UPDATE 1-Finland's Kemira issues profit warning

Tue Jan 21, 2014 3:28am EST

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HELSINKI, Jan 21 (Reuters) - Finnish chemicals firm Kemira said its fourth-quarter profit would be smaller than previously expected due to higher costs and a weak contribution from a recent acquisition.

Kemira, which has lately been shifting its focus to its water treatment business, said its quarterly core operating profit is expected to be 34-35 million euros versus its previous expectation of 42-50 million.

It said Italy's 3F Chimica, a special polymers maker it bought late last year for 85 million euros ($115 million), had so far contributed poorly for the group's bottom line. Kemira also cited surprise costs related to its recent reorganisation moves.

Shares in the company fell 6.5 percent to 10.98 euros in early Helsinki trade.

"The reasons for the warning are pretty much non-recurring, but of course the disappointment of 3F gives a challenging outlook for its profitability this year," said Markku Jarvinen, analyst at Evli brokerage.

Kemira, through its recent cost-cuttings, has been targeting an operating profit margin of 10 percent in 2014, but analysts have been sceptical.

"It looks like the 2013 margin was around 7.3 percent. For 2014 I have been looking at something like 8.4 percent," Jarvinen said.

Kemira's full 2013 results are due to be published on Feb 7. ($1 = 0.7373 euros) (Reporting by Jussi Rosendahl; editing by Jason Neely and Sophie Walker)

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