Kemira divests to focus on water
Kemira has agreed to divest its oil and gas chemicals portfolio to Sterling Specialty Chemicals, a US subsidiary of India’s Artek Group for €260 million subject to customary closing conditions and regulatory approvals. The company said that this will enable it “to focus on its core businesses and accelerate its profitable growth strategy”. The two parties expect to complete by the end of Q1 2024.
“We want to expand in water, build a leading renewables portfolio and digital services business,” said Petri Castrén, interim president and CEO. “This move strengthens our capability to look for growth within our water treatment and pulp and paper businesses, and also to explore new growth opportunities.”
The business being divested saw revenues grew from €190 million in 2020 to nearly €430 million in 2022, of which the oil and gas business, comprised €373 million while the rest consisted of industrial polymers sold through indirect channels. In the first nine months of 2023, revenues were €377.3 million. The operating EBITDA margin grew from 5% to 13% during the period.
The deal includes three US facilities in Mobile, Columbus and Aberdeen, and another at Teesport, UK, subject to certain site-specific closing conditions. About 250 employees will transfer. Also included is the novel liquid polymer plant at Botlek, Netherlands, but Kemira will continue to operate this under a long-term agreement and will retain the employees.
Kemira added that the divestment does not have an impact on its outlook for 2023. It still expects to record a loss of around €90 million during Q4 2023, which is expected to be partially tax-deductible. The loss will be booked as an item affecting comparability.
The news came less than a week after Kemira announced a 70,000 tonnes/year expansion of its ferric sulfate water treatment chemicals production line in Goole, UK. Due to be in operation by Q3 2025, this targets growing demand for coagulants as a result of the Asset Management Plan 7 and 8 regulation on phosphorus and other nutrient discharge from wastewater treatment in the Water Industry National Environment Programme.
Kemira produces currently over 350,000 tonnes/year of water treatment and other chemicals annually at Goole and three other UK sites in Ellesmere Port, Teesport and Bradford. The company has invested heavily at Goole in recent years, with the latest expansion programme being completed in 2021.