Kemira Oyj

Sources: Financial Statements Bulletins FY2022 (for FY2021–FY2022), FY2024 (for FY2023 comparatives) and FY2025 (for FY2024–FY2025). FY2023 figures are the comparatives reported in the FY2024 bulletin. Kemira reports expenses by nature and does not report gross profit.

Margins and growth (%)

Revenue CAGR FY2021–FY2025 (derived): +0.7% p.a. The flat five-year CAGR masks a sharp price-driven spike in 2022 (organic +27%, caustic soda and energy-intensive bleaching chemicals) followed by normalisation, the O&G divestment (approx. EUR 495M of 2023 revenue), FX headwinds and volume weakness in pulp and packaging. On an O&G-adjusted basis, revenue was EUR 2,889.0M in 2023, EUR 2,903.5M in 2024 and EUR 2,753.5M in 2025.

Items affecting comparability

FY2025 IAC were mainly restructuring and streamlining costs (including Teesport ramp-down impairments and an environmental liability for an old site closure in Finland) and transaction costs. FY2024 IAC related to the O&G divestment, the operating-model change and expected underutilisation of a Pohjolan Voima energy asset (Pori).

Balance sheet

Note on FY2022 net debt: the CEO statement in the FY2022 bulletin cites net debt/operative EBITDA of 1.3x, implying approx. EUR 743M. Debt structure at end-2025: average interest rate on loans (excl. leases) 2.5%, average duration 11 months, 75% fixed-rate. There was an undrawn EUR 400M committed credit facility maturing 2030 and a EUR 50M bilateral loan drawn in Q4 2025 (max. 10-year maturity). Short-term interest-bearing liabilities were EUR 105.9M.

Cash flow

FY2025 capex mix: expansion 15% (12%), improvement 29% (25%), maintenance 56% (64%).

Ratios

Cash conversion cycle components are not disclosed in days. NWC increased by EUR 45.2M in FY2025 (cash flow statement), versus a EUR 28.5M release in FY2024.

2026 year-to-date

LTM to June 2026 (derived): revenue EUR 2,721.6M; operative EBITDA EUR 486.3M (17.9%); diluted EPS EUR 0.97. Net debt at 30 June 2026 is approx. EUR 620M (derived from 39% gearing on approx. EUR 1.6bn equity), implying approx. 1.3x LTM operative EBITDA.

Trend commentary

2021 (inflection down). Operative EBITDA declined 2% to EUR 425.5M as raw material and energy inflation outpaced pricing. The operative EBITDA margin compressed to 15.9%, at the low end of the then 15–18% target. Cash conversion was weak (CFO only 59% of EBITDA) owing to working-capital build.

2022 (price-driven super-cycle). Revenue jumped 33% to a record EUR 3,569.6M on +27% organic growth, almost entirely price. This was particularly so in caustic soda and energy-intensive bleaching chemicals during the European energy crisis. Kemira's Finnish nuclear/hydro electricity at cost (PVO/TVO) became a major relative advantage versus European peers buying spot power. Pulp & Paper revenue exceeded EUR 2bn (+30%) at a 17.2% operative EBITDA margin. Industry & Water grew 38% to EUR 1.5bn, helped by Oil & Gas, but its margin fell to 14.5%. IAC included losses on the colorants divestment and the Russia exit.

2023 (margin peak, portfolio pivot). Revenue normalised (−5%) as caustic prices fell, but operative EBITDA reached a record EUR 666.7M (19.7%) as variable costs dropped faster than prices. Reported EBIT (EUR 336.4M) was depressed by the loss on the O&G divestment recognised in Q4 2023 (Q4 EPS −EUR 0.20). Operating cash flow peaked at EUR 546M, and gearing fell to 32%.

2024 (clean-up year). Reported revenue fell 13% owing to the O&G exit, but O&G-adjusted revenue grew 1% with volume growth in both segments offset by pulp chemical price declines. Diluted EPS reached an all-time high EUR 1.61. Cash after investing was EUR 411.8M, and net debt fell to just EUR 291.5M (0.5x), creating balance-sheet capacity for M&A and buybacks.

2025 (demand-led downturn, capital deployment). Revenue declined in all three BUs (organic −4%); operative EBITDA fell 10% to EUR 524.6M (19.1%). The decline came from volumes (−EUR 28.5M), prices (−EUR 31.5M) and FX (−EUR 15.0M), partly offset by fixed-cost savings (+EUR 14.2M). Kemira cut guidance in July 2025. Capital allocation shifted decisively: EUR 144.6M of acquisitions (mainly Water Engineering), EUR 96.3M of buybacks and EUR 126.1M of dividends. Net debt rose to EUR 506.1M and gearing to 30%. Operative ROCE (16.5%) fell to the floor of the >16% target.

2026 YTD (cost-shock year). The Iran war drove oil-derivative and logistics cost inflation. Management estimates the full-year gross cost impact at approx. EUR 100M, with only approx. 50% recoverable through pricing. Q2 operative EBITDA margin dropped to 16.1%, below the 18–21% target range, and guidance was cut on 10 June 2026. A second buyback and acquisitions lifted gearing to 39%. Operative ROCE (13.5%) is now below target.

Guidance and expectations

2026 guidance is revenue of EUR 2,600–3,000M and operative EBITDA of EUR 400–500M, implying a margin of roughly 15.4–16.7% at the revenue midpoint, against FY2025's 19.1%. H1 2026 delivered EUR 229.0M, so H2 requires EUR 171–271M. The midpoint (EUR 221M) is roughly flat with the H1 run-rate, assuming price catch-up offsets seasonal Q4 weakness and adding SIDRA from Q4 (approx. EUR 3M quarterly EBITDA).

Bull case

1. Margin mean reversion. Kemira held 19–20% operative EBITDA margins in 2023–2025. If the approx. EUR 50M of unrecovered 2026 inflation is recouped through lagged contract repricing and EUR 15M of savings, 2027 margins could return towards 18–19%.

2. Water compounding at attractive prices. Water Solutions earns a 25% operative ROCE. SIDRA was bought at approx. 6x EBITDA, and US services offer recurring revenue with roll-up optionality. Net debt of approx. 1.3x leaves room.

3. Valuation and yield support. Approx. 6x EV/EBITDA and a 4.6% dividend yield, with an anchor shareholder (Oras approx. 24%) and 6.6% of shares retired in a year, offer an asymmetric entry point.

Bear case

1. Structural growth deficit. Organic growth has been negative for three consecutive periods against a >4% target. Packaging and pulp (approx. 55% of revenue) face overcapacity and Chinese competition.

2. Credibility and earnings risk. Two profit warnings in 11 months, operative ROCE at 13.5% (below the 16% target) and LTM EPS down to EUR 0.97 (from EUR 1.61 in 2024) could push the payout ratio near 80%. That would limit dividend growth if recovery stalls.

3. Execution risk on the pivot. Renewables revenue is flat, the IFF JV has slipped two years, and services are sub-scale versus Ecolab and Veolia. Rising leverage from buybacks plus M&A reduces flexibility if the cost shock persists.

Catalysts and monitorables (next 12 months)

Concluding analyst verdict

Kemira enters late 2026 as a fundamentally sound but cyclically bruised business. Its core economic engine is a dense, local network of coagulant, polymer and bleaching-chemical plants, backed by unusually cheap Nordic power and deep application know-how. That engine sustained near-20% operative EBITDA margins through 2023–2025 even as revenue declined. The 2026 setback is primarily an exogenous cost shock: roughly EUR 100M of Iran-war-related raw material and logistics inflation, half of it unrecovered so far. The shock was amplified by the fixed-price nature of municipal water contracts and weak packaging and pulp demand. Those are temporary features, and the price increases already implemented should flow through over two to three quarters.

The concerns are more structural on growth. Organic growth has been negative for three successive periods against a >4% target. Renewables have plateaued at EUR 240M against a EUR 500M ambition, and the flagship IFF JV has slipped to 2029. Management has responded sensibly. It has redeployed the post-O&G balance sheet into higher-return water assets (Water Engineering, SIDRA, US bolt-ons, activated-carbon reactivation), returned approx. EUR 200M via buybacks, and taken out approx. 130 roles. Yet the 2026 combination of falling earnings and active buybacks has lifted gearing from 16% to 39% within 18 months.

At approx. EUR 16.5, the shares price in a meaningful margin trough: approx. 6x EV/EBITDA, 1.5x book and a 4.6% yield. Downside appears cushioned by the anchor shareholder, asset backing and cash generation (FCF positive every year since 2021). The investment case hinges on evidence in Q3/Q4 2026 that pricing is catching up and on the 2027 guidance restoring margins towards the 18% floor. We regard Kemira as a value-oriented, recovery-dependent holding. It merits accumulation by patient investors if Q3 confirms sequential margin improvement, but a third guidance miss would undermine management credibility and the progressive-dividend thesis.

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All figures are from Kemira primary disclosures unless labelled otherwise.