Tikkurila Oyj : half year financial report for January-June 2017- Revenue stable, program to boost profitability initiated

Tikkurila Oyj
Stock Exchange Release
August 4, 2017 at 9:00 a.m. (CET+1)
 
Tikkurila's half year financial report for January-June 2017
- Revenue stable, program to boost profitability initiated

April-June 2017 highlights

• Revenue for the second quarter totaled EUR 183.2 million (4-6/2016: EUR 179.3 million).
• Adjusted operating profit was EUR 20.0 (28.4) million, i.e. 10.9 (15.8) percent of revenue.
• Operating profit (EBIT) was EUR 20.0 (27.6) million, i.e. 10.9 (15.4) percent of revenue. 
• EPS was EUR 0.28 (0.54).

January-June 2017 highlights

• Revenue totaled EUR 320.2 million (1-6/2016: EUR 309.8 million).
• Adjusted operating profit was EUR 25.2 (40.9) million, i.e. 7.9 (13.2) percent of revenue.
• Operating profit (EBIT) was EUR 25.2 (40.1) million, i.e. 7.9 (13.0) percent of revenue. 
• EPS was EUR 0.41 (0.77).

Revenue and EBIT estimates for 2017 (updated on July 13, 2017)

• Tikkurila expects its revenue to remain at last year's level and adjusted operating profit for the financial year 2017 to remain below the 2016 level.

Comments by Erkki Järvinen, President and CEO:

"The operating profit for the second quarter came well short of our expectations. Our sales volumes were lower than anticipated due to poor weather conditions, as well as the problems with the availability of raw materials and the new ERP system in Sweden and Finland. Higher raw material prices, the introduction of the new ERP system, and investments in sales promotion also significantly increased costs.

Raising revenue is still high on our list of priorities. Our focus is on bringing operations to the normal level and restoring our excellent supply chain reliability. We will also be strengthening our competitiveness regarding new construction and services offered to professionals and industrial customers, which will also balance the seasonal nature of our operations. Due to raw material cost pressure, we will continue selective sales price increases.

We have initiated an extensive program to boost profitability. The program is aimed at generating at least EUR 30 million in savings. As part of this program, a study on our future production network has been started. We will also continue the previously launched organizational and structural transformation, which is aimed at clarifying decision-making and responsibilities and eliminating overlaps. Improved cost competitiveness will support Tikkurila in seeking new growth opportunities."

Outlook for 2017

Among Tikkurila's key markets in Sweden and Poland, the fairly strong economic growth is expected to continue in 2017. The economies of Finland and Russia are also anticipated to grow slightly. Demand for paint is predicted to moderately increase in Tikkurila's operational area during the current year. The importance of the professional segment is growing, which affects the sales structure of the Tikkurila Group.  

The problems related to the introduction of the new ERP system and the availability of raw materials meant that Tikkurila could not fully meet market demand during the first half of 2017. The problems related to the ERP system has been solved to a large extent but they will still affect our operations in the second half. 

Raw material prices are expected to rise, but Tikkurila will aim to compensate for this impact by intensifying its raw material procurement, increasing local purchasing in Russia, and by increasing its sales prices. Furthermore, there are risks related to the availability of titanium dioxide.

Additional costs will be generated by restructuring activities and the introduction of the new ERP system.

Guidance for 2017 (updated on July 13, 2017)

Tikkurila expects its revenue to remain at last year's level and adjusted operating profit for the financial year 2017 to remain below the 2016 level.

Press Conference and webcast

Tikkurila will hold a press conference regarding the half year financial report for January-June 2017 for the media and analysts today on August 4, 2017, 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 half year financial 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, 2017, 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 (0)9 7479 0404 (Finnish callers)
+44 (0)33 0336 9411 (UK callers)
+1 719 325 2202 (US callers)
Participant code: 5196100

An on-demand version of the webcast will be available at www.tikkurilagroup.com/investors later during the same day.

The half year financial 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, Director, Communications and 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 14 countries. Our high-quality products and extensive services ensure the best possible user experience in the market. Sustainable beauty since 1862.


www.tikkurilagroup.com