Annual Report 1999 - Kemira

TO THE READER
For Kemira, the 2000 decade is opening in the midst
of a reassessment of the Group’s business mix.
Towards the end of 1999 we took a decision to
sharpen the focus of our Group strategy.
Our objective is a more stable profit-making
ability and faster growth within paper and pulp
chemicals, water treatment chemicals and paints.
Speciality fertilizers and industrial chemicals
generate cash flow. We will lower substantially the
proportion of capital-intensive, cyclically sensitive
business from the present level. This will mean
ownership and cooperation arrangements within the
titanium dioxide pigment and nitrogen fertilizer
businesses.
In 1999 the world economy
rebounded smartly, spurred by brisk
growth in the United States and
Asia. Within the European chemical
industry the signs of an upswing
began to show up in the latter
months of the year.
Most of Kemira’s business areas
developed favourably during the
year under review, but despite this
the Group’s financial result
weakened compared with the
previous year. This was attributable
above all to the large non-recurring costs incurred
by Kemira Agro and to the low prices of fertilizers.
Environmental issues are of central importance to
Kemira. Environmental issues place great demands
on the chemical industry, but at the same time
solutions to them offer new opportunities for us to
develop our operations. We offer our customers
products and services that enable them to deal with
environmental issues efficiently. Last year the
environmental business generated EUR 313 million
of income, or a good 12 per cent of our net sales.
This business will account for a growing share of
our operations in coming years.
We aim to focus particular attention on research
and development. At the same time we will exploit
more widely than ever before our own expertise
and the synergies among our business areas. An
example of a unifying factor is water: we supply
products and know-how to municipalities and
industry for the purification of drinking and waste
water as well as for the treatment of process water
in the paper industry. We also manufacture waterborne
paints and water-soluble speciality fertilizers. A
special Water Research Centre has been set up in
conjunction with our research centre in Oulu, Finland.
Now that our operations are shifting from
products of the heavy basic chemical industry
towards integrated customer solutions, we must
ensure that our people have new knowledge, skills
and capabilities. Development of the personnel and
rewards for good work are one of the main focuses
of our attention.
The outlook for 2000 is encouraging, both for
Kemira and elsewhere. Asia is expected to recover
and reach nearly the growth rate of
past years, whereas Europe may rival
the United States’ growth figures. In
step with improved export prospects,
the chemical industry is expected to
continue its steady growth. CEFIC, the
European chemical industry’s
umbrella organization, has forecast
growth of 3.5% in 2000.
By realigning our strategy, we will
achieve a more efficient use of capital
and improve the Group’s cash flow. A
sharper focus will also enable us to
step up our R&D activities and to direct growth
towards fields with the most stable business
outlook. Our clear-cut objective is to increase
Kemira’s shareholder value. Although these major
changes will take time, I nevertheless believe that
Kemira’s structure and earnings ability will be
substantially better even by the end of 2000.
I wish to thank our customers, shareholders and
other stakeholders for their contributions during the
past year. A special vote of thanks goes to our
personnel for the good job they have done, and
I furthermore believe that as we give our people a
greater say in how things are done at our company
sites, we will at the same time create a strong spirit
of cooperation across a Kemira that is undergoing
fundamental renewal.
Tauno Pihlava
CEO
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