Berenberg cuts Kemira as weak demand hits high-revenue forestry segment

Kemira Oyj

26/04/2023 10:19

** Berenberg cuts Kemira  KEMIRA.HE  to "hold" from "buy";
says profit margins of the Finnish chemicals maker has reached
its peak citing sluggish demand for forestry products
    ** While pulp and paper volumes might fall 10% Y/Y,
Berenberg expects stronger prices and cost movement to outweigh
sluggish demand
    ** Kemira shares down 2.5%, extending Tuesday's losses when
gloomy news flow from its key customers in the forestry industry
overshadowed its good quarterly results
    ** Forestry firms Stora Enso  STERV.HE  and UPM-Kymmene
 UPM.HE  warned that high costs and weak demand amid customers
destocking had impacted their operations in Q12023 
    ** Kemira generated 55% of its revenue from chemical
products for the forestry industry in Q12023
    ** "With energy and raw materials costs easing, and under
pressure from squeezed clients, we believe Kemira has hit peak
profit margins," the broker says
    ** That said, Berenberg expects the volumes to recover "soon
after current temporary weakness"; raises PT to 18.50 euros from
16.50 euros

 (Reporting by Boleslaw Lasocki)
 ((boleslaw.lasocki@tr.com))