Finland's chemicals group Kemira has decided to spin off Tikkurila, its Coatings division. This is to take place gradually next year, in order to try and cash in any extra value that could result from a separate valuation of this business on a stand-alone basis. Kemira will focus on chemicals that relate to water treatment and to the paper industry. In the first quarter of 2008, Tikkurila was Kemira's most profitable division, with a high-single digit operating profit margin, compared with only 4% for the whole group. It had full-year sales of €625 million in 2007.
At the same time, Kemira warns on its full-year profit outlook, only a few hours after some its major customers (Stora and UPM) did the same.
Ahead of the current CFO's retirement in 2009, Kemira announces that its new CFO will be Jyrki Mäki-Kala, with effect from October 2008. Jurki was head of Pulp & Paper at Kemira. Three existing managers have been promoted to Presidents of the new core activities: Paper, Water and Oil and Mining, respectively.
You will remember that Moody's downgraded Kemira's short-term rating to not-prime last Friday, which corresponds to a long-term rating of Ba1 or lower. Indeed, credit metrics are not particularly impressive. With net debt of over €1 billion at 31 March 2008, funds from operations before changes in working capital were only €47 million in the first quarter, and cash flows after capital expenditure were negative by €18 million (-€82 million full year 2007).
Will the Coatings move help stem the trend? Only if only a small portion of the shares are distributed "for free" to Kemira shareholders and the valuation multiple achieved helps to strengthen credit metrics.
Showing posts with label kemira. Show all posts
Showing posts with label kemira. Show all posts
Wednesday, 18 June 2008
Friday, 13 June 2008
Friday 13 June 2008
"Is Lehman the next Bear Stearns?", all the media ask. Hmm... I wonder whether they are trading as much as they used to. For, from what I understand, reduction in trading volumes because of counterparty risk concerns was the last "red flag" at Bear, before the Fed and JP Morgan came to the rescue. Now, Lehman is replacing some of its top executives: I am not convinced such measures bring much when the slide is already slippery.
In the freight sector, I am intrigued by the launch of new derivatives based on the Baltic Dry Index. Somehow it reminds me of the CBOT evolution: from farmers or orange-growers and their customers to purely-financial punters. Remember "Trading Places"? In freight, are these instruments new toys with which to burn one's fingers?Kemira Oyj, a Finnish chemicals group that counts paper companies among its main customers, has just announced that it would raise its prices by as much as 25% to try and offset higher raw material and energy costs. A week ago, it received a €100 million loan from the EIB to support its R&D activities. Sounds positive doesn't it? Perhaps, but not enough in Moody's eyes: they lower the group's short-term rating, which had been on review for downgrade since 17 March 2008, to Not-Prime, from P-3. Unfortunate timing, but presumably correct decision, as financial difficulties among customers are likely to hinder price-raising efforts (37% of 2007 revenues from Pulp & Paper produts and 22% from Coatings, plus 25% from Water treatment products, which, in turn, are frequently used in the paper industry).
This follows Moody's downgrades two days ago of Sappi, the South African paper company (to Ba2/stable corporate family and debt ratings), and of the French coated fine paper company Lecta SA (to B1/stable corporate family and B3/stable debt ratings).
M-Real will not sell its Reflex mill to Arjowiggins. The companies had envisaged the deal in October 2007, but the European Commission, in its capacity of M&A spoilsport, decided last week that the transaction could only take place if Arjowiggins sold off Reflex's carbonless and digital imaging activities. Anyone else interested in Reflex?
In the freight sector, I am intrigued by the launch of new derivatives based on the Baltic Dry Index. Somehow it reminds me of the CBOT evolution: from farmers or orange-growers and their customers to purely-financial punters. Remember "Trading Places"? In freight, are these instruments new toys with which to burn one's fingers?Kemira Oyj, a Finnish chemicals group that counts paper companies among its main customers, has just announced that it would raise its prices by as much as 25% to try and offset higher raw material and energy costs. A week ago, it received a €100 million loan from the EIB to support its R&D activities. Sounds positive doesn't it? Perhaps, but not enough in Moody's eyes: they lower the group's short-term rating, which had been on review for downgrade since 17 March 2008, to Not-Prime, from P-3. Unfortunate timing, but presumably correct decision, as financial difficulties among customers are likely to hinder price-raising efforts (37% of 2007 revenues from Pulp & Paper produts and 22% from Coatings, plus 25% from Water treatment products, which, in turn, are frequently used in the paper industry).
This follows Moody's downgrades two days ago of Sappi, the South African paper company (to Ba2/stable corporate family and debt ratings), and of the French coated fine paper company Lecta SA (to B1/stable corporate family and B3/stable debt ratings).
M-Real will not sell its Reflex mill to Arjowiggins. The companies had envisaged the deal in October 2007, but the European Commission, in its capacity of M&A spoilsport, decided last week that the transaction could only take place if Arjowiggins sold off Reflex's carbonless and digital imaging activities. Anyone else interested in Reflex?
Subscribe to:
Posts (Atom)
