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Tikkurila's Interim Report for January-June 2014 - Good profitability despite weak demand in Russia

July 24, 2014

Tikkurila Oyj Stock Exchange Release July 25, 2014 at 9:00 a.m. (CET+1) Tikkurila's Interim Report for January-June 2014 - Good profitability despite weak demand in Russia April-June 2014 highlights * Revenue for the second quarter decreased by 7.4 percent to EUR 192.9 million (4-6/2013: EUR 208.3 million). * Operating profit (EBIT) excluding non-recurring items was EUR 32.2 (33.4) million, i.e. 16.7 (16.0) percent of revenue. * Operating profit (EBIT) was EUR 32.5 (33.3) million, i.e. 16.8 (16.0) percent of revenue. * EPS was EUR 0.56 (0.54). January-June 2014 highlights * Revenue decreased by 3.6 percent to EUR 334.4 million (1-6/2013: EUR 346.7 million). * Operating profit (EBIT) excluding non-recurring items was EUR 45.3 (43.5) million, i.e. 13.5 (12.6) percent of revenue. * Operating profit (EBIT) was EUR 46.3 (43.6) million, i.e. 13.8 (12.6) percent of revenue. * EPS was EUR 0.73 (0.69). 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) 4-6/2014 4-6/2013 Change % 1-6/2014 1-6/2013 Change % 1-12/2013 -------------------------------------------------------------------------------- Income statement Revenue 192.9 208.3 -7.4% 334.4 346.7 -3.6% 653.0 Operating profit (EBIT), excluding non- recurring items 32.2 33.4 -3.4% 45.3 43.5 4.0% 72.6 Operating profit (EBIT) margin, excluding non- recurring items, % 16.7% 16.0%   13.5% 12.6%   11.1% Operating profit (EBIT) 32.5 33.3 -2.6% 46.3 43.6 6.2% 71.5 Operating profit (EBIT) margin, % 16.8% 16.0%   13.8% 12.6%   10.9% Profit before taxes 30.4 31.1 -2.2% 42.2 41.6 1.6% 67.0 Net profit for the period 24.9 23.9 4.3% 32.2 30.5 5.8% 50.1 Other key indicators EPS, EUR 0.56 0.54 4.3% 0.73 0.69 5.8% 1.14 ROCE, %, rolling 25.7% 22.9%   25.7% 22.9%   23.5% Cash flow after capital expenditure -7.0 4.4   -11.9 -9.4 -26.7% 66.9 Net interest- bearing debt at period-end     97.0 125.6 22.8% 48.6 Gearing, %       48.5% 66.0%   23.4% Equity ratio, %       41.1% 36.9%   50.1% Personnel at period-end     3,338 3,400 -1.8% 3,133 Comments by Erkki JÄrvinen, President and CEO: "Our financial performance continued to be good in the second quarter of the year despite the market challenges, but the weak Russian ruble, in particular, decreased our euro-denominated revenue. The growing uncertainty related to economic development in Russia was increasingly reflected in consumer behavior regardless of the fact that consumer confidence indicators have shown some positive development recently. Based on our estimate, the volume growth in the Russian decorative paints market will be very low this year. It would also appear that the relative demand for paints in the lower quality and price grades has increased in the entire paint market in Russia, at least temporarily. For Tikkurila, the postponed purchasing decisions lead to lower sales volumes in Russia during the second quarter compared to the same period last year. However, the sales of our higher quality and price grades continued to be at a reasonably good level. The economic situation in the EU region also continued to be fairly weak, and no significant improvement is in sight in the overall economic situation. Our sales volume grew slightly in SBU West where the development of the operations in Poland and the Baltic countries, in particular, continued to be good. The weakening Swedish krona reduced our euro-denominated revenue in SBU West. Despite the decline in revenue, we improved our relative profitability through the streamlining of operations, improved productivity, cost savings, and favorable development of the sales mix. The continuous improvement of our operations will generate desired results in the future as well. Growing revenue organically is challenging in the current market situation, but we will continue the measures to reach our growth objective. At the end of the period under review, we completed a small acquisition in Sweden, which will strengthen our surface treatment competence aimed at professionals, in particular. Our objective is to commercialize the acquired technology in all our geographical areas of operation." Outlook for 2014 Tikkurila reiterates its guidance for 2014. The economic situation in Europe is expected to improve moderately in 2014. 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 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-June 2014 Interim Report for the media and analysts today on July 25, 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. Ilari Hyyrynen, Director of Tikkurila's Russian operations, will also attend the press conference. A live webcast, conducted in English, will be organized on July 25, 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: 945654 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.comMinna 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.comTikkurila Interim Report Q2/2014: http://hugin.info/142852/R/1837153/638520.pdf This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Tikkurila Oyj via GlobeNewswire [HUG#1837153]


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