Tikkurila's Interim Report for January-June 2015 - Decreasing revenue due to Russia, Group profitability still high
Tikkurila Oyj
Stock Exchange Release
August 4, 2015 at 9:00 a.m. (CET+1)
Tikkurila's Interim Report for January-June 2015
- Decreasing revenue due to Russia, Group profitability still high
April-June 2015 highlights
- Revenue for the second quarter decreased by 7.0 percent to EUR 179.5 million (4-6/2014: EUR 192.9 million).
- Operating profit (EBIT) excluding non-recurring items was EUR 28.6 (32.2) million, i.e. 15.9 (16.7) percent of revenue.
- Operating profit (EBIT) was EUR 30.9 (32.5) million, i.e. 17.2 (16.8) percent of revenue.
- EPS was EUR 0.52 (0.56).
January-June 2015 highlights
- Revenue decreased by 6.5 percent to EUR 312.7 million (1-6/2014: EUR 334.4 million).
- Operating profit (EBIT) excluding non-recurring items was EUR 43.9 (45.3) million, i.e. 14.0 (13.5) percent of revenue.
- Operating profit (EBIT) was EUR 46.2 (46.3) million, i.e. 14.8 (13.8) percent of revenue.
- EPS was EUR 0.82 (0.73).
Guidance for 2015 intact
- Tikkurila expects its revenue and EBIT excluding non-recurring items for the financial year 2015 to be below the 2014 level.
| Key figures | |||||||
| (EUR million) | 4-6/2015 | 4-6/2014 | Change % | 1-6/2015 | 1-6/2014 | Change % | 1-12/2014 |
| Income statement | |||||||
| Revenue | 179.5 | 192.9 | -7.0% | 312.7 | 334.4 | -6.5% | 618.4 |
| Operating profit (EBIT), excluding non-recurring items | 28.6 | 32.2 | -11.3% | 43.9 | 45.3 | -3.0% | 64.2 |
| Operating profit (EBIT) margin, excluding non-recurring items, % | 15.9% | 16.7% | 14.0% | 13.5% | 10.4% | ||
| Operating profit (EBIT) | 30.9 | 32.5 | -4.7% | 46.2 | 46.3 | -0.2% | 63.7 |
| Operating profit (EBIT) margin, % | 17.2% | 16.8% | 14.8% | 13.8% | 10.3% | ||
| Profit before taxes | 28.9 | 30.4 | -4.9% | 46.3 | 42.2 | 9.7% | 63.3 |
| Net profit for the period | 23.0 | 24.9 | -7.6% | 36.3 | 32.2 | 12.7% | 48.3 |
| Other key indicators | |||||||
| EPS, EUR | 0.52 | 0.56 | -7.6% | 0.82 | 0.73 | 12.8% | 1.10 |
| ROCE, %, rolling | 22.8% | 25.7% | 22.8% | 25.7% | 22.9% | ||
| Cash flow after capital expenditure | -7.2 | -7.0 | -2.5% | -20.8 | -11.9 | -75.5% | 49.9 |
| Net interest-bearing debt at period-end | 101.8 | 97.0 | -5.0% | 47.4 | |||
| Gearing, % | 51.4% | 48.5% | 24.6% | ||||
| Equity ratio, % | 40.9% | 41.1% | 49.5% | ||||
| Personnel at period-end | 3,300 | 3,340 | -1.2% | 3,142 |
Comments by Erkki Järvinen, President and CEO:
"There were no considerable changes in the market situation in the second quarter. Development in SBU West was steady, whereas in SBU East, the situation continued to be difficult. The entire Group's revenue decreased as a result of weak currencies and the low demand in Russia.
There were no changes in the situation in Russia in the second quarter. The weak Russian ruble still had a significant negative impact on SBU East's euro-denominated revenue. In addition, sales volumes continued to decline in both of our main brands. Due to the tight competitive situation and weak purchasing power, we decided to refrain from increasing sales prices in Russia during the second quarter. Despite strict management of costs, SBU East's profitability was clearly lower than in the comparison period, as the weak currencies increased our raw material costs.
In SBU West, demand was good in Sweden, Poland and the Baltic countries, whereas in Finland, the weak economic situation and declined construction reflected negatively on the demand for paints. The good development of our sales mix continued in Poland, but in Sweden, the relative share of lower-margin products in our revenue increased. Both our revenue and profitability in the second quarter were close to the comparison period level, even though we continued to increase our sales and marketing investments.
The slow but steady development in the Western market would seem to continue, whereas in the Eastern market, the difficult situation is likely to continue for a long time. Finding new, more effective and more flexible operating methods as well as implementing strict cost management will play an important role in the upcoming months."
Outlook for 2015
The geopolitical tensions, low oil prices and the weak ruble will make a difficult operating environment for 2015. The Russian economy is anticipated to weaken considerably, and the EU region is expected to see a slow recovery. The demand for paint is anticipated to reduce in Russia, with a relative increase expected in the market share of the lower price and quality grade products. Demand in the EU region is expected to remain close to last year's level. Tikkurila will increase sales prices mainly in Russia to partly, not fully, compensate for the effects of the weak ruble. As in the previous years, Tikkurila will continue investing in sales and marketing in order to strengthen its market position. The level of costs is being continuously monitored.
Guidance for 2015
Tikkurila expects its revenue and EBIT excluding non-recurring items for the financial year 2015 to be below the 2014 level.
Press Conference and webcast
Tikkurila will hold a press conference regarding the Interim Report for January-June 2015 for the media and analysts today on August 4, 2015, at 12:00 p.m. (CET+1) in the Akseli Gallen-Kallela Cabinet at the Hotel Kämp (address Pohjoisesplanadi 29, 00100 Helsinki). The conference will be held in Finnish language. Attendees will be served lunch at the conference premises starting at 11:30 a.m. (CET+1). The Interim Report will be presented by Erkki Järvinen, President and CEO, and Jukka Havia, CFO.
A live webcast, conducted in English, will be organized on August 4, 2015, at 3:00 p.m. The live webcast will be available at www.tikkurilagroup.com. The participants can also join a telephone conference that will be arranged in conjunction with the live webcast. The telephone conference details are set out below:
+358 9 2313 9202 (Finnish callers)
+44 20 7162 0177 (UK callers)
+1 334 323 6203 (US callers)
Participant code: 953922
An on-demand version of the webcast will be available at www.tikkurilagroup.com/investors later during the same day.
The Interim Report and presentation materials will be available before the event at www.tikkurilagroup.com/investors.
Tikkurila Oyj
Erkki Järvinen, President and CEO
For further information, please contact:
Erkki Järvinen, President and CEO
Mobile +358 400 455 913, erkki.jarvinen@tikkurila.com
Jukka Havia, CFO
Mobile +358 50 355 3757, jukka.havia@tikkurila.com
Minna Avellan, Manager, 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 16 countries. Our high-quality products and extensive services ensure the best possible user experience in the market. Sustainable beauty since 1862.