Tikkurila's Interim Report for January-September 2014 - Solid profitability, weak economic situation puts pressure on revenue
Tikkurila Oyj
Interim Report
November 6, 2014 at 9:00 a.m. (CET+1)
Tikkurila's Interim Report for January-September 2014
- Solid profitability, weak economic situation puts pressure on revenue
July-September 2014 highlights
* Revenue for the third quarter decreased by 5.3 percent to EUR 179.6 million
(7-9/2013: EUR 189.6 million).
* Operating profit (EBIT) excluding non-recurring items was EUR 32.1 (33.3)
million, i.e. 17.9 (17.6) percent of revenue.
* Operating profit (EBIT) was EUR 31.3 (33.1) million, i.e. 17.4 (17.4)
percent of revenue.
* EPS was EUR 0.55 (0.55).
January-September 2014 highlights
* Revenue decreased by 4.2 percent to EUR 514.0 million (1-9/2013: EUR 536.3
million).
* Operating profit (EBIT) excluding non-recurring items was EUR 77.4 (76.8)
million, i.e. 15.0 (14.3) percent of revenue.
* Operating profit (EBIT) was EUR 77.6 (76.7) million, i.e. 15.1 (14.3)
percent of revenue.
* EPS was EUR 1.28 (1.25).
Revenue and EBIT estimates for 2014 intact
* Tikkurila expects its revenue and EBIT excluding non-recurring items for the
financial year 2014 to remain at the 2013 level.
Key figures
(EUR million) 7-9/2014 7-9/2013 Change % 1-9/2014 1-9/2013 Change % 1-12/2013
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Income
statement
Revenue 179.6 189.6 -5.3% 514.0 536.3 -4.2% 653.0
Operating
profit (EBIT),
excluding non-
recurring
items 32.1 33.3 -3.7% 77.4 76.8 0.7% 72.6
Operating
profit (EBIT)
margin,
excluding non-
recurring
items, % 17.9% 17.6% 15.0% 14.3% 11.1%
Operating
profit (EBIT) 31.3 33.1 -5.4% 77.6 76.7 1.2% 71.5
Operating
profit (EBIT)
margin, % 17.4% 17.4% 15.1% 14.3% 10.9%
Profit before
taxes 30.7 31.6 -2.6% 72.9 73.1 -0.2% 67.0
Net profit for
the period 24.3 24.4 -0.8% 56.5 54.9 2.9% 50.1
Other key
indicators
EPS, EUR 0.55 0.55 -0.6% 1.28 1.25 3.0% 1.14
ROCE, %,
rolling 25.5% 23.7% 25.5% 23.7% 23.5%
Cash flow
after capital
expenditure 54.1 64.9 -16.6% 42.2 55.5 -23.9% 66.9
Net interest-
bearing debt
at period-end 46.1 60.1 -23.3% 48.6
Gearing, % 21.2% 28.0% 23.4%
Equity ratio,
% 46.8% 46.4% 50.1%
Personnel at
period-end 3,212 3,253 -1.3% 3,133
Comments by Erkki Järvinen, President and CEO:
"As expected, the market situation continued to be challenging in the third
quarter. The overall economic activity is still weakening in Russia and Finland,
where the low consumer confidence and the decline in construction reduced our
sales volumes. Our other key markets in Sweden, Poland and the Baltic countries
performed somewhat better. Regardless of the tough market conditions, we had
quite good sales of higher priced quality products in all markets, which is an
evidence of the strength of our brands and services.
Weak currencies continued to put additional pressure on revenue growth. Linked
to the weak economic growth and to the recent decline in oil price, Russian
ruble has been depreciating for more than a year, the development escalating
during the last months, which has led to a sizable negative translation effect
in our income statement. We have been able to partially offset the ruble impact
by operational actions.
Our third quarter revenue was close to last year's level as a result of the
favorable development of the sales mix. Operating profit excluding non-recurring
items decreased slightly in absolute terms, but in relative terms profitability
remained at a record high level due to the positive sales mix development,
streamlining of operations, and cost savings. We continued and will continue our
marketing investments and other commercial activities aimed at accelerating
demand. During the review period, the international launch of the new Tikkurila
brand logo and packaging was also carried out.
Our operating profit for the first nine months of the year was at a higher level
than in the comparison period despite the slight dip in revenue. We can be
satisfied with the improvement of our relative profitability, although revenue
did not develop as expected. The weaker trend in our key currencies is likely to
continue during the remainder of the year.
Tikkurila acquired the Danish ISO Paint Nordic in October. The acquisition will
complement our professional product range and our technological expertise in
energy-efficient coating solutions and solutions which extend the life cycle of
structures. The acquisition will also support our strategy of profitable growth,
since we expect the demand for energy-efficient and eco-efficient solutions to
grow."
Outlook for 2014
For the last months of 2014, the economic growth is expected to be weak in
Tikkurila's key market areas. Considerable regional differences are forecasted
between Tikkurila's different markets in private consumption and construction
volumes in 2014, but overall growth is estimated to remain low. No considerable
change is expected in the demand for Tikkurila's products compared to last year.
Cost inflation is expected to continue, and investments in sales, marketing and
innovation activities are forecasted to increase the fixed cost level. Raw
material prices are forecasted to remain stable.
Tikkurila reiterates its guidance for 2014.
Tikkurila expects its revenue and EBIT excluding non-recurring items for the
financial year 2014 to remain at the 2013 level.
Press Conference and webcast
Tikkurila will hold a press conference regarding its January-September 2014
Interim Report for the media and analysts today on November 6, 2014, at 12:00
p.m. (CET+1) in the Akseli Gallén-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 (CET+1). The Interim Report will be presented by Erkki Järvinen, and Jukka
Havia, CFO.
A live webcast, conducted in English, will be organized on November 6, 2014, 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 9201 (Finnish callers)
+44 20 7162 0077 (UK callers)
+1 334 323 6201 (US callers)
Participant code: 948477
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
For 150 years already, Tikkurila has provided consumers and professionals with
user-friendly and sustainable solutions for surface protection and decoration.
Tikkurila wants to be the leading paint company in the Nordic area as well as in
Russia and other selected Eastern European countries. - Tikkurila inspires you
to color your life.
www.tikkurilagroup.com