General News

Kemira starts job cut consultation

Finland to feel main brunt of restructuring

Kemira has invited employee representatives at sites in its native Finland to ‘co-determination’ negotiations on plans that could result in the loss of up to 600 jobs globally, including about 250 in Finland itself. This is part of the ‘Fit for Growth’ global restructuring programme that was announced on 26 July alongside disappointing 1H results.

President and CEO Wolfgang Büchele said “Our profitability is the fundamental issue. We need to improve in order to continue to be a relevant player within the water quality and quantity management business, and to meet our guidance for 2012”.

The stated aims of ‘Fit for Growth’ are “to improve the company's profitability, internal efficiency and to accelerate growth in the emerging markets”. Sites at Helsinki, Espoo, Oulu, Sastamala, Kuusankoski, Joutseno, Vaasa and Harjavalta could all be affected. As of June, Kemira has 5,181 employees, 1,259 (24.3%) in Finland. Negotiations in the other 40 or so countries where Kemira is active will proceed according to local laws.

Jukka Oinonen, VP for human resources in Finland, said that the negotiations will include internal transfers, retirement arrangements and outsourcing and that the company aims to conclude them within six weeks. “Although we are not planning to close our sites in Finland, the possibility of some direct layoffs cannot unfortunately be ruled out,” he added.

‘Fit for Growth’ will cost about €85 million to implement, a cost that will be spread out over the next four quarters. Cost savings of €60 million/year are expected once it is fully implemented. The ultimate goal is to reach Kemira's unchanged financial targets faster. These include revenue growth of above 3% in the mature markets and 7% in the emerging markets, an EBIT margin of at least 10% and gearing below 60%.

Other key stated elements of ‘Fit for Growth’ include: reducing internal complexity by renewing and simplifying the organisational structure in order to foster accelerated growth, innovation and application focus; improving internal efficiency by reducing organisational layers and giving regional business units full profit and loss responsibility; and, optimising and rebalancing the manufacturing network.

In 1H, Kemira’s revenue increased by 0.9% to €1,115.2 million, but operating EBIT fell by 10.1% to €73.9 million and the margin fell from 7.4% to 6.6%, while net profit fell by 12.3% to €61 million. Overall, the company expects its revenue and operative EBIT for 2012 to be at approximately the same level as in 2011.

Sales volumes were up in Paper and Municipal & Industrial, while the company was able to compensate for lower sales volumes and higher raw material prices with sales price increases in other industries. However, EBIT was hurt by growing fixed costs across all segments and ChemSolutions business was hurt by an extended maintenance shutdown of its Oulu plant and higher variable costs.