Forchem Plc’s 2016 financial statements and report of the board of directors

During 2016, the market prices of raw materials have for the most part continued to decrease, although during the last quarter of the year the price of Crude Oil started to increase. The low price level is reflected in Forchem as a decrease in sales price as well as a decrease in purchase prices. Compared to the previous accounting period, the revenue of the group has decreased circa 18 % and profitability at EBITDA level circa 16 %, but the relative EBITDA margin has remained at 21 %. The group´s revenue for the whole year is € 109 million and operating profit € 17,6 million.

The increase in crude oil price at the end of 2016 has increased Forchem´s CTO cost for energy related contracts which has had a negative effect also on Forchem´s margins. However, at the beginning of 2017, the increase has subsided, and prices have even slightly decreased. However, the increase in Crude Oil price may put some pressure on Forchem´s refining margin also in the future, if product prices stay soft.

The demand for Forchem’s products continues to be robust. The company continues to develop its business by new innovations, new products, and co-operation in sales and sourcing. Turnover is expected to increase slightly, due to market prices. Relative profitability in terms of EBITDA margin is expected to remain steady.

The company’s business environment is significantly affected by the development of the global economy. Main parameters are price of mineral oil, dollar/euro exchange rate, and price development of substitute Gum Rosins and vegetable oils.

The raw material used by the company, CTO, is sourced from the forest (pulp) industry, which has pressure to develop new sources of income from side products, and residual biomass from logging. There is some uncertainty related to the availability and price of CTO if the use of CTO in biofuels increases drastically, due to recent classifications and changes in tax treatment.

This release is a summary of Forchem Plc’s 2016 Financial Statements and Report of the Board of Directors. The whole report including the tables is attached to this release and it is available at www.forchem.com/investor_area

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For more information:

Forchem Oyj
Henrik Lindegrén, CFO, p. +358 44 032 1075, henrik.lindegren@forchem.com
Risto Näsi, CEO, p. +358 50 315 1585, risto.nasi@forchem.com

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