, but is it normal now or maybe a bit, you know, too positive for your EBITDA? How should we think about that one?

Yes, again, as Petri said earlier, you should not really look at one individual quarter in isolation because there will always be fluctuation in terms of demand, but in terms of product mix as well. Certain product lines are more profitable than others for us, and there might be this fluctuation between the quarters. The third quarter happened to be very positive in terms of mix for us. As order patterns kind of ravel out week by week, even if we would want to, we could not comment on what to expect for Q4.

Petri Castrén, CFO, Kemira: Yeah, so Antti, maybe addressing your question a bit differently. The profit improvement need is not over in the Packaging and Hygiene Solutions business unit at all. That’s why we are doing the business model change there now. This will actually take, like I said, well into next year as we are implementing it. It’s a fairly fundamental change. Yes, we’ll continue to drive that to get the business unit profitability sustainably to the level where it actually ought to be. Don’t take that Q2 to Q3 improvement and put a linear stick on it and expect that to continue. Maybe that’s another way of saying it bluntly.

Okay, that’s clear. Thank you. That’s all from me.

Kiira Fröberg, Head of Investor Relations, Kemira: Thank you, Antti. Let’s now then take the next question, please.

Operator: The next question comes from Andres Kastanosmola from Berenberg. Please go ahead.

Hi, I was thinking, do you expect lower raw materials to have a positive effect in Q4 in the cost side for you? I was wondering if you had seen already something in Q3, maybe potentially affecting being a positive factor in your Packaging and Hygiene Solutions result in Q3?

Petri Castrén, CFO, Kemira: I showed the raw material development year on year, and it was a sort of a boring flat line. I didn’t even talk about it all that much. As a group, it looks pretty flat. There are individual areas where we have cost pressures, and we have some cost pressures in some areas of our water services business. We have some areas in our fiber, I mentioned, and that was already visible in their sort of profit bridge as we talk about it. Consequently, there was perhaps a slight improvement on the variable cost environment in PHS. Again, these are fairly small changes. I think really the focus is much more on what can we do and how can we drive more volume.

Thank you. I’ll follow up a different question, if I may. On Water Engineering, I wanted to ask about the rate of acquisitions they have been doing in the past. Can you comment on that? Can you kind of give us an idea of how much capital this platform could deploy going forward? Thank you.

Antti Salminen, President and CEO, Kemira: We will not comment on how much capital, but just that you get the idea. Typically, they have done several a year of this kind of small acquisitions. That’s the kind of what we plan to do. Of course, with our bigger muscle, we can also then look at bigger targets to add onto that platform, not only the small ones that they have been thus far doing.

Petri Castrén, CFO, Kemira: I think it’s very logical to say when Antti described Water Engineering as a platform. It is a platform to continue on this sort of smallish type of deals and maybe increase the size, which they have been really doing, like $10 million revenue type of deals or even smaller, some smaller. Maybe increase that a little bit so that for the same effort, you can get a bit more meaningful impact. This platform wouldn’t be something hugely bigger on top of this. That’s not the idea.

Antti Salminen, President and CEO, Kemira: Thank you. That’s it for me. Thanks.

Kiira Fröberg, Head of Investor Relations, Kemira: Thank you, Andres. Let’s now take the next question, please.

Operator: The next question comes from Joni Sandvoll from Nordea. Please go ahead.

Yeah, thanks. A couple of questions also from my side. You mentioned that the answer in the industrial side of the Water Solutions. Can you give any more color? Has this intensified during Q3? Which sectors are most affected? Does this have any impact on your mix?

Antti Salminen, President and CEO, Kemira: If you look at the industrial side of the Water Solutions, we are basically serving all the possible industries that you can think of that use water, which is basically all the industries. In that sense, pinpointing which industry is exactly more in decline than some other is impossible. As I started my presentation, it’s the overall slowness of the global economy and then the less global trade that happens, which both are not only now impacting the Packaging and Hygiene Solutions, but really all the industries, especially here in EMEA. We all see it all around us every day. When the industries run with lower utilization rates, they consume less water, and that is impacted. That impact typically is gradual because you have some industries doing a bit better than others, and they are offsetting each other.

Typically, we don’t see it in industrial water treatment if there’s some short-term notch in the economy. When it’s this kind of a longer degrade of the industrial activity, it then starts to be visible for the water treatment chemicals demand as well. There’s no particular step from Q2 to Q3. You should really look at it as a longer-term continuum of what happens to the economy, especially here in Europe.

Petri Castrén, CFO, Kemira: Maybe it helps if I remind you that a lot of these industrial customers, we actually don’t address direct. We go through the distributors. These are for us smallish, or the end customers would be so small for us that it doesn’t make sense for us to cover them direct. We cover the urban customers, the municipal customers, we cover them all direct. This is a sort of an indirect channel, and like Antti said, that’s why it gets a little bit diluted, the impact of what happens in the economy.

Okay, thanks. That’s clear. Maybe still digging into Packaging and Hygiene Solutions and the improvement, let’s say, potential for 2026. You mentioned that, you know, Americas and EMEA are in the at 15% or above level. Should we expect in 2026 up to its mid-teens levels on, let’s say, run rate on profitability?

Antti Salminen, President and CEO, Kemira: We are working as hard as we can to improve it as much as we can, as quickly as we can.

Petri Castrén, CFO, Kemira: Yes, yes. Clearly, we’re not happy with and satisfied with the run rate of profitability in PHS through 2025. Yes, we want to improve that, and there are efforts ongoing towards that. I think it’s going towards the mid-teens range. When we will get there, we’re not giving an exact guidance, a quarterly guidance. It also depends what happens in the market. Is there any recovery in 2026, and if yes, when it will happen?

Okay, that’s clear. Last question from me. Given the weak pulp and paper market that we are currently in, have you seen any increase on pressure on pricing from the companies?

Antti Salminen, President and CEO, Kemira: It is obvious that this kind of a situation leads to more pressure. Our customers are quite really professional and well-educated. Regardless of the cycle, they are tough negotiators, so we have all the time pressure on our prices. Of course, it is a bit more harsh in this kind of environment when you have seen all the savings programs of our customers. As I mentioned, I think in the Q2 webcast as well, our approach has been to try to turn it around to a kind of a collaboration effort where we look together at how we can help them to save more so that it’s not about the per ton price of the chemicals, but our application and solution, which is helping them to consume less virgin raw materials, less energy, and so forth.

It is also an opportunity, even if there is some more pressure on the pricing, but it’s also an opportunity because we have some of these solutions. For instance, some of our digital services are exactly aimed for these kinds of improvements in the customer’s processes. Thus, I see both, of course, pressure, but also a really good opportunity to help our customers.

Okay, thanks. That’s all for me.

Kiira Fröberg, Head of Investor Relations, Kemira: Thank you, Joni. Let’s now take the next question, please.

Operator: The next question comes from Tommy Railo from DNB Carnegie. Please go ahead.

Hello, this is Tommy from DNB Carnegie. First question, fiber. Do you expect or are you initiating any actions on the fiber side now that you see the impacts of weaker demand there, something similar as in PHS?

Antti Salminen, President and CEO, Kemira: We’re, of course, all the time looking at the profitability of each of the business units. It’s good to remember with the fiber that it is slower turning than, for example, Packaging and Hygiene Solutions, where basically we have a relatively lean organization. It’s not that easy to look at the kind of organizational model and cost to serve. It’s very low because we have this kind of typically tightly connected supply to our customers. It’s a slower turning ship and you need to be more careful in analyzing what are the potential actions. You need really kind of a prolonged downturn from the customer side in order to start some kind of a more radical actions on that business unit. Obviously, we are all the time looking at how can we manage in this environment with a good profitability.

Just to follow up, if it’s slower, can it also be deeper? How do you see that, if it’s slower, but does it kind of then also decline more relative to Packaging and Hygiene Solutions, or how does it work if we were to assume longer prolonged weakness?

Yeah, that’s a really complex question. Of course, I mean that you should again predominantly ask from our customers to understand kind of what is happening at the global pulp markets. The global word is here actually very important. The pulp markets are global and our customers are not only kind of playing on the geographies where they produce, but there’s global trade flows. A lot depends on how China’s economy will develop and so forth. It’s kind of a complex question to answer and difficult to say whether it would be any deeper. Pulp and the packaging materials are in the same value chain ultimately. Basically, you can’t really separate. The timing effect is different, but the value chain is the same. I think it’s an impossible question to answer as such.

In a sense, it’s easier in PHS side to do your self-help actions than it is at the Fiber Essentials side.

Petri Castrén, CFO, Kemira: Yes, Tommy, the cost structures are quite different. Because we have a small number of customers on Fiber Essentials, each customer buys a lot. There’s a very small sort of sales and application team. Whereas in the Packaging and Hygiene Solutions, we have a lot more customers. There’s a lot more applications. There’s a lot of application and salespeople. The mix, when your total fixed costs are the mix between manufacturing and what we call business overhead, where we lump both the sales and application and technical support people, is totally different. There’s fairly little of this business overhead in Fiber Essentials, whereas there’s a lot more in PHS. With that, of course, you can play with it.

That’s where we are implementing this business model change, how we are supporting our customers with this team of not only the technical support people, the application people, the salespeople, but also the support organization that is managing the whole supply chain.

Yes, okay, thank you. Thanks for the color. Second question, just starting the fourth quarter, have you seen any kind of a change? Do we continue on a similar kind of a situation as in the third quarter, kind of up or down, or any positives, any negatives, any further negatives?

Tommy, you know our practices. We never comment on the ongoing quarters, and you almost always try.

All right, I’ll try later. Thank you.

Kiira Fröberg, Head of Investor Relations, Kemira: Thank you, Tommy. Let’s now then take the next question, please.

Operator: The next question comes from Andrew Noel from Chemical Week. Please go ahead.

Hi, hi everyone. Thanks for taking my questions. I’ve got two. I wanted to ask about PFAS and how you see that market developing. When I talk to some people, they seem to think that when it comes properly, it will come quickly and big, if you see what I mean. I’m wondering about your investment plans. Say Helsingborg is sort of $10 million. Are you going to invest heavily ahead of this, or how do you see that PFAS market growing in terms of timing and whether you’re going to scale up, whether you can scale up? Have you done a forecast on what perhaps you may need to invest to stay ahead of the market when it does gather a bit more momentum? That’s the first question. The second one is on valuations in M&A.

In some other, not particularly in water perhaps, but you know some chemical distributors are talking about valuations coming down. I just wondered, you know as owners are a bit worried about the outlook and so on, I just wondered what you are seeing in your particular sector. Thank you.

Antti Salminen, President and CEO, Kemira: Thanks. I will take the first question and let Petri comment on the second one. The PFAS removal market indeed is a really interesting market, which is developing as we speak. As it’s a kind of a new market, there’s a lot of unknowns. We have clearly stated that we will be playing in that market and are developing our approach there. It’s also interesting from the perspective that there is not one dominant solution that will be used by our customers for removing PFAS. It will always be a combination of the good old warhorse, the activated carbon, which is not enough and which will not solve the problem. Other technologies are needed. Some of them are chemical, some of them are non-chemical. It’s this combination within which we need to find our playing field, so which parts of that we play.

We have clearly started our approach by entering the activated carbon market. We purchased a small facility in the UK. That’s actually kind of, we have filled it up very nicely and it’s working well as a first step. We have announced now the investment project in Helsingborg, Sweden for the reactivation. Those are all these small steps that we are taking into the market as it continues to develop. We are also looking at the bigger steps, but that all depends on how the market develops and what we can do there. We are really kind of determined about that. As I said, this will not be enough. We are working with different external partners and our own research and innovation area to develop new, more specific solutions, which will be complementing then the activated carbon on this fight. We are serious about the market.

The market will grow and as you said, some are expecting it to explode, some are expecting it to have a kind of a more linear type of growth. Nobody knows today. We are taking our steps according to our strategy. We have, I think, a very clear plan, how do we enter it. Our benefit on that area will be that we are serving already all of these customers with our coagulant and polymer solutions. Basically, we have the supply chains ready and we are there with these customers. Whatever the new prevailing technologies will be, we are in a really good position to globalize them and capitalize on that market presence that we have.

Petri Castrén, CFO, Kemira: Andrew, that was a good question to ask Antti. I think the valuation question is also a fair and good question. I think very few sellers would actually acknowledge that their expectations of multiples are coming down. When you look at what’s going on in the market, there’s a number of private equity funds that own assets that they are holding towards their maturity. Clearly, there is still a discrepancy on valuations and maybe the seller expectations at times are still higher. I think in general, at least I wouldn’t say that they are going up anymore. Clearly, we’ve sort of maybe moderated from the zero-cost financing that was available a couple of years ago in that sense. Perhaps you’re right that there is an expectation and realization of some moderation on the valuations.

Of course, this would be a development that we would welcome very much because some of the actions, some of the things we’ve been sitting on the sidelines because we could not make the ends meet.

Kiira Fröberg, Head of Investor Relations, Kemira: Thank you.

Antti Salminen, President and CEO, Kemira: Thanks very much.

Kiira Fröberg, Head of Investor Relations, Kemira: Thank you. I think we start to actually run out of time here with our webcast. We had a couple of questions through the webcast question formular. They were related to the Packaging and Hygiene Solutions profitability improvement program. I think that they were covered in the other questions, so we don’t need to take them now here. I would like to thank all the participants for the active participation and good questions. As a reminder, we will report our financial statements bulletin on February 12th. That’s already next year, so 2026. I hope to see as many investors as possible on meetings during the next quarter. We will be actively on the road. Of course, have a great day, everyone, as well as a great weekend. Thank you so much.

Antti Salminen, President and CEO, Kemira: Thank you.

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