Tikkurila Oyj Stock Exchange Release February 9, 2017 at 9:00 a.m. (CET+1) Tikkurila's Financial Statement Release for January-December 2016 - Encouraging signs of recovery on the market
Full-year 2016 highlights - Revenue decreased by 2.1 percent to EUR 572.0 million (2015: EUR 584.1 million). - Adjusted operating profit was EUR 54.0 (58.9) million, i.e. 9.4 (10.1) percent of revenue. - Operating profit (EBIT) was EUR 53.1 (61.7) million, i.e. 9.3 (10.6) percent of revenue. - EPS was EUR 1.01 (0.94). - Cash flow after capital expenditure was EUR 22.7 (32.6) million.
October-December 2016 highlights - Revenue increased by 0.7 percent to EUR 104.2 million (10-12/2015: EUR 103.4 million). - Adjusted operating result was EUR -10.6 (-11.1) million, i.e. -10.1 (-10.7) percent of revenue. - Operating result (EBIT) was EUR -10.7 (-10.3) million, i.e. -10.3 (-9.9) percent of revenue. - EPS was EUR -0.18 (-0.25).
Dividend proposal - The Board proposes a dividend of EUR 0.80 (0.80) per share, which corresponds to about 79 (85) percent of the Group's 2016 earnings per share.
Revenue and operating profit estimates for 2017 - Tikkurila expects its revenue and adjusted operating profit for the financial year 2017 to increase from the 2016 level.
| Key figures | ||||||
| (EUR million) | 10-12/2016 | 10-12/2015 | Change % | 1-12/2016 | 1-12/2015 | Change % |
| Income statement | ||||||
| Revenue | 104.2 | 103.4 | 0.7% | 572.0 | 584.1 | -2.1% |
| Adjusted operating result | -10.6 | -11.1 | 4.5% | 54.0 | 58.9 | -8.3% |
| Adjusted operating result margin, % | -10.1% | -10.7% | 9.4% | 10.1% | ||
| Operating result (EBIT) | -10.7 | -10.3 | -4.2% | 53.1 | 61.7 | -13.9% |
| Operating result (EBIT) margin, % | -10.3% | -9.9% | 9.3% | 10.6% | ||
| Result before taxes | -8.8 | -13.7 | 35.5% | 57.4 | 52.8 | 8.7% |
| Net result for the period | -8.2 | -11.0 | 25.6% | 44.5 | 41.5 | 7.2% |
| Other key indicators | ||||||
| EPS, EUR | -0.18 | -0.25 | 25.6% | 1.01 | 0.94 | 7.2% |
| ROCE, %, rolling | 18.5% | 22.2% | 18.5% | 22.2% | ||
| Cash flow after capital expenditure | 9.3 | -1.6 | 22.7 | 32.6 | -30.4% | |
| Net interest-bearing debt at period-end | 58.7 | 46.2 | 27.0% | |||
| Gearing, % | 28.1% | 23.7% | ||||
| Equity ratio, % | 50.9% | 51.1% | ||||
| Personnel at period-end | 3,033 | 3,100 | -2.2% |
Comments by Erkki Järvinen, President and CEO:
"The revenue and operating result of the year's last quarter were close to the level of the comparison period. Sales volumes developed well in Western markets, but the unfavorable development in exchange rates and higher cost level negatively impacted revenue and profitability.
Euro-denominated revenue for the entire year decreased by 2 percent, but grew in local currencies. The exchange rate development and divestments exerted a negative impact on revenue, totaling approximately EUR 28 million. Sales volumes grew in all key markets with the exception of Russia, where the decline in volume nevertheless clearly leveled out. China's strong growth in business operations continued, and the sales network was again raised by over 100 sales outlets.
Relative profitability for the entire year deteriorated from 10.1 percent to 9.4 percent. This deterioration arose primarily as a result of our investments towards stimulating demand in the Western paint market and improving the customer experience, as well as in strengthening sales and marketing resources under harsh competitive circumstances.
The most difficult phase in Russia would appear to be over. We await a slightly easier situation for the current year, but we do not see signs of rapid improvement. Increase in local production and raw materials sourcing have proceeded as planned. The changes made have favorably impacted demand and profitability, and as a result we have been able to maintain our clear leadership in the market.
Our goal is to grow our business further in the coming years. Growth is being actively sought in various geographical areas and product groups. In addition, better service on the professional side is high on our priority list. In order to support our growth target, we have on the one hand adjusted the structure of the company and streamlined our operational modes in recent years and, on the other hand, increased resources supporting growth. We will continue to make our operations more efficient also during the current year.
The price and availability related uncertainties linked with raw materials and titanium dioxide in particular, have increased significantly during the past few days. We will do our utmost to mitigate this significant risk by activating our sourcing and product development.
We estimate positive volume development as well as revenue and adjusted operating profit to grow this year."
Outlook for 2017
Among Tikkurila's key markets in Sweden and Poland, the fairly strong economic growth is expected to continue in 2017. The economies of Finland and Russia are also anticipated to grow slightly. Demand for paint is predicted to moderately increase in Tikkurila's operational area during the current year. The importance of the professional segment is growing, which affects the sales structure of the Tikkurila Group.
Raw material prices are expected to rise, but Tikkurila will aim to compensate for this impact by intensifying its raw material procurement, increasing local purchasing in Russia, and by increasing its sales prices. Furthermore, there are risks related to the availability of titanium dioxide.
Guidance for 2017
Tikkurila expects its revenue and adjusted operating profit for the financial year 2017 to increase from the 2016 level.
Board of Directors' proposal for the distribution of profit
Tikkurila Oyj's distributable equity totaled EUR 161.5 million on December 31, 2016: reserve for invested unrestricted equity totaled EUR 40.0 million and retained earnings totaled EUR 121.5 million. The Board proposes to the Annual General Meeting that a dividend of EUR 0.80 per share will be distributed for the year ended on December 31, 2016, and that the rest be retained in the unrestricted equity. The proposed dividend totals about EUR 35.3 million, which corresponds to approximately 79 percent of the Group's net profit for 2016. It is proposed that the record date for the payment of the dividend will be April 6, 2017, and that the dividend will be paid on April 13, 2017.
Press Conference and webcast
Tikkurila will hold a press conference regarding the Financial Statement Release for 2016 for the media and analysts today on February 9, 2017, at 12:00 p.m. (CET+1) in the Paavo Nurmi 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 Financial Statement Release will be presented by Erkki Järvinen , and Jukka Havia , CFO.
A live webcast, conducted in English, will be organized on February 9, 2017, 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 7479 0404 (Finnish callers) +44 330 336 9411 (UK callers) +1 719 457 2086 (US callers) Participant code: 7761517
An on-demand version of the webcast will be available at www.tikkurilagroup.com/investors later during the same day.
The Financial Statement Release 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 14 countries. Our high-quality products and extensive services ensure the best possible user experience in the market. Sustainable beauty since 1862.
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