Tikkurila. Interim Report for January June 2012 Investor presentation

Transcription

1 Tikkurila Interim Report for January June 2012 Investor presentation

2 Disclaimer In this presentation, all forward-looking statements in relation to the company or its business are based on the management judgment, and macroeconomic or general industry data are based on third-party sources, and actual results may differ from the expectations and beliefs such statements contain. August

3 Contents Tikkurila overview Review period Group highlights Review period Segment highlights Outlook Appendix August

4 Tikkurila overview

5 Tikkurila in brief Tikkurila in a nutshell Tikkurila's locations Customers: Consumers and professionals Market position: Leading market position in decorative paints in Finland, Sweden, Russia and the Baltic countries, one of the leading in Poland Market area: Northern Europe, Central Eastern Europe, Russia and other CIS countries, Ukraine Products and services: Decorative paints, industrial wood and metal coatings, customer training, comprehensive advisory service (e.g. Customer hotline), Designer and Contractor Pool etc. Finland Sweden Estonia Poland Germany Serbia Ukraine Production, logistics center, sales Logistics center, sales Distribution center, sales Russia Kazakhstan China August

6 Tikkurila market shares and positions in decorative paints in key markets in 2011 RUSSIA SWEDEN FINLAND POLAND 19% 16% 60% 40% 50% >50% 81% 84% Tikkurila Others Tikkurila Others Tikkurila Others Tikkurila Others #1 #1 #1 #4 Russia accounts for 30% of Group revenue Sweden accounts for 24% of Group revenue Finland accounts for 17% of Group revenue Poland accounts for 9% of Group revenue Source: Chem-Courier (Russia), SVEFF (Sweden), Association of Finnish Paint Industry (Finland), IRP Research (Poland) August

7 Value of the global paints and coatings market EUR ~73 billion Metal Industrial Decorative paints 44% Coatings Industrial coatings 56% 10% 8% Transportation Decorative paints 44% 8% Industrial Maintenance and Protective 7% Automotive Refinish Source: IPPIC 2010, Valspar % 3% 4% 6% Packaging Coatings Marine Coatings Coil Coatings 6% Wood Coatings Powder Coatings August

8 Paint consumption and demand structure Factors impacting paint demand Estimated paint consumption per capita* Living standards Local habits and painting methods Construction styles and available materials Trends in interior decoration, colors etc. Level of activity in new construction, renovation and industry Functional paints Markets in Western Europe mature, growth opportunities in areas with increasing income per household Tikkurila has an established presence in areas with expected growth in consumption per capita and increasing demand for premium products = High = Medium = Low * Paint consumption source: Management estimates, IPPIC August

9 Revenue, EUR million EBIT % (excl. non-recurring) Long term financial development Development of sales and profitability Major acquisitions and divestments Sale of tinting business in 2000 (Revenue ~MEUR 130) Acquisition of Alcro- Beckers in 2001 (Revenue ~MEUR 190) Acquisition of Kraski Teks in 2006 (Revenue ~MEUR 80) Acquisition of Zorka Color in 2011 (Revenue ~MEUR 16) Revenue Revenue from acquisitions Divestments EBIT margin (excl. non-recurring) 0 August

10 Tikkurila's strategy Tikkurila offers user-friendly and sustainable solutions for surface protection and decoration. Focusing Customers Geographic area Brands Profitability Resilience Realignment Agility Targets: Operating EBIT* >10% Continuous improvement of ROCE % Growth Organic Well-targeted acquisitions Target: An annual organic revenue growth of >5% The leading provider of paint-related architectural solutions for consumers and professionals in the Nordic area as well as in Russia and other selected Eastern European countries. * Excluding non-recurring items August

11 Strong and well-established brands Strategic brands Local brands "High end" (premium) "High end" (premium) "Medium" "Economy" Large majority of sales from strategic brands August

12 Deep partnerships with retailers are of crucial importance Creating added value to consumers The strongest brands Marketing support Active product and service development Training for retailers' personnel Developing the category together with the retailers August

13 Service concepts and tinting technology Inspiration Ideas Colors Stores Designer Pool Contractor Pool Internet Helpline Training August

14 Distribution channels Tikkurila Wholesale (some countries) RETAIL Direct sales to: construction industry wood industry metal industry BIG Boxes Specialised paint shops Temaspeed Consumers Professionals Advertising and trade marketing August

15 Tikkurila's ownership structure on June 30, 2012 Number of shareholders ~22,500 Largest shareholders Oras Invest Oy (18.1%), Ilmarinen (10.4%) and Varma (8.6%) 50 largest shareholders holding ~60% ~95% of shareholders holding max 1,000 shares 3.1% 13.0% 24.7% 25.2% 23.4% 10.7% Private companies Financial and insurance institutions Public sector organizations Households Non-profit organizations Foreigners and nominee registered August

16 Review period Group highlights

17 Second quarter highlights Revenue increased by 6% due to sales price increases, in particular Sales volumes decreased in all markets, excluding the impact of acquisitions Operating profit (EBIT) excl. non-recurring items increased by 27% due to increased revenue and streamlining measures Relative profitability improved Raw material cost level was clearly higher than in the comparison period, but the price development and availability are stabilizing Efficiency improvement measures are proceeding as planned and are improving the result Uncertainty in the operating environment increased towards the end of the review period Tikkurila's outlook for 2012 is reiterated Development Q2/2012 vs. Q2/2011 August

18 Review period key figures Milj. euroa 4 6/ /2011 Change % 1 6/ /2011 Change % 2011 Revenue % % EBIT excluding nonrecurring items % % 62.7 EBIT excluding nonrecurring items, % 16.6% 13.8% 12.5% 10.2% 9.7% EBIT % % 61.2 EBIT, % 15.9% 13.8% 10.9% 10.2% 9.5% EPS, EUR % % 0.80 ROCE, %, rolling 20.6% 18.8% 20.6% 18.8% 19.4% Cash flow after capital expenditure % 13.3 Net interest-bearing debt at period-end % 99.4 Gearing, % 84.0% 77.1% 51.9% Equity ratio, % 35.0% 34.4% 44.1% Personnel at period-end 3,555 3, % 3,551 August

19 Non-recurring items by segment EUR million SBU East SBU Scandinavia SBU Finland SBU CEE Tikkurila common Total 1 6/2012 Personnel related Divestments Impairment losses Total Personnel related non-recurring items are related to the efficiency improvement program and restructuring measures under way in the Group Divestment related non-recurring items are related to the sale of the subsidiaries in Hungary, Czech Republic, Slovakia and Romania Impairment losses are related to a Russian land area and related buildings, which have been put up for sale August

20 Development of gross domestic product F, growth-% Russia Sweden E 2012F E 2012F Finland Poland E 2012F E 2012F Source: Bank of Finland, Statistics Finland, Eurostat, Citibank August

21 Volume of Finnish residential building construction has been falling since autumn 2011 Granted permits and building starts in Finland Volume index for Finnish newbuilding mil. m 3, variable annual sum 2005=100, trend The situation is still fairly good for the construction industry however, there are some signs of slowing down in many European countries Source: Statistics Finland August

22 Revenue and operating profit* by segment Q2/2012 vs. Q2/2011 Revenue change by segment Operating profit* change by segment EUR million EUR million The figures on the graph above have been independently rounded to one decimal, which should be taken into account when calculating total figures. * Excluding non-recurring items August

23 Revenue development EUR million 4 6/ /2011 Change % Revenue % Group's revenue development Q2/2012 vs. Q2/2011 Increase/decrease, % % (EUR million) +10% (EUR million) 0% +2% (EUR +3.5 million) +6% (EUR million) Volume Sales mix/price Exchange rates Acquisitions/ divestments Total -8 The figures on the graph above have been independently rounded to one decimal, which should be taken into account when calculating total figures. August

24 Second quarter highlights Teks brand in renewal Teks, a strategic brand of Tikkurila, was renewed in Russia, CIS countries and the Baltics in order to strengthen the brand's position Services business in Sweden Alcro to cooperate with Skanska in construction of the New Karolinska Solna University Hospital outside Stockholm For further information, please visit August Vision shop-in-shop store concept received an honorary mention Fennia Prize Good design grows global competition awarded Vision for innovative and inspiring design in Finland

25 Review period Segment highlights

26 SBU East Q2/2012 EUR million 4 6/ /2011 Change % Revenue % EBIT* % EBIT*, % 18.6% 13.9% Increase/decrease, % % Revenue development Q2/2012 vs. Q2/ % 0% 0% +12% Volume Sales mix/price Exchange rates Acquisitions/ divestments Total Q2/2012 highlights Revenue grew due to the sales price increases Profitability was improved by revenue growth and streamlining of operations Economic growth in Russia is slowing down after a good start of the year * Excluding non-recurring items August

27 SBU Scandinavia Q2/2012 EUR million 4 6/ /2011 Change % Revenue % EBIT* % EBIT*, % 15.7% 18.0% Increase/decrease, % Revenue development Q2/2012 vs. Q2/ % -7% +1% Volume Sales mix/price Exchange rates Acquisitions/ divestments -3% Total -2% Q2/2012 highlights Sales volumes decreased due to the uncertainty of the economic development and rainy beginning of the summer Competitive situation has tightened in Scandinavia Reduction in revenue and higher sales promotion expenses weakened the profitability * Excluding non-recurring items August

28 SBU Finland Q2/2012 EUR million 4 6/ /2011 Change % Revenue % EBIT* % EBIT*, % 20.2% 16.3% Increase/decrease, % % Revenue development Q2/2012 vs. Q2/2011 Volume Sales mix/price Exchange rates Acquisitions/ divestments +7% 0% 0% Total -2% Q2/2012 highlights Economic uncertainty and slowdown in construction weakened sales volumes Efficiency improvements and cost saving operations improved profitability Consumer confidence took a clear downward turn in summer * Excluding non-recurring items August

29 SBU Central Eastern Europe Q2/2012 EUR million 4 6/ /2011 Change % Revenue % EBIT* % EBIT*, % 12.3% 6.4% Increase/decrease, % Revenue development Q2/2012 vs. Q2/ % +11% Volume Sales mix/price Exchange rates Acquisitions/ divestments -5% -10% +12% Total Q2/2012 highlights Sales volumes declined, excl. the impact the Tikkurila Zorka acquisition Sales price increases and the acquisition of Tikkurila Zorka increased the revenue Revenue growth as well as restructuring and cost saving measures clearly improved the profitability The figures on the graph above have been independently rounded to one decimal, which should be taken into account when calculating total figures. * Excluding non-recurring items August

30 Outlook for 2012

31 Price development of TiO 2 seems to be stabilizing TiO 2 Pigment Pricing TiO 2 Supply/Demand Trends Source: TZMI Q forecast, Tronox Source: TZMI Q forecast, Tronox August

32 Conclusions Tikkurila's first half of the year was very strong Streamlining and restructuring measures are proceeding as planned and they are improving the result Measures in accordance with the strategy will be continued, but they are estimated not to result in significant expenses Raw material situation is stabilizing Market volatility has all in all increased Uncertainty related to the global economic development poses the main near-term challenge August

33 Outlook for 2012 reiterated Revenue and profitability of Tikkurila Outlook for 2012 EUR million % In 2012, the GDP is expected to remain close to the 2011 levels or the GDP growth is expected to be low in the key market areas of Tikkurila. Further raw material cost increases are predicted, even though it is assumed that the raw material and packaging material cost inflation will be clearly lower than in In 2012, Tikkurila expects the revenue growth to exceed the average GDP growth in Tikkurila's main market areas and EBIT in euro to stay at the same level as in Revenue EBIT, % (excluding non-recurring items) August

34 Appendix

35 Tikkurila SBUs East Finland Scandinavia CEE Operational area Russia and other CIS countries Finland Sweden, Norway, Denmark CEE countries and other countries incl. Germany Production sites St. Petersburg, Russia Stary Oskol, Russia Kiev, Ukraine Tikkurila, Vantaa Nykvarn, Sweden Tallinn, Estonia Ansbach, Germany Debica, Poland Sabac, Serbia Current demand structure Economy price and quality segment products Premium and medium price and quality segment products Premium and medium price and quality segment products Medium and economy price and quality segment products Expected demand structure Premium price and quality segment products expected to rise Premium and medium price and quality segment products Premium and medium price and quality segment products Medium and premium price and quality segment products Competitors Akzo Nobel, Lakra-Sintez, Empils, ABC-Farben, Meffert, Caparol Akzo Nobel, Teknos, Nor- Maali 2, Becker Acroma 2 Akzo Nobel, Flügger, Jotun, Becker Acroma, Teknos Akzo Nobel, PPG, a large number of local and regional suppliers Distribution channels Deco: DIY retailers, independent retailers, wholesalers Industry: direct sales, Temaspeed Deco: DIY retailers, independent paint retailers Industry: direct sales, Temaspeed Deco: DIY retailers, Alcro- Beckers professional stores 1, Happy Homes chain 1, Colorama retail chain 1 Industry: direct sales, Temaspeed Deco: DIY retailers, independent retailers Industry: direct sales, Temaspeed August In Sweden 35 2 Industrial coatings

36 SBU East in brief Key facts Locations Operational area Russia, other CIS countries, Ukraine 2011 revenue EUR million, 34% of group 2011 EBIT 1 EUR 25.3 million, 39% of group 2 Employees Production sites Sales offices 1,577 (average) 3 in St. Petersburg, Russia, Stary Oskol, Russia and Kiev, Ukraine Russia, Ukraine, Belarus, Kazakhstan Expansion in East St. Petersburg Mytishchi Novosibirsk Minsk Chelyabinsk Stary Oskol Almaty Kiev 1970s Export to Russia and the former Soviet Union started 1994 Sales company in Russia 1995 First western paint factory opened in St. Petersburg 1998 Sales company OOO Tikkurila Coatings established 2004 Acquisition of Kolorit in Ukraine 2006 Acquisition of Kraski Teks 2006 Sales company established in Almaty, Kazakhstan 2007 Acquisition 2 St. Petersburg-based paint companies (Gamma, Powder Coatings) 2008 Sales company established in Minsk, Belarus 2009 Completion of logistic centre in Mytishchi, Moscow region 2011 Divestment of the powder coatings business 1 Excluding non-recurring items 2 Excluding group items August

37 Tikkurila in Russia Overview Tikkurila is the leading decorative paints supplier in Russia Tikkurila products are sold in over 5,000 retail outlets The product range consists of decorative paints and coatings for the wood and metal industries Products are sold under the well known brands: Teks, Finncolor, Gamma and Tikkurila Tikkurila has three paint factories in St. Petersburg and one in Stary Oskol Personnel 1,500 at year-end 2011 Tikkurila paint brands in Russia PREMIUM ECONOMY Market leader in decorative paints in 2011 * 19% Tikkurila 6% Empils 5% Lakra Others 70% * Chem-Courier, 2011 (volume) August

38 In good position to grow further in Russia, other CIS Countries and CEE countries Tikkurila's production capacity Production and raw materials 48.6% 51.4% 11 production facilities in 8 countries Local production increases flexibility, clear advantage specially during unstable market conditions Production of water-borne products increasing; ~60% of total, ~70% of decorative paints Raw material prices affected mainly by oil prices, supply capacity and currencies ~75% of raw materials from western suppliers, in Russia ~50% of raw materials from local suppliers Outside EU In EU August

39 Decorative paint brands in Russia Segment Trends Shelf Price Tikkurila Empils Farben Akzo Nobel Lakra Russkiye Predpriyatie Dekart + ICI kraski VGT Caparol Khimik Holding Prestizh Eskaro Meffert Premium > 6 EUR Medium 2-6 EUR Value 1-2 EUR Low / Economic < 1,0 EUR August

40 SBU Scandinavia in brief Key facts Locations Operational area Sweden, Norway, Denmark 2011 revenue EUR million, 30% of group 2011 EBIT 1 EUR 24.3 million, 37% of group 2 Employees Production sites Sales offices 473 (average) Nykvarn, Sweden Sweden, Norway, Denmark Development in Scandinavia 1865 Beckers founded 1906 Alcro founded 1967 First Tikkurila subsidiary established in Sweden 2001 Acquisition of Alcro-Beckers 2002 Acquisition of Akzo Nobel s general industrial finishes business 2007 New production plant in Nykvarn 2008 New headquarters in Hammarby Sjöstad 2008 Acquisition of Måleributiken in Alvik, Sweden 2011 Divestment of two retail stores in Sweden Oslo Copenhagen 1 Excluding non-recurring items 2 Excluding group items Nykvarn Stockholm August

41 SBU Finland in brief Key facts Locations Operational area Finland 2011 revenue EUR million, 17% of group 2011 EBIT 1 EUR 10.9 million, 17% of group 2 Employees 746 (average) Production sites Vantaa, Finland Sales offices Several in Finland Vantaa 1 Excluding non-recurring items 2 Excluding group items August

42 SBU CEE in brief Operational area Key facts Albania, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Former Yugoslav Republic of Macedonia, Kosovo, Hungary, Latvia, Lithuania, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia and other markets (including e.g. China) 2011 revenue EUR million, 19% of group Locations Tallinn Riga Vilnius 2011 EBIT 1 EUR 4.4 million, 7% of group 2 Employees 845 (average) Lodz Warsaw Production sites Sales offices Tallinn, Estonia, Ansbach, Germany, Debica, Poland and Sabac, Serbia Czech Republic, Hungary, Latvia, Lithuania, Romania, Slovakia, China, Finland (export) Expansion in CEE 1989 JV established in Tallinn, Estonia 1992 Paint production started in Tallinn, Estonia 1993 Sales company in Riga, Latvia 1995 Sales company established in Vilnius, Lithuania 1997 Sales company in Budapest, Hungary 2001 Production plants in Ansbach, Germany and Debica, Poland 2006 Acquisition of sales company in Prague, Czech Republic 2007 Sales company established in Beijing, China 2008 Sales companies in Shanghai, China, Bucharest, Romania and Martin, Slovakia 2011 Acquisition of the business of Serbian Zorka Color Ansbach 1 Excluding non-recurring items 2 Excluding group items Prague Martin Budapest Debica Šabac Skopje + China (Beijing and Shanghai) Bucharest August

43 Investor and media contacts Erkki Järvinen President and CEO Jukka Havia CFO Minna Avellan Manager, Investor Relations Tel August

44 Thank you!