Tikkurila's Interim Report for January-September 2015 - Development was good in the west; the difficult situation continued in the east

Tikkurila Oyj
Stock Exchange Release
November 5, 2015 at 9:00 a.m. (CET+1)
 
Tikkurila's Interim Report for January-September 2015
- Development was good in the west; the difficult situation continued in the east

July-September 2015 highlights

  • Revenue for the third quarter decreased by 6.5 percent to EUR 168.0 million (7-9/2014: EUR 179.6 million).
  • Operating profit (EBIT) excluding non-recurring items was EUR 26.0 (32.1) million, i.e. 15.5 (17.9) percent of revenue.
  • Operating profit (EBIT) was EUR 25.8 (31.3) million, i.e. 15.3 (17.4) percent of revenue.
  • EPS was EUR 0.37 (0.55).

January-September 2015 highlights

  • Revenue decreased by 6.5 percent to EUR 480.7 million (1-9/2014: EUR 514.0 million).
  • Operating profit (EBIT) excluding non-recurring items was EUR 70.0 (77.4) million, i.e. 14.6 (15.0) percent of revenue.
  • Operating profit (EBIT) was EUR 72.0 (77.6) million, i.e. 15.0 (15.1) percent of revenue.
  • EPS was EUR 1.19 (1.28).

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) 7-9/2015 7-9/2014 Change % 1-9/2015 1-9/2014 Change % 1-12/2014
Income statement        
Revenue 168.0 179.6 -6.5% 480.7 514.0 -6.5% 618.4
Operating profit (EBIT), excluding non-recurring items 26.0 32.1 -18.8% 70.0 77.4 -9.6% 64.2
Operating profit (EBIT) margin, excluding non-recurring items, % 15.5% 17.9%   14.6% 15.0%   10.4%
Operating profit (EBIT) 25.8 31.3 -17.6% 72.0 77.6 -7.2% 63.7
Operating profit (EBIT) margin, % 15.3% 17.4%   15.0% 15.1%   10.3%
Profit before taxes 20.2 30.7 -34.3% 66.5 72.9 -8.8% 63.3
Net profit for the period 16.1 24.3 -33.5% 52.4 56.5 -7.2% 48.3
Other key indicators             
EPS, EUR 0.37 0.55 -33.7% 1.19 1.28 -7.2% 1.10
ROCE, %, rolling 20.9% 25.5%   20.9% 25.5%   22.9%
Cash flow after capital expenditure 55.1 54.1 1.8% 34.2 42.2 -18.9% 49.9
Net interest-bearing debt at period-end     46.8 46.1 1.5% 47.4
Gearing, %     22.4% 21.2%   24.6%
Equity ratio, %     46.1% 46.8%   49.5%
Personnel at period-end     3,189 3,212 -0.7% 3,142


Comments by Erkki Järvinen, President and CEO:

"There were no significant changes in the outlook in the third quarter. Demand grew in the west, where we saw positive signs in many markets and our result was excellent. Demand picked up particularly in Sweden and Poland in the fall, after the summer that was plagued with poor painting weather. In Poland, we have actively developed shop level activities, which has delivered good results for our premium product sales. In Sweden, our business was supported by the high construction activity. The Baltic countries also developed well, whereas in Finland, the demand was at the comparison period level. Moreover, functional products, such as those designed for saving energy, provided us with additional growth in the Western markets.

However, the good development in the west was unfortunately not enough to compensate for the difficult situation in Russia. The value of the ruble halved from the value a year ago, which had a negative impact on our euro-denominated revenue and our raw material costs. Despite a clear decline in consumers' purchasing power, our revenue remained flat in local currency terms. Considering the circumstances, our premium brand Tikkurila continued to perform well in Russia, where the low consumer confidence seems in general to be shifting demand increasingly towards economy products.

We have to adjust our operations in Finland due to the current, difficult situation in Russia and the persistent challenges we are experiencing in the sales volumes in Finland. The primary objective of the adjustment measures is to change our current operating methods and to broadly increase flexibility."

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. 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 intact

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-September 2015 for the media and analysts today on November 5, 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 November 5, 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 9201 (Finnish callers)
+44 20 7162 0077 (UK callers)
+1 334 323 6201 (US callers)
Participant code: 955386
 
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.

www.tikkurilagroup.com

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 2,700 dedicated professionals share the joy of building a vivid future through surfaces that make a difference. In 2018, our revenue totaled EUR 562 million. The company is listed on Nasdaq Helsinki. Nordic quality from start to finish since 1862. www.tikkurilagroup.com