Unsolicited rating

KEMIRA OYJ

BBB+ Negative

Ratings

  • Type Corporate
  • Action Affirmed
  • Action date
  • Last rating
  • First rating

Methodologies

Documents

Rating Action And Rationale

  • EthiFinance Ratings affirms Kemira Oyj’s long-term rating at BBB+, changing the outlook from Stable to Negative. Concurrently, EthiFinance Ratings affirms Kemira Oyj’s short-term rating at EF1. 

  • Kemira Oyj is a Finnish chemicals company specializing in chemical solutions for water-intensive industries and applications, including pulp and paper, industrial water treatment, and fibre-based packaging and hygiene applications.

  • The outlook revision from Stable to Negative reflects the deterioration in Kemira’s operating performance and credit metrics in FY25 and 9M26, driven by persistently weak demand across its key end-markets and sustained raw material and logistics cost pressures. It also incorporates our expectations of potential sustained pressure on credit metrics over the next 12 to 18 months due to continued negative cash flow amid ongoing investment requirements, shareholder distributions, and bolt-on acquisitions, with no early signs of a profitability recovery. 

  • The rating affirmation remains supported by Kemira’s established competitive positioning in water treatment and specialty chemicals, diversified geographical footprint and customer base. It is also driven by a still solid financial risk profile, despite a deterioration since our previous review. As it stands, credit ratios remain solid on average over our analysis period from FY24 to FY28e, and within the thresholds of the BBB rating category (Net adjusted debt/ adjusted EBITDA < 2.0x; Equity/Total adjusted debt > 170%; Adj EBITDA/interest > 11.0x). Following an already challenging FY25, when revenue declined by 6.6% and EthiFinance’s adjusted EBITDA decreased by 12.4% to €485m, profitability weakened further throughout 2026. In 9M26, reported EBITDA declined by 15% yoy to €338m, with the corresponding margin contracting to 16.3% from 19.1% in 9M25. The accelerated margin deterioration in Q3 prompted Kemira’s management to reiterate its downward-revised operative EBITDA guidance for FY26e of €400m-€500m, compared with the initial range of €470m-€570m, indicating a weaker earnings trajectory than previously anticipated.

  • In light of the 9M26 results, we expect revenue to remain flat in 2026 with management anticipating no major improvement in Q4. Municipal water remains stable, but industrial water is rather volatile, and pulp and packaging remain weak. Against this backdrop, we forecast a flat Q4 in 2026. We expect revenue growth to resume from 2027, with total revenue growth of 3% in each of FY27e and FY28e. The adjusted EBITDA margin is projected to deteriorate to a range of 16.0% to 16.5% over FY26e-27e, before improving to around 17.0% from 2028 on the back of potential recovery in profitability. We project Kemira’s net adjusted leverage, as calculated by EthiFinance Ratings, to deteriorate to 1.7x, resulting from the expected yoy decline in EBITDA and negative FCF generation (post-dividends, equity movements and investments). As of 9M26, negative FCF primarily reflected €94m of share buybacks, €50m of cash outflows for bolt-on acquisitions (AquaBlue, Clear Water Tech, ANMAC, and Repur) and, to a lesser extent, a 5% decline in operating cash flow. We also expect the interest coverage ratio to deteriorate on average to a level of 11.0x (vs 13.2x in FY25), reflecting lower EBITDA and rising interest rates. 

  • Our ratings remain constrained by the industry’s currently weak dynamics and Kemira’s modest scale relative to larger investment-grade peers. Persistent weakness in the pulp and paper industry, particularly in Europe, continues to limit demand visibility and growth prospects, as reflected in lower customer production volumes and capacity reduction. These pressures are compounded by geopolitical uncertainty, volatile raw material and logistics costs, and Kemira’s limited ability to fully pass through cost inflation in a subdued demand environment. Global pulp and paper markets remain exposed to structural overcapacity, particularly in Asia, and intensifying international competition. Expanding Chinese production capacity and rising imports of low-priced paper and board into Europe continue to weigh on European producers' competitiveness and capacity utilisation. 

  • Under our methodology, the materials & chemicals industry faces high ESG risks (heatmap score of between 4 and 5) given its impact on the environment, which constrains our industry assessment. Regarding environmental factors, the industry has a significant environmental impact through high GHG emissions and risks associated with air and water pollution and hazardous waste. The company has a positive ESG score (between 1.0 and 1.5). While the company’s ESG profile continues to partially offset industry-related environmental risks, the overall ESG assessment remains negative.

 

Issuer Description

Kemira is a Finnish chemicals company serving customers in the pulp & paper and water-intensive industries. The company develops and commercializes solutions for pulp & paper, as well as a range of paper wet-end products, including packaging and board, and tissue products. Its Industry & Water segment offers coagulants, polymers, and fiber essentials. Founded in 1920 and headquartered in Helsinki, Finland, Kemira operates in 40 countries, with 58 manufacturing sites, and sells its products in over 100 countries. Its four core product areas are (i) polymers, (ii) coagulants, (iii) sizing chemicals, and (iv) bleaching and pulping chemicals. 

In FY25, the group reported revenue of €2.75bn, EthiFinance’s adjusted EBITDA of €485m, and a net adjusted leverage ratio of 1.3x. As of end-September 2026, LTM revenue was €2.74bn (-2.5% vs LTM at end-September 2025), and EthiFinance’s adjusted LTM EBITDA was €426m (-17% vs LTM at end-September 2025). Kemira’s largest shareholder is Oras Invest, with a stake of 25.0%. The free float represents c. 74% of its total shareholding with a total market capitalisation of c. €2.27bn as of 9 November 2026. 

Liquidity

We assess the liquidity profile of Kemira Oyj as “Superior” reflecting its strong refinancing profile and its high level of liquidity. 

Credit Metrics Expected Evolution (CMEE)

Our Stable CMEE reflects our expectation that credit metrics will remain broadly flat over the next twelve months. 

Main Financial Figures 

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Credit Rating

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Rating Sensitivity 

  • List of ratings:

LT Rating: BBB+

ST Rating: EF1

Factors that may (individually or collectively) impact the ratings:

  • Positive factors (↑).

Given the negative outlook, an upgrade of our long-term rating is currently unlikely. However, a significant improvement in the group’s credit metrics from 2027, resulting from an unexpected event or strategic decision, would support an outlook change and a potential upgrade.  Specifically, a sustained reduction in adjusted net leverage below 0.5x, combined with an interest coverage ratio of at least 20.0x, would constitute a potential trigger. For this uncertain scenario to materialise, demand in Kemira’s end markets would need to materially recover and input cost inflation would need to ease, alleviating the current strong pressure on the group’s profitability margins. We could change the outlook from Negative to Stable should the group restore its profitability metrics while generating positive internal cash flows. 

With an unchanged CMEE and liquidity profile, an upgrade of the short-term rating to EF1+ would require at least a 2-notch upgrade of the long-term reference rating.

  • Negative factors (↓).

Given the negative outlook, a downgrade of our long-term rating could result from a sustained deterioration in Kemira’s financial profile, particularly if credit metrics evolve in line with our expectations. In our view, this scenario is likely given (i) weak demand in pulp and paper markets, which materially affects capacity utilisation and profitability; and (ii) a high payout ratio, share buybacks, and continuous bolt-on acquisitions, constraining the internal cash generation capacity amid weak end markets. In addition, a downgrade of the business risk profile to BB+ due to a more aggressive financial policy or a loss of market share would cap the long-term rating at BBB. 

A downgrade of our short-term rating to EF2 would follow a one-notch downgrade of the long-term reference rating, combined with either (i) a Negative CMEE, regardless of the liquidity profile; or (ii) a Stable CMEE and a deterioration in the liquidity risk assessment from ‘Superior’ to ‘Weak’.

Sources of information

The credit rating issued in this report is unsolicited. The credit rating is based exclusively on public information, being the main sources the following:

  1. Annual Audit Report.
  2. Corporate Governance Report.
  3. Corporate Website.
  4. Information published in the Official Bulletins.

The information was thoroughly reviewed to ensure that it is valid and consistent, and is considered satisfactory. Nevertheless, EthiFinance Ratings assumes no responsibility for the accuracy of the information and the conclusions drawn from it.

Level of the rated entity participation in the rating process

EthiFinance Ratings

Additional information

  • The rating was carried out in accordance with Regulation (EC) N°1060/2009 of the European Parliament and the Council of 16 September 2009, on credit rating agencies. Principal methodology used in this research are :
  • The rating scale used in this report is available at https://www.ethifinance.com/credit-rating-agency/rating-scale.
  • EthiFinance Ratings publishes data on the historical default rates of the rating categories, which are located in the central statistics repository CEREP, of the European Securities and Markets Authority (ESMA).
  • In accordance with Article 6 (2), in conjunction with Annex I, section B (4) of the Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009, it is reported that during the last 12 months EthiFinance Ratings has not provided ancillary services to the rated entity or its related third parties.
  • The issued credit rating has been notified to the rated entity, and has not been modified since.

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