Tikkurila Oyj’s Half year financial report for January−June 2020

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Tikkurila Oyj’s Half year financial report for January−June 2020

Tikkurila Oyj
Half year financial report
July 24, 2020 at 11:00 a.m. (EEST)


Tikkurila’s profitability clearly improved in Q2/2020

Original guidance for profitability restored, no guidance for revenue

This is a summary of Tikkurila's Half year financial report. The full report is attached to this stock exchange release and is available on Tikkurila's website.

April−June 2020 highlights

  • Revenue increased by 1.3 percent to EUR 171.8 (169.7) million. Comparable revenue* increased by 4.6 percent.
  • Operating result (EBIT) increased by 56.2 percent to EUR 33.1 (21.2) million and was 19.3 (12.5) percent of revenue.
  • Adjusted operating result increased by 49.2 percent to EUR 34.7 (23.2) million and was 20.2 (13.7) percent of revenue.
  • EPS increased by 67.6 percent to EUR 0.61 (0.37).
  • Tikkurila restores original guidance for adjusted operating profit for 2020 but will not give guidance for revenue due to expected fluctuations in demand.

January−June 2020 highlights

  • Revenue increased by 2.0 percent to EUR 304.8 (298.8) million. Comparable revenue* increased by 4.2 percent.
  • Operating result (EBIT) increased by 43.3 percent to EUR 41.7 (29.1) million and was 13.7 (9.7) percent of revenue.
  • Adjusted operating result increased by 37.6 percent to EUR 43.2 (31.4) million and was 14.2 (10.5) percent of revenue.
  • EPS increased by 30.9 percent to EUR 0.70 (0.53).

* Comparable revenue excludes currency effects, divestments and closures.

Guidance for 2020

  • Due the strong first half, Tikkurila has decided to restore its original profitability guidance for 2020: Full year adjusted operating result is expected to continue to improve (2019: EUR 46.4 million).
  • Tikkurila will not give guidance for the revenue for 2020 due to expected fluctuations in demand in all segments.

Assumptions behind the guidance

Tikkurila withdrew its guidance for 2020 on 27 March 2020 due to increased uncertainty and weakened visibility, as the global coronavirus pandemic (Covid-19) and the related local restrictions were rapidly changing Tikkurila's business environment.

During the second quarter, demand fluctuated rapidly and significantly in Tikkurila’s core markets but, overall, the quarter and first half year were strong. The various impacts of Covid-19 on Tikkurila during the second quarter have been described in more detail under relevant segments of this half year financial report.

However, uncertainties remain concerning the development of demand for paint as well as the general macroeconomic development. Tikkurila expects demand for decorative paints to normalize after the exceptionally strong end of the second quarter. Also, even if the recovery was also visible in the professional and industry paints at period-end, these businesses are expected to continue to be impacted by the forecasted negative GDP development in all key markets. In decorative paints, customers place their orders at a relatively short notice. Thus, any forecasting can only be done based on current demand and visibility remains weak.

Elisa Markula, CEO

During the second quarter, demand fluctuated rapidly and substantially in Tikkurila’s core markets. Still, due to the rapid recovery experienced towards the end of the quarter, with revenue growing by 24 percent in June, Tikkurila’s performance during the second quarter was strong.

Adjusted operating result improved 49 percent to EUR 34.7 million, driven by exceptionally high sales in the consumer driven DIY business in all Tikkurila’s core markets towards the end of the quarter. Profitability also increased thanks to our strong margin management, continued efficiency improvements and strictly executed temporary short-term savings. Improved profitability was reflected in our cash flow.

Revenue increased by 1 percent, and by 5 percent in local currencies in the second quarter. In April, sales declined in all markets as governments began to impose restrictions on the movement of people to slow down the spread of the Covid-19 pandemic. However, a rapid consumer-lead recovery started from May onwards in decorative paints. The recovery was strongest in Finland and in Sweden, where demand especially for exterior paints was extraordinarily high, while Poland grew in all decorative segments. In Russia, restrictions were stricter – curfews were imposed in major cities and most shops were closed until end of May – and lasted longer. Thus, the recovery there started later, but in June our sales were in double-digit growth in Russia.

Half of our sales comes from consumers, with the other half coming from professionals and industry customers. As expected, professional and industry businesses were negatively impacted by Covid-19 pandemic during the quarter, but the decline in both remained in single digits. Revenue continued to increase in the more locally driven wood industry paints, whereas revenue from metal industry paints decreased, driven by generally soft demand. Among professional customers, demand clearly recovered in June, especially in Poland, Sweden and Finland.

Overall, our profitability was strong during the first half year, which prompted us to restore our original guidance for adjusted operating result for 2020. Still, our visibility into revenue development during the rest of the high-season, and beyond, is low. In decorative paints, we expect the exceptionally high consumer demand to normalize.

Key figures

EUR million 4-6/2020 4-6/2019 Change % 1-6/2020 1-6/2019 Change % 1-12/2019
Revenue  171.8 169.7 +1.3% 304.8 298.8 +2.0% 563.8
 revenue growth*
+4.6% +4.2% +1.4%
Operating result (EBIT) 33.1 21.2 +56.2% 41.7 29.1 +43.3% 43.9
Operating result (EBIT) margin, % 19.3% 12.5% 13.7% 9.7% 7.8%
Adjusted operating result 34.7 23.2 +49.2% 43.2 31.4 +37.6% 46.4
Adjusted operating result margin, %  20.2% 13.7% 14.2% 10.5% 8.2%
Result before taxes 34.3 20.9 +64.2% 39.1 30.6 +27.7% 44.2
Net result for the period 27.0 16.1 +67.5% 30.8 23.5 +30.9% 33.2
Earnings per share (EPS), EUR  0.61 0.37 +67.6% 0.70 0.53 +30.9% 0.75
Interest-bearing net liabilities (at period-end)  96.9 151.8 -36.2% 78.4
Total equity (at period-end)  173.8 161.1 +7.8% 171.9
Total assets (at period-end) 561.8 530.3 +5.9% 437.1
Equity ratio, % 30.9% 30.4% 39.3%
Gearing, % 55.8% 94.2% 45.6%
ROCE, %, rolling 20.5% 12.2% 15.4%
Cash flow after capital expenditure 11.4 -12.0 +194.9% -5.9 -30.1 +80.2% 52.7

Press conference and live webcast

CEO Elisa Markula will present the results in English for investors, analysts and the media in a live webcast, which starts at 1:00 p.m. (EEST). CFO Markus Melkko will join the Q&A session.




Questions can only be asked via dial-in.

  • Finland: +358 981 710 310
  • Sweden: +46 856 642 651
  • United Kingdom: +44 333 300 0804
  • United States: +1 631 913 1422

PIN: 73262721#

An on-demand version of the webcast will be available on our webpage later the same day. The report and related presentation material will be available before the press conference at http://www.tikkurilagroup.com/investors.

For further information, please contact:

Elisa Markula, CEO
+358 50 596 0978 elisa.markula@tikkurila.com

Markus Melkko, CFO
+358 40 531 1135 markus.melkko@tikkurila.com

Tapio Pesola, Director, Communication & IR
+358 44 373 4693 ir@tikkurila.com

Sustainable Nordicness
Tikkurila 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 seven countries and our 2,700 dedicated professionals share the joy of building a vivid future through surfaces that make a difference. In 2019, our revenue totaled EUR 564 million. The company is listed on Nasdaq Helsinki. Nordic quality from start to finish since 1862.