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

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| Source: Tikkurila Oyj
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.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




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