Tikkurila's Business Review for January-September 2017

Tikkurila Oyj
Stock Exchange Release
October 26, 2017 at 9:00 a.m. (CET+1)

Tikkurila's Business Review for January-September 2017

Tikkurila's revenue for the third quarter totaled EUR 159.9 million (7-9/2016: EUR 158.0 million). Adjusted operating profit totaled EUR 21.9 (23.7) million, i.e. 13.7 (15.0) percent of revenue.

"Third-quarter revenue was at the same level as last year. However, SBU East's revenue increased especially due to improved sales mix and higher sales prices. Refunds paid to customers in Sweden and the lower sales volumes in Finland and Sweden decreased SBU West's revenue. Demand grew slightly in Russia and Poland. Profitability in the third quarter was maintained close to the level of the same period a year ago despite a clear rise in raw material costs. Profitability development was particularly good in Russia. In order to ensure deliveries, we have raised the level of raw material and end product inventories in different parts of the Group.

During the third quarter, corrective actions related to the new ERP system implementation proceeded well with majority of identified challenges being fixed. We have been able to normalize our operations to a large extent.

As part of the program to boost profitability, we have decided to discontinue manufacturing and warehousing operations in Stary Oskol in Russia and to move the unit's production to our St. Petersburg site during the next year", says Jukka Havia, Interim President and CEO and CFO.

Revenue for January-September amounted to EUR 480.2 million (1-9/2016: EUR 467.8 million). Adjusted operating profit decreased to EUR 47.1 (64.6) million, i.e. 9.8 (13.8) percent of revenue.

Key figures       
(EUR million) 7-9/2017 7-9/2016 Change % 1-9/2017 1-9/2016 Change %
Group data       
Revenue 159.9 158.0 1.2% 480.2 467.8 2.6%
Adjusted operating profit 21.9 23.7 -7.7% 47.1 64.6 -27.1%
Adjusted operating profit margin, % 13.7% 15.0%   9.8% 13.8%  
EPS, EUR 0.36 0.43 -14.7% 0.77 1.19 -35.2%
Net interest-bearing liabilities (at period-end) 99.8 64.1 55.7% 99.8 64.1 55.7%
Total equity (at period-end) 203.5 211.5 -3.8% 203.5 211.5 -3.8%
Total assets (at period-end) 473.1 451.0 4.9% 473.1 451.0 4.9%
Segment data          
SBU West revenue 101.6 104.9 -3.2% 318.5 328.0 -2.9%
SBU West adjusted operating profit 13.8 18.5 -25.2% 36.5 55.0 -33.7%
SBU East revenue 58.4 53.2 9.8% 161.7 139.8 15.6%
SBU East adjusted operating profit 8.7 6.1 43.3% 14.2 13.1 8.4%
Revenue by country          
Sweden 35.4 39.4 -10.3% 114.0 124.2 -8.2%
Russia 42.3 37.5 12.8% 116.2 94.6 22.8%
Finland 22.7 23.2 -2.0% 80.9 85.3 -5.2%
Poland 22.3 20.8 7.0% 61.7 57.1 8.1%

Financial development in July-September 2017

Tikkurila Group's revenue in the third quarter was at the comparison period's level. Lower sales volumes decreased revenue by 2 percent. The sales price increases in Russia during the early part of the year, favorable sales mix development and a stronger Russian ruble had a positive impact on revenue.

Profitability in the third quarter was maintained close to the level of the same period a year ago despite a clear rise in raw material costs.

Financial development in January-September 2017

Tikkurila Group's revenue increased in January-September 2017 particularly due to stronger Russian ruble. Sales volumes were at the comparison period's level. Divestments decreased revenue.

Profitability was weakened by the costs being higher than in the comparison period, which was related to the implementation of the new ERP system, the higher level of raw material and packaging material prices and the sales investments being higher than in the comparison period.

The lower profitability of the business and the costs resulting from the introduction of the ERP weakened the cash flow considerably during the period under review. Net working capital increased due to higher inventory levels and trade receivables.

Changes in Group management

Based on the decision of Tikkurila's Board of Directors, President and CEO Erkki Järvinen left the company at the end of September. The recruitment process for a new President and CEO is ongoing.

Guidance for 2017 intact

Tikkurila expects its revenue to remain at last year's level and adjusted operating profit for the financial year 2017 to remain below the 2016 level.

Tikkurila Oyj
Jukka Havia, Interim President and CEO, CFO

For further information, please contact:

Jukka Havia, Interim President and CEO, CFO
Mobile +358 50 355 3757, jukka.havia@tikkurila.com

Minna Avellan, Director, Communications and Investor Relations
Mobile +358 40 533 7932, minna.avellan@tikkurila.com

Tikkurila is the leading paints and coatings professional in the Nordic region and Russia. With our roots in Finland, we now operate in 14 countries. Our high-quality products and extensive services ensure the best possible user experience in the market. Sustainable beauty since 1862.


About Us

Sustainable NordicnessTikkurila is a leading Nordic paint company with expertise that spans decades. We develop premium products and services that provide our customers with quality that will stand the test of time and weather. We operate in around ten countries and our 3,000 dedicated professionals share the joy of building a vivid future through surfaces that make a difference. In 2017, our revenue totaled EUR 582 million. The company is listed on Nasdaq Helsinki. Nordic quality from start to finish since 1862. www.tikkurilagroup.com