Tikkurila's Interim Report for January-September 2014 - Solid profitability, weak economic situation puts pressure on revenue

Tikkurila Oyj
Interim Report
November 6, 2014 at 9:00 a.m. (CET+1)
 
Tikkurila's Interim Report for January-September 2014
- Solid profitability, weak economic situation puts pressure on revenue   

July-September 2014 highlights

Revenue for the third quarter decreased by 5.3 percent to EUR 179.6 million (7-9/2013: EUR 189.6 million).Operating profit (EBIT) excluding non-recurring items was EUR 32.1 (33.3) million, i.e. 17.9 (17.6) percent of revenue.Operating profit (EBIT) was EUR 31.3 (33.1) million, i.e. 17.4 (17.4) percent of revenue.EPS was EUR 0.55 (0.55).

January-September 2014 highlights

Revenue decreased by 4.2 percent to EUR 514.0 million (1-9/2013: EUR 536.3 million).Operating profit (EBIT) excluding non-recurring items was EUR 77.4 (76.8) million, i.e. 15.0 (14.3) percent of revenue.Operating profit (EBIT) was EUR 77.6 (76.7) million, i.e. 15.1 (14.3) percent of revenue.EPS was EUR 1.28 (1.25).

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)7-9/2014 7-9/2013 Change % 1-9/2014 1-9/2013 Change % 1-12/2013 Income statement        Revenue 179.6 189.6 -5.3% 514.0 536.3 -4.2% 653.0 Operating profit (EBIT), excluding non-recurring items 32.1 33.3 -3.7% 77.4 76.8 0.7% 72.6 Operating profit (EBIT) margin, excluding non-recurring items, % 17.9% 17.6%  15.0% 14.3%   11.1% Operating profit (EBIT) 31.3 33.1 -5.4% 77.6 76.7 1.2% 71.5 Operating profit (EBIT) margin, % 17.4% 17.4%  15.1% 14.3%   10.9% Profit before taxes 30.7 31.6 -2.6% 72.9 73.1 -0.2% 67.0 Net profit for the period 24.3 24.4 -0.8% 56.5 54.9 2.9% 50.1 Other key indicators            EPS, EUR 0.55 0.55 -0.6% 1.28 1.25 3.0% 1.14 ROCE, %, rolling 25.5% 23.7%  25.5% 23.7%   23.5% Cash flow after capital expenditure 54.1 64.9 -16.6% 42.2 55.5 -23.9% 66.9 Net interest-bearing debt at period-end    46.1 60.1 -23.3% 48.6 Gearing, %    21.2% 28.0%   23.4% Equity ratio, %    46.8% 46.4%   50.1% Personnel at period-end    3,212 3,253 -1.3% 3,133

Comments by Erkki Järvinen, President and CEO:

"As expected, the market situation continued to be challenging in the third quarter. The overall economic activity is still weakening in Russia and Finland, where the low consumer confidence and the decline in construction reduced our sales volumes. Our other key markets in Sweden, Poland and the Baltic countries performed somewhat better. Regardless of the tough market conditions, we had quite good sales of higher priced quality products in all markets, which is an evidence of the strength of our brands and services.

Weak currencies continued to put additional pressure on revenue growth. Linked to the weak economic growth and to the recent decline in oil price, Russian ruble has been depreciating for more than a year, the development escalating during the last months, which has led to a sizable negative translation effect in our income statement. We have been able to partially offset the ruble impact by operational actions.
 
Our third quarter revenue was close to last year's level as a result of the favorable development of the sales mix. Operating profit excluding non-recurring items decreased slightly in absolute terms, but in relative terms profitability remained at a record high level due to the positive sales mix development, streamlining of operations, and cost savings. We continued and will continue our marketing investments and other commercial activities aimed at accelerating demand. During the review period, the international launch of the new Tikkurila brand logo and packaging was also carried out.
 
Our operating profit for the first nine months of the year was at a higher level than in the comparison period despite the slight dip in revenue. We can be satisfied with the improvement of our relative profitability, although revenue did not develop as expected. The weaker trend in our key currencies is likely to continue during the remainder of the year.
 
Tikkurila acquired the Danish ISO Paint Nordic in October. The acquisition will complement our professional product range and our technological expertise in energy-efficient coating solutions and solutions which extend the life cycle of structures. The acquisition will also support our strategy of profitable growth, since we expect the demand for energy-efficient and eco-efficient solutions to grow."

Outlook for 2014

For the last months of 2014, the economic growth is expected to be weak in Tikkurila's key market areas. 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 reiterates its guidance for 2014.

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-September 2014 Interim Report for the media and analysts today on November 6, 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, and Jukka Havia, CFO.

A live webcast, conducted in English, will be organized on November 6, 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: 948477
 
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

Jukka Havia, CFO
Mobile +358 50 355 3757, jukka.havia@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

 

Tikkurila Interim Report Q3/2014


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Source: Tikkurila Oyj via Globenewswire
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