Tikkurila Oyj
Stock Exchange Release
August 4, 2016 at 9:00 a.m. (CET+1)
Tikkurila's half year financial report for January-June 2016
- Demand clearly up, but unfavorable exchange rates eroded revenue growth
April-June 2016 highlights
- Revenue for the second quarter totaled EUR 179.3 million (4-6/2015: EUR 179.5 million).
- Adjusted operating profit was EUR 28.4 (28.6) million, i.e. 15.8 (15.9) percent of revenue.
- Operating profit (EBIT) was EUR 27.6 (30.9) million, i.e. 15.4 (17.2) percent of revenue.
- EPS was EUR 0.54 (0.52).
January-June 2016 highlights
- Revenue totaled EUR 309.8 million (1-6/2015: EUR 312.7 million).
- Adjusted operating profit was EUR 40.9 (43.9) million, i.e. 13.2 (14.0) percent of revenue.
- Operating profit (EBIT) was EUR 40.1 (46.2) million, i.e. 13.0 (14.8) percent of revenue.
- EPS was EUR 0.77 (0.82).
Revenue and EBIT estimates for 2016 intact
- Tikkurila expects its revenue for the financial year 2016, with exchange rates as of the publication date of the financial statement release, to be at the same level as in 2015. Adjusted operating profit is expected to stay at 2015 level.
| Key figures | |||||||
| (EUR million) | 4-6 /2016 | 4-6 /2015 | Change % | 1-6 /2016 | 1-6 /2015 | Change % | 1-12 /2015 |
| Income statement | |||||||
| Revenue | 179.3 | 179.5 | -0.1% | 309.8 | 312.7 | -0.9% | 584.1 |
| Adjusted operating profit | 28.4 | 28.6 | -0.8% | 40.9 | 43.9 | -6.9% | 58.9 |
| Adjusted operating profit margin, % | 15.8% | 15.9% | 13.2% | 14.0% | 10.1% | ||
| Operating profit (EBIT) | 27.6 | 30.9 | -10.8% | 40.1 | 46.2 | -13.1% | 61.7 |
| Operating profit (EBIT) margin, % | 15.4% | 17.2% | 13.0% | 14.8% | 10.6% | ||
| Profit before taxes | 28.9 | 28.9 | 0.2% | 42.5 | 46.3 | -8.3% | 52.8 |
| Net profit for the period | 23.9 | 23.0 | 4.0% | 33.9 | 36.3 | -6.8% | 41.5 |
| Other key indicators | |||||||
| EPS, EUR | 0.54 | 0.52 | 3.9% | 0.77 | 0.82 | -6.8% | 0.94 |
| ROCE, %, rolling | 19.6% | 22.8% | 19.6% | 22.8% | 22.2% | ||
| Cash flow after capital expenditure | -23.2 | -7.2 | -220.8% | -56.7 | -20.8 | -172.3% | 32.6 |
| Net interest-bearing debt at period-end | 135.2 | 101.8 | 32.8% | 46.2 | |||
| Gearing, % | 70.2% | 51.4% | 23.7% | ||||
| Equity ratio, % | 36.6% | 40.9% | 51.1% | ||||
| Personnel at period-end | 3,154 | 3,300 | -4.4% | 3,100 |
Due to European Securities and Markets Authority's (ESMA) guidelines on Alternative Performance Measures, effective from July 3, 2016, the performance measure "operating profit (EBIT) excluding non-recurring items" is replaced with "adjusted operating profit". Adjusted items affecting comparability are defined in the table section of this half year financial report.
Comments by Erkki Järvinen, President and CEO:
"Our sales volumes developed really well in the second quarter, especially in the west. This growth derives from suitable weather conditions in the spring, pre-season orders of paints in the first quarter that were delivered in the second, successful product launches, and an upswing in construction in Finland. Volumes grew in the east, too, as China continued to grow steadily, with demand also picking up a little in Russia.
Second-quarter revenue increased markedly at comparable exchange rates thanks to higher demand and a product price hike in Russia. However, reported revenue remained at the comparison period's level because of weak currencies, especially the Russian ruble. The exchange rates had a negative effect of some EUR 15 million on the second-quarter euro-denominated revenue.
Our Q2 profitability was at the same level as a year ago. Sales and marketing expenses were clearly higher than a year ago because of the efforts put into the western markets. We will continue our efforts to improve user experience and to boost our market position. Full-year sales and marketing expenses will be close to those a year ago.
We are not expecting any major changes in the market in the second half of the year. The western market seems to continue to be stable, whereas in Russia and its neighboring regions the weak currency and low purchase power of the consumers continue to make things difficult."
Outlook for 2016
Growth in the EU region is forecasted to be steady but fairly low. The importance of the Western markets, particularly Sweden and Poland, is expected to increase further. The weak economic situation in Russia and the low level of ruble will make the operating environment difficult in 2016. In Russia, paint demand is expected to decrease and the relative market share of the lower price and quality grade products is expected to grow. Tikkurila is planning to increase its prices primarily in Russia, as well as to increase local manufacturing and raw material purchasing. Sales and marketing investments will continue in the previous years' manner in order to strengthen the market position. At the same time, increased operational efficiency and cost savings will be actively sought in all operations.
Guidance for 2016
Tikkurila expects its revenue for the financial year 2016, with exchange rates as of the publication date of the financial statement release, to be at the same level as in 2015. Adjusted operating profit is expected to stay at 2015 level.
Press Conference and webcast
Tikkurila will hold a press conference regarding the half year financial report for January-June 2016 for the media and analysts today on August 4, 2016, 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. The event will also be participated by Ilari Hyyrynen, Head of Tikkurila's Russian operations.
A live webcast, conducted in English, will be organized on August 4, 2016, 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 6937 9543 (Finnish callers)
+44 20 3427 1906 (UK callers)
+1 646 254 3360 (US callers)
Participant code: 7024857
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, Investor Relations and Brand Concept Development
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.
HUG#2032994
