Transcript www.tikkurilagroup.com

Interim Report
January–June 2013
Investor presentation
Disclaimer
New or revised or amended standards and interpretations
have been applied from the beginning of 2013 and therefore
comparison information is changed accordingly.
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.
July 2013
2
Contents
•
•
•
•
•
Tikkurila overview
Development during the review period
Key financials of the Strategic Business Units
Conclusions and outlook for 2013
Appendix
July 2013
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Tikkurila overview
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
Sweden
Finland
Estonia
Poland
Germany
Ukraine
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.
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Russia
Kazakhstan
Serbia
China
Production, logistics center, sales
Logistics center, sales
Distribution center, sales
Tikkurila market shares and positions in
decorative paints in key markets in 2012
RUSSIA
SWEDEN
FINLAND
POLAND
15%
17%
38%
50%
>50%
62%
83%
Tikkurila
85%
Others
#1
Russia accounts for 32%
of Group revenue
Tikkurila
Others
Tikkurila
Others
#1
#1
Sweden accounts for 23%
of Group revenue
Finland accounts for 16%
of Group revenue
Tikkurila
Others
#4
Poland accounts for 9% of
Group revenue
Source: Chem-Courier (Russia, volume), SVEFF (Sweden, value), Association of Finnish Paint Industry (Finland, value), IRP Research (Poland, volume)
July 2013
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Value of the global paints and coatings market
EUR ~76 billion
Metal Industrial
Coatings
Decorative paints 44%
10%
Industrial coatings 56%
Transportation
8%
Decorative paints
44%
Powder Coatings
8%
7%
Industrial Maintenance
and Protective
7%
3% 3% 4%
6%
Automotive
Refinish
Wood Coatings
Packaging Coatings
Marine Coatings
Coil Coatings
Source: IPPIC 2012
July 2013
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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
* Paint consumption source: Management estimates, IPPIC
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= High
= Medium
= Low
Long term financial development
Development of sales and profitability 1996–2012
Major acquisitions and divestments
Sale of tinting business in
2000
(Revenue ~MEUR 130)
Acquisition of AlcroBeckers in 2001
(Revenue ~MEUR 190)
Acquisition of Kraski Teks
in 2006
(Revenue ~MEUR 80)
Acquisition of Zorka Color
in 2011
(Revenue ~MEUR 16)
16
700
625
Revenue, EUR million
600
445
400
349
361
358
450
439
441
644
670
589
563
500
300
648
14
12
530
457
10
8
345
6
255
200
4
100
2
0
0
1996
1997
1998
Revenue
July 2013
1999
2000
2001
2002
2003
Revenue from acquisitions
9
2004
2005
2006
Divestments
2007
2008
2009
2010
2011
2012
EBIT margin (excl. non-recurring)
EBIT % (excl. non-recurring)
800
Tikkurila's strategy for 2012–2014
Tikkurila offers user-friendly and
sustainable solutions for surface
protection and decoration.
Growth
Profitability
Resilience
Realignment
Agility
Focusing
Customers
Geographic area
Brands
July 2013
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Organic
Well-targeted
acquisitions
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.
Financial targets for 2018
Growth
Profitability
Return on
capital
Balance Sheet
structure
July 2013
• Revenue EUR 1 billion
• Operative EBIT margin over 12
percent
• Operative return on capital
employed (ROCE) over 20 percent
• Gearing less than 70 percent
11
Strong and well-established brands
Strategic brands
"High end" (premium)
"Medium"
Local brands
"High end" (premium)
"Economy"
Large majority of sales from strategic brands
July 2013
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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
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Service concepts and tinting technology
Inspiration
Profe professional
services
July 2013
Ideas
Designer Pool
Contractor Pool
Colors
Internet
14
Stores
Helpline
Training
Distribution channels
Tikkurila
Direct sales to:
• construction
industry
• wood industry
• metal industry
Wholesale (some countries)
RETAIL
BIG Boxes
Specialised
paint shops
Consumers
Professionals
Advertising and trade marketing
July 2013
Temaspeed
15
Tikkurila's ownership structure
Ownership structure on June 30, 2013
•
Number of shareholders
~22,000
Private companies
•
Largest shareholders Oras
Invest Oy (18%), Ilmarinen
(10%) and Varma (6%)
•
50 largest shareholders
holding ~55%
•
~95% of shareholders holding
max 1,000 shares
22%
Financial and
insurance institutions
30%
Public sector
organizations
10%
3%
12%
July 2013
Households
Non-profit
organizations
22%
Foreigners and
Nominee registered
16
Development
during the review
period
Second quarter highlights
•
Revenue was at comparison period level
• Sales volumes continued to decline but the decline was clearly less
steep compared to the beginning of the year
• Increases in sales prices and changes in the sales mix had a positive
impact on the revenue
•
Profitability remained at the comparison period's good level
• Increased fixed cost level and decline in revenue decreased profitability
• Streamlining measures and decline in raw material prices supported
profitability
•
Net debt was down by 19% year-on-year
•
Economic situation continued to be weak in all key markets
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Review period key figures
4−6/2013
4−6/2012
Change %
1–6/2013
1–6/2012
Change %
2012
208.3
209.1
-0.4%
346.7
357.7
-3.1%
670.4
EBIT excluding nonrecurring items
33.4
34.7
-3.9%
43.5
44.8
-2.9%
73.7
EBIT excluding nonrecurring items, %
16.0%
16.6%
12.6%
12.5%
33.3
33.2
43.6
39.0
16.0%
15.9%
12.6%
10.9%
0.54
0.52
0.69
0.51
22.9%
20.6%
22.9%
20.6%
4.4
-0.8
-9.4
-23.6
60.4%
50.3
125.6
155.4
-19.2%
80.8
Gearing, %
66.0%
87.4%
40.6%
Equity ratio, %
36.9%
33.6%
45.9%
3,400
3,552
EUR million
Revenue
EBIT
EBIT, %
EPS, EUR
ROCE, %, rolling
Cash flow after capital
expenditure
Net interest-bearing debt
at period-end
Personnel at period-end
July 2013
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0.5%
3.7%
11.0%
11.8%
66.3
9.9%
35.0%
0.92
21.0%
-4.3%
3,223
Market conditions remained challenging
EUR million
Revenue
4–6/2013
4−6/2012
Change %
208.3
209.1
-0.4%
Group's revenue development Q2/2013 vs. Q2/2012
Increase/decrease, %
0
Volume
Sales mix/Price
Exchange rates
Acquisitions/ divestments
+4%
0%
0%
(EUR +8.5 million)
(EUR -0.4 million)
-2
-4%
(EUR -8.8 million)
-4
-6
July 2013
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Total
0%
(EUR -0.8 million)
Decline in sales volumes was less steep in
the second quarter
Quarterly sales volume development, change in %, year-on-year
10
SBU East
SBU Scandinavia
SBU Finland
SBU CEE
5
0
-2
-5
-4
-4
-8
-10
-15
-20
July 2013
2012
21
2013
Price development of raw materials
Titanium dioxide price development
•
Raw material prices were on a
slightly lower level than in the
comparison period, mainly due to
the decline in TiO2 price
•
TiO2 price is expected to remain
at the current level during the
remainder of the year
•
FY 2013 raw material costs are
expected to be slightly lower than
in 2012
Index (2009=100)
160
140
120
100
80
July 2013
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Key financials of
the SBUs
SBU East Q2/2013
4−6/2013
4−6/2012
Change %
1−12/2012
Revenue
80.3
82.4
-2.6%
242.8
EBIT*
13.0
15.3
-14.7%
32.5
16.3%
18.6%
EUR million
EBIT*, %
13.4%
Revenue development Q2/2013 vs. Q2/2012
Q2/2013 highlights
Increase/decrease, %
•
2
•
+5%
0
Volume
Sales mix/Price Exchange rates
-3%
Acquisitions/
divestments
-2
0%
-4%
-4
Total
-3%
•
Weak economic situation kept
consumers cautious
Sales were also reduced by
delivery disturbances
Profitability was reduced by the
increase in fixed costs, by the
decline in revenue and by the
weakening of ruble
-6
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
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SBU Scandinavia Q2/2013
4−6/2013
4−6/2012
Change %
1−12/2012
Revenue
57.9
55.5
4.5%
194.2
EBIT*
10.3
8.7
18.3%
24.3
17.8%
15.7%
EUR million
EBIT*, %
12.5%
Revenue development Q2/2013 vs. Q2/2012
Q2/2013 highlights
Increase/decrease, %
•
6
+4%
4
2
0%
+5%
•
+3%
0
Volume
-2
Sales mix/Price Exchange rates
Acquisitions/
divestments
-2%
-4
* Excluding non-recurring items
July 2013
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Total
•
Decline in sales volumes
experienced at the beginning of
the year became considerably
less steep
Marketing efforts were clearly
boosted
Streamlining measures and
lower raw material prices
improved profitability
SBU Finland Q2/2013
EUR million
Revenue
EBIT*
EBIT*, %
4−6/2013
4−6/2012
Change %
1−12/2012
33.4
34.3
-2.9%
107.9
5.9
6.9
-14.4%
12.6
17.8%
20.2%
11.7%
Revenue development Q2/2013 vs. Q2/2012
Q2/2013 highlights
Increase/decrease, %
•
0
Volume
Sales mix/Price Exchange rates
Acquisitions/
divestments
Total
0%
-3%
-2
0%
-4%
+1%
-4
-6
* Excluding non-recurring items
July 2013
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•
Sales volumes decreased due
to the decline in construction,
home sales and the weakened
purchasing power of
consumers
Profitability was mainly
decreased by the decline in
revenue and higher cost level
SBU Central Eastern Europe Q2/2013
EUR million
Revenue
EBIT*
EBIT*, %
4−6/2013
4−6/2012
Change %
1−12/2012
36.7
36.9
-0.4%
125.5
4.9
4.5
7.3
13.5%
12.3%
5.8%
Revenue development Q2/2013 vs. Q2/2012
Q2/2013 highlights
Increase/decrease, %
•
0
Volume
Sales mix/Price Exchange rates
-2
+6%
Acquisitions/
divestments
0%
+1%
Total
0%
•
•
-4
-6
•
-8%
-8
-10
Revenue remained at the
comparison period level
Development of retail was weak
Profitability was improved by the
restructuring and streamlining
measures carried out in the area
Business operations in Poland
developed well in the tight
competitive situation
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
July 2013
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Conclusions and
outlook for 2013
Conclusions
•
Performance during the second quarter was
reasonably good considering the current market
conditions
•
In 2013, the market conditions remain challenging
and the economic growth may be modest in all
Tikkurila's markets
•
In Russia, the service level will be upgraded in
order to secure the revenue growth
•
Streamlining of operations will support our
profitability
July 2013
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Outlook for 2013
Revenue and profitability of Tikkurila 2008−2012
EUR million
%
800
700
600
11.0
9.1
648
10.1
9.5
9.7
644
12
10
670
589
500
Outlook for 2013
8
530
400
6
300
4
200
2
100
0
0
2008
Revenue
July 2013
Economic development in Europe is expected to be weak
in 2013. The overall uncertainty and increasing
unemployment are expected to have a negative impact on
consumers’ willingness to purchase and on the demand
for Tikkurila’s products. The outlook of the economic
development of Russia, which is one of the key markets of
Tikkurila, has weakened in comparison to the publishing
date of Tikkurila’s Financial Statement Release. The
average GDP growth of Russia, Sweden, Finland, and
Poland, is estimated to be slightly over one percent in
2013. Raw material prices are estimated to remain stable
or to decrease slightly.
2009
2010
2011
2012
EBIT, % (excluding non-recurring items)
30
Tikkurila expects its revenue and EBIT in euro
excluding non-recurring items for the financial
year 2013 to remain on 2012 level.
Appendix
Tikkurila SBUs
East
Scandinavia
Finland
CEE
Russia and other CIS
countries
Sweden, Norway,
Denmark
Finland
CEE countries and other
countries incl. Germany
St. Petersburg, Russia
Stary Oskol, Russia
Kiev, Ukraine
Nykvarn, Sweden
Tikkurila, Vantaa
Tallinn, Estonia
Ansbach, Germany
Debica, Poland
Sabac, Serbia
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, Flügger,
Jotun, Sherwin-Williams,
Teknos
Akzo Nobel, Teknos, NorMaali, Sherwin-Williams
Akzo Nobel, PPG, a large
number of local and
regional suppliers
Deco: DIY retailers,
independent retailers,
wholesalers
Industry: direct sales,
Temaspeed
Deco: DIY retailers, AlcroBeckers professional
stores1, Happy Homes
chain1, Colorama retail
chain1
Industry: direct sales,
Temaspeed
Deco: DIY retailers,
independent paint retailers
Industry: direct sales,
Temaspeed
Deco: DIY retailers,
independent retailers
Industry: direct sales,
Temaspeed
Operational area
Production sites
Current demand
structure
Distribution
channels
July 2013
1 In Sweden
2 Industrial coatings
32
SBU East in brief
Key facts
Locations
Operational area
Russia, other CIS countries, Ukraine
2012 revenue
EUR 242.8 million, 36% of Group
2012 EBIT1
EUR 32.5 million, 42% of Group2
Employees
1,517 (average)
Production sites
3 in St. Petersburg, Russia, Stary Oskol,
Russia and Kiev, Ukraine
Sales offices
St. Petersburg
Ekaterinburg
Mytishchi
Russia, Ukraine, Belarus, Kazakhstan
Kiev
Khabarovsk
Chelyabinsk
Stary Oskol
Almaty
Krasnodar
Expansion in East
1970s
1994
1995
1998
2004
2006
2006
2007
2008
2009
2011
2012
July 2013
Export to Russia and the former Soviet Union started
Sales company in Russia
First western paint factory opened in St. Petersburg
Sales company OOO Tikkurila Coatings established
Acquisition of Kolorit in Ukraine
Acquisition of Kraski Teks
Sales company established in Almaty, Kazakhstan
Acquisition 2 St. Petersburg-based paint companies
(Gamma, Powder Coatings)
Sales company established in Minsk, Belarus
Completion of logistic centre in Mytishchi, Moscow region
Divestment of the powder coatings business
Expansion of sales and ware house network in Russia
33
Novosibirsk
Minsk
1 Excluding non-recurring items
2 Excluding group items
Irkutsk
Tikkurila in Russia
Overview
Tikkurila paint brands in Russia
• 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 and Tikkurila
• Tikkurila has three paint factories in St.
Petersburg and one in Stary Oskol
• Personnel 1,400 at year-end 2012
PREMIUM
ECONOMY
Market leader in decorative paints in 2012*
17%
Tikkurila
72%
* Source: Chem-Courier, 2013 (volume)
July 2013
34
6%
Empils
5%
Lakra
Others
In good position to grow further in Russia,
other CIS Countries and CEE countries
Tikkurila's production capacity
49%
• 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
51%
Outside EU
July 2013
Production and raw materials
In EU
35
SBU Scandinavia in brief
Key facts
Locations
Operational area
Sweden, Norway, Denmark
2012 revenue
EUR 194.2 million, 29% of Group
2012 EBIT1
EUR 24.3 million, 32% of Group2
Employees
421 (average)
Production sites
Nykvarn, Sweden
Sales offices
Sweden, Norway, Denmark
Development in Scandinavia
1865
1906
1967
2001
2002
2007
2008
2008
2011
Beckers founded
Alcro founded
First Tikkurila subsidiary established in Sweden
Acquisition of Alcro-Beckers
Acquisition of Akzo Nobel’s general industrial finishes
business
New production plant in Nykvarn
New headquarters in Hammarby Sjöstad
Acquisition of Måleributiken in Alvik, Sweden
Divestment of two retail stores in Sweden
Oslo
Nykvarn
Stockholm
Copenhagen
1 Excluding non-recurring items
2 Excluding group items
July 2013
36
SBU Finland in brief
Key facts
Locations
Operational area
Finland
2012 revenue
EUR 107.9 million, 16% of Group
2012 EBIT1
EUR 12.6 million, 17% of Group2
Employees
641 (average)
Production sites
Vantaa, Finland
Sales offices
Several in Finland
Vantaa
1 Excluding non-recurring items
2 Excluding group items
July 2013
37
SBU CEE in brief
Key facts
Operational area
Locations
Estonia, Latvia, Lithuania, Poland, China,
Germany, Serbia, Slovakia and Macedonia.
Furthermore, exports to approximately 25
countries that are not included in the
operating areas of the other SBUs.
2012 revenue
EUR 125.5 million, 19% of Group
2012 EBIT1
EUR 7.3 million, 9% of Group2
Employees
843 (average)
Production sites
Tallinn, Estonia, Ansbach, Germany, Debica,
Poland and Sabac, Serbia
Sales offices
Czech Republic, Hungary, Latvia, Lithuania,
Romania, Slovakia, China, Finland (export)
Tallinn
Riga
Vilnius
Lodz
Debica
Ansbach
Expansion in CEE
1989
1992
1993
1995
1997
2001
2006
2007
2008
2011
2012
July 2013
JV established in Tallinn, Estonia
Paint production started in Tallinn, Estonia
Sales company in Riga, Latvia
Sales company established in Vilnius, Lithuania
Sales company in Budapest, Hungary
Production plants in Ansbach, Germany and Debica, Poland
Acquisition of sales company in Prague, Czech Republic
Sales company established in Beijing, China
Sales companies in Shanghai, China, Bucharest, Romania and
Martin, Slovakia
Acquisition of the business of Serbian Zorka Color
Divestment of subsidiaries in Hungary, Czech Republic, Slovakia
and Romania
38
Warsaw
Šabac
Skopje
+ China (Beijing and Shanghai)
1 Excluding non-recurring items
2 Excluding group items
Investor and media contacts
Erkki Järvinen
President and CEO
Jukka Havia
CFO
Minna Avellan
Manager, Investor Relations
[email protected]
Tel. +358 40 533 7932
July 2013
39
Thank you