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Stock exchange releases

Tikkurila's half year financial report for January−June 2018

Tikkurila Oyj
Stock exchange release
August 3, 2018 at 9:00 a.m. (CET+1)

03.08.2018

Tikkurila's half year financial report for January−June 2018: Sales volumes and operating profit growing in the second quarter despite the headwind from currencies and raw material inflation. Cost reductions are on track.

April–June 2018 highlights

  •  Revenue for the second quarter decreased by 5.1 percent to EUR 173.7 million (4–6/2017: EUR 183.2 million). Revenue grew by 3.1 percent, excluding currency effects and divestments. 
  •  Adjusted operating profit was EUR 21.5 (20.0) million, i.e. 12.4 (10.9) percent of revenue.
  •  Operating profit (EBIT) was EUR 21.2 (20.0) million, i.e. 12.2 (10.9) percent of revenue.
  • EPS was EUR 0.35 (0.28).

January–June 2018 highlights

  • Revenue decreased by 5.1 percent to EUR 303.8 million (1–6/2017: EUR 320.2 million). Revenue grew by 1.6 percent, excluding currency effects and divestments. 
  • Adjusted operating profit was EUR 25.1 (25.2) million, i.e. 8.3 (7.9) percent of revenue.
  • Operating profit (EBIT) was EUR 21.1 (25.2) million, i.e. 7.0 (7.9) percent of revenue.
  • EPS was EUR 0.30 (0.41).

Guidance for 2018

-        Tikkurila’s revenue is expected to remain at last year’s level and adjusted operating profit to improve.  

Key figures
(EUR million) 4–6/2018 4–6/2017 Change % 1–6/2018 1–6/2017 Change % 1–12/2017
Income statement
Revenue 173.7 183.2 -5.1% 303.8 320.2 -5.1% 582.4 
Adjusted operating profit 21.5 20.0 7.8% 25.1 25.2 -0.2% 28.8 
Adjusted operating profit margin, % 12.4% 10.9% 8.3% 7.9% 4.9% 
Operating profit (EBIT) 21.2 20.0 6.0% 21.1 25.2 -16.1% 19.3 
Operating profit (EBIT) margin, % 12.2% 10.9% 7.0% 7.9% 3.3% 
Profit before taxes 19.5 16.4 18.7% 18.2 23.7 -23.4% 16.6 
Net profit for the period 15.4 12.5 22.9% 13.3 18.1 -26.7% 10.7 
Other key indicators
EPS, EUR 0.35 0.28 22.9% 0.30 0.41 -26.7% 0.24 
ROCE, %, rolling 5.0% 12.9% 5.0% 12.9% 6.3% 
Cash flow after capital expenditure -6.5 -33.4 80.6% -52.1 -63.9 18.5% 4.4 
Net interest-bearing debt at period-end 157.3 157.2 0.0% 90.1 
Gearing, % 104.6% 83.3% 50.2% 
Equity ratio, % 28.1% 34.8% 42.0% 
Personnel at period-end 3,030 3,228 -6.1% 3,037 


Comments by Elisa Markula, CEO:

Our euro-denominated revenue decreased in the second quarter, but by excluding currency effects and divestments the comparable growth was 3 percent. Sales volumes grew in all key markets, thanks to our sales efforts, positive economic trends, and the improved reliability of deliveries.  

Profitability improved due to higher sales volumes and reduced fixed expenses, but profitability did not reach the targeted level. We increased our sales prices, but not sufficiently to compensate for the increased raw material costs.  

A year ago, we launched an extensive efficiency program to boost profitability and cost competitiveness. The minimum savings target for the program was set at EUR 30 million. Within the framework of the efficiency program, we have so far moved to a more centralized organizational model, discontinued and divested unprofitable business operations, decided to close down certain small production units, and begun streamlining and simplifying the product portfolio. At an annual level, the savings impact of the measures taken thus far is roughly EUR 10 million. Furthermore, we are aiming to achieve savings of approximately EUR 20 million by streamlining sourcing, optimizing the production network, and reducing fixed expenses. Headcount reductions are planned for areas in which overlaps and opportunities to streamline operations have been identified. The reductions will take place during the current year. The effects of the EUR 30 million saved through the program will be visible during 2019.  

As for this year, we will continue to boost sales and raise sales prices in all markets. Raw material prices are estimated to continue to increase throughout 2018. We estimate that our revenue will remain at the previous year’s level, and our adjusted operating profit will improve. Our long-term goal is to ensure the realization of Tikkurila’s vision, ’Surfaces that make a difference’, and define the related strategic choices, particularly with regard to building outstanding customer experiences and making sustainability the center of all our operations and concrete added value to our customers. Our short-term goal is to focus on strengthening the position of our brands and improving operational efficiency through several transformation projects.” 

Outlook for 2018

The market outlook for the current year is relatively good, although uncertainty has increased in the housing market. Economic growth is anticipated to continue in Tikkurila’s key markets and consumer confidence is high. The importance of professional segment is on the rise which will affect the sales split of the Tikkurila Group. The identified problems with the deployment of the ERP system have mostly been resolved, and inventory levels have been significantly raised in order to ensure deliveries.  

The prices of raw materials and packaging materials are anticipated to continue rising during the remainder of the year. Some challenges with availability may also still occur. In order to compensate for increased costs, Tikkurila will continue to raise its sales prices and to take action to boost profitability.

Guidance for 2018

Tikkurila’s revenue is expected to remain at last year’s level and adjusted operating profit to improve.

Press Conference and webcast

Tikkurila will hold a press conference regarding the half year financial report for January–June 2018 for the media and analysts today on August 3, 2018, 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 Elisa Markula, CEO, and Jukka Havia, CFO.

A live webcast, conducted in English, will be organized on August 3, 2018, 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 0361 (Finnish callers)

+44 (0)330 336 9105 (UK callers)

+1 929-477-0448 (US callers)

Participant code: 8165234 

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 will publish the business review for January−September 2018 on Friday October 26, 2018, at around 9:00 a.m. (CET+1).

Tikkurila Oyj

Elisa Markula, CEO

For further information, please contact:

Elisa Markula, CEO
Mobile +358 50 596 0978,
elisa.markula@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  


Sustainable Nordicness

Tikkurila 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 3,000 dedicated professionals share the joy of building a vivid future through surfaces that make a difference. In 2017, our revenue totaled EUR 582 million. The company is listed on Nasdaq Helsinki. Nordic quality from start to finish since 1862.

www.tikkurilagroup.com