Business Review

Q1/2021

2

Tikkurila's Business Review for January-March 2021:

Revenue and profitability continued to improve significantly

Tikkurila Oyj

Business Review Q1

April 28, 2021 at 9.00 a.m. (EEST)

January-March highlights

  • Revenue increased by 9.3 percent compared to 2020, amounting to EUR 145.4 million (1-3/2020: 133.0). Comparable revenue increased by 12.9 percent, excluding currency effects.
  • Adjusted operating result increased by 105.8 percent to EUR 17.6 (8.5) million and amounted to 12.1 (6.4) percent of revenue.
  • Operating result (EBIT) increased by 88.5 percent to EUR 16.1 (8.5) million and was 11.1 (6.4) percent of revenue.
  • Earnings per share (EPS) increased by 258.6 percent to EUR 0.31 (0.09).
  • Regarding the voluntary recommended cash tender offer for all the shares in Tikkurila Oyj by PPG Industries, Inc., PPG announced on April 14 that it has extended the tender offer period to continue until May 11, 2021.

Elisa Markula, CEO

Tikkurila's financial performance during the first quarter was strong, revenue increased by 9 percent and revenue without currency effects close to 13 percent. The adjusted operating result reached EUR 17.6 million, which is more than double compared to the same period a year ago. High demand for decorative paints and premium quality brands continued, and our customers prepared actively for the upcoming peak season. Volume development was +10 percent.

Tikkurila experienced a strong revenue growth particularly in Sweden and Poland, and revenue increased also in Finland. Excluding the impact of the weakening Ruble, our paint sales grew by double-digits in Russia. Across all key markets, our sales and price mix continued to develop positively and the demand both for interior and exterior paints was high in all decorative channels and markets. In industry paints, revenue was slightly below the previous year's level, and performance varied from country to country. We saw growth in wood industry paints, while at the same time, demand decreased in the metal industry paint market.

The demand for decorative paints continued on a healthy level, and despite the Covid- restrictions imposed in some countries such as in the Baltic countries, Poland and Denmark, the impact on paint sales remained minor as home improvement shops were allowed to operate. Many customers discovered new ways to serve their customers in home improvement activities safely with an increased focus on online and click & collect activities.

3

Tikkurila expects the Do-It-Yourself (DIY) -trend to continue solid throughout the coming months as travel restrictions are still valid in many countries. People tend to stay extensively at home and spend their excessive spare time by renovating their homes and other premises.

The paint industry has recently experienced constraints in raw material supply causing availability issues and cost inflation globally. The impact of raw material disruption is expected to be visible from Q2 onwards.

PPG Industries, Inc. made a voluntary recommended public cash tender offer for all outstanding shares in Tikkurila in December 2020. PPG has decided to extend the offer period for the Tender Offer to expire on May 11, 2021.

Key figures for the Group

EUR million

1-3/2021

1-3/2020

Change %

1-12/2020

Revenue

145.4

133.0

+9.3%

582.0

Excl. currencies and

+17.2

+12.9%

closures

Operating result

16.1

8.5

+88.5%

61.1

Operating result

11.1%

6.4%

+4.6%-p*

10.5%

margin, %

Adjusted operating

17.6

8.5

+105.8%

63.8

result

Adjusted operating

12.1%

6.4%

+5.7%-p

11.0%

result margin, %

Net result for the

13.5

3.8

+258.6%

43.1

period

Earnings per share

0.31

0.09

+258.6%

0.98

(EPS), EUR

Interest-bearing net

liabilities (at period-

48.8

95.6

-49.0%

12.1

end)

Cash and cash

37.9

70.5

-46.2%

92.0

equivalents

Total equity (at

195.4

166.3

+17.5%

181.4

period-end)

Total assets (at

454.0

486.5

-6.7%

441.6

period-end)

Gearing, %

25.0%

57.5%

6.7%

ROCE, %, rolling

27.6%

15.8%

24.0%

Cash flow after

-32.2

-17.4

-85.2%

92.0

capital expenditure

*percentage points

4

Main drivers (Q1)

The demand for decorative paints remained high during the first quarter. The sales of premium quality products, Tikkurila, Alcro and Beckers, increased and price/mix impact was positive. Our customers also prepared actively for a coming paint peak season.

In industry paints the total revenue slightly declined, but performance varied between countries and segments. The revenue declined in metal industry paints but increased in wood industry. Especially Poland was growing in industry paints.

Currencies had a clear negative impact on the revenue during the quarter. The weakening of the Russian Ruble impacted negatively on the revenue in SBU East, whereas in local currency the revenue growth was strong. In SBU West, the weakening Polish Zloty had a negative impact on the revenue, which however, was compensated by the strengthening Swedish Krona.

Operating result improved significantly driven by the healthy demand for decorative paints and positive development on all core markets. The turn-around efficiency improvements also boosted the financial result. Items affecting comparability during Q1 were related to the ongoing PPG's tender offer.

Segment data

EUR million

1-3/2021

1-3/2020

Change %

1-12/2020

SBU West revenue

107.1

96.9

+10.5%

398.0

Excl. FX and

+9.3

+9.6%

closures

SBU West operating

15.2

10.4

+47.8%

49.0

result (EBIT)

SBU West adjusted

15.4

10.4

+47.8%

49.2

operating result

SBU East revenue

38.3

36.0

+6.3%

184.1

Excl. FX and

+7.9

+21.9%

closures

SBU East operating

3.5

-0.9

+475.4%

20.4

result (EBIT)

SBU East adjusted

3.6

-0.9

+483.5%

21.8

operating result

Group Common

-2.6

-0.9

-176.3%

-8.3

operating result

5

Effects of various factors on revenue

Group

SBU West

SBU East

EUR

%

EUR

%

EUR

%

million

million

million

Revenue in

133.0

96.9

36.0

Q1/2020

Volume

13.0

9.8%

7.1

7.3%

5.9

16.5%

Price/mix

4.2

3.1%

2.2

2.3%

2.0

5.5%

Currencies

-4.7

-3.6%

0.9

0.9%

-5.6

-15.5%

Divestments

-

-

-

Revenue in

145.4

+9.3%

107.1

+10.5%

38.2

+6.3%

Q1/2021

Revenue by region

EUR million

1-3/2021

1-3/2020

Change %

1-12/2020

Russia

26.0

27.7

-6.0%

133.6

Sweden

36.6

31.0

+18.1%

131.3

Finland

29.1

27.6

+5.5%

97.9

Poland

24.2

21.4

+12.9%

92.6

Other countries*

29.4

25.2

+16.6%

126.6

* Tikkurila's products are available in over 40 countries.

Main drivers (Q1)

In Russia (SBU East), euro-denominated revenue declined due to the weakening Russian Ruble, but the revenue in local currency was in double digit growth, driven by decorative paints. Sales mix continued to develop positively, as demand increased for premium brands.

In Sweden (SBU West), revenue increased driven especially by decorative paints. The growth was driven by the continued strong demand for all paints. The strengthened Swedish Krona impacted positively on revenue.

In Finland (SBU West), revenue increased in decorative paints, driven by exterior paints. Revenue decreased in industry paints whereas metal industry has been impacted by the generally lower demand in our customers' businesses.

In Poland (SBU West), revenue increased both in decorative and industry paints driven by the strong growth in premium quality brands. The weakened Polish Zloty had a negative impact on the euro-denominated revenue.

The revenue increase in Other countries was driven by Denmark and China. China recovered against the relatively weak comparison period.

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Tikkurila Oyj published this content on 28 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 April 2021 07:08:03 UTC.