tikkurila inspires you to color your life! · pdf filecontacts with other professionals ......

Tikkurila inspires you

to color your life!

Contents

• Tikkurila as a company

• Business environment

• Key figures and financial targets

• Business Units

March 16, 2017 Tikkurila company presentation 2

Tikkurila as a company


TIKKURILATikkurila 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.

69%

31%

West East

Revenue EUR 572 million

Adjusted operating profit EUR 54 million

(9.4% of revenue)

More than 3,000 employees

Production in nine countries

Products available in over 40 countries

Leading market position in main markets

Revenue by segment Operating profit* by segment

54%45%

1%

West East Group

Personnel by segment

* Adjusted, excl. Group items

4

77%

23%

SBU West SBU East

March 16,

2017

Tikkurila company

presentation

Production units in 9 countries

Sales units in 14 countries

Training centers in 11 countries

Our locations

March 16, 2017 Tikkurila company presentation

Production, distribution center, sales

Distribution center, sales

Training center

FinlandSweden

Estonia

Germany

Serbia

Poland

Kazakhstan

China

Russia

Denmark

5

Our end-customers

March 16, 2017

Consumers (DIY) IndustryProfessional painters

50%* 15%

*Tikkurila estimate

35%*

Tikkurila company presentation 6

Ideas, work instructions and

methods online

Personal painting advice and

technical support over the phone,

online, on site and on production

lines

Color cards, color design and

tinting service

Training events

On-site visits, inspections and

analysis services

Contacts with other professionals

in the industry

Comprehensive home interior

and exterior surface

treatment products

Wallpapers

Comprehensive surface

treatment products for

masonry surfaces, wood

facades and concrete floors,

effect and decorative paints

Functional coatings

Durable products and

solutions to protect steel

structures, machinery and

equipment

Paints and lacquers for

wood industry

Floor coatings for

demanding environments

Functional coatings for line

application

ServicesConsumers (DIY)

Professional painters

and designersIndustry

Our products and services

7

150 years of decoration and protection


1862 1950 1960 1970 1980 1990 2010

1862

An oil press was

founded on the

banks of the

Keravanjoki River

in Tikkurila.

1920s

The manufacture of

paints and lacquers

began in Tikkurila in

1919. Extensive

marketing and

customer training

began in the 1920s.

1950s

Tikkurila introduced its

first water-borne

product, the Joker

paint. Tikkurila's

coloring service was led

by designer Yki Nummi.

1960s

Entering the Scandinavian

market through Sweden.

A clear leading position was

obtained through

the acquisition of Alcro-

Beckers in 2001.

Tinting technology was

introduced.

1970s

Entering the Eastern

trade. Tikkurila was

known as "Firma

Miranol" in Soviet

Union. The

acquisition of Kraski

Teks in 2006 made

Tikkurila the leading

decorative paint

company in Russia.

1980s

To the Eastern

European market

and the Baltics

through Poland.

2010s

Tikkurila listed on

the stock exchange.

Entering the Balkan

area through the

acquisition of

Serbian Zorka Color.

Tikkurila turned

150 yrs.

8

SWEDEN RUSSIA FINLAND POLAND

Tikkurila market shares in decorative paints in key

markets in 2015

#1

37%(37%)

63%

Tikkurila Others

>50%(>50%)

50%

Tikkurila Others

15%(16%)

84%

Tikkurila Others

#1 #1 #4Sweden accounts for 26% of Group revenue Russia accounts for 22% of Group revenue Finland accounts for 17% of Group revenue Poland accounts for 12% of Group revenue

Source: SVEFF (Sweden, value), Chem-Courier (Russia, volume), Association of Finnish Paint Industry (Finland, value), IBP Research (Poland, volume)

15%(16%)

85%

Tikkurila Others

March 16, 2017 9Tikkurila company presentation

Tikkurila Group structure

March 16, 2017

Support Functions

Supply Chain Management

& HSEQ

RDI

Business Portfolio & Brand

Management

SBU EASTRussia

Central Asia

Balkan

China

Exports

SBU WESTSweden

Norway

Denmark

Finland

Poland

Germany

Baltic countries

Tikkurila's reporting units: West and East.


Tikkurila strategy


Tikkurila values


We are trustworthy

We create and offer quality brands, services, and products that

people can trust are safe, reliable, and environmentally sustainable.

We are innovative

We drive change in the market and offer novel solutions for

our customers' needs.

We are professionals

We add value to our customers, owners, and the community –

every day.

12

Strong and well-established brands

Strategic international

brands

Tactical regional or local

brands

Strategic regional or local

brands


Distribution channels


We help our customers to succeed in surface protection

and decoration

March 16, 2017

Inspiration Ideas Colors Stores

Helpline TrainingInternetDesigner PoolContractor Pool

Professional services


March 16, 2017

• We enhance the quality of painting, environmentally sustainable use

of products, product and user safety, as well as the knowledge of

surface treatment.

• We train our customers, retailers, and other professionals and

students in our training centers and in stores regarding paints,

painting, and tinting.

• We invest in developing solutions that make selecting, buying and

selling of paints easier.

• We offer our customer technical consultation, advice on selecting

colors and paints as well as tips and work instructions in all channels.


Successful end-results

Colors

• Tikkurila is one of the forerunners in the production of paints

for tinting and in the development and marketing of colors.

• Color cards are based on the tinting system and made with

color card paints. Thus the color card sample will be as close

to the color of the final painted surface as is technically

possible.

• Tikkurila provides color cards for both indoor and outdoor

painting.



Ecological

and cost-efficient

way of operating

Economical way

to produce small

batches of

different colors

Enhances

the service level

of retailers

Emphasizes

the quality

of paint

Deepens

the cooperation of

retailers and

paint producer

The many advantages of tinting

Enables

lower

inventory

levels

Practically

unlimited

amount of

shades

18

Sustainable solutions

• Tikkurila develops durable and user-friendly products that are safe for both

people and the environment.

• Quality: Long service life of painted surfaces and long maintenance painting

intervals

• Products that are safe for both people and the environment: raw material

choices, product and user safety

• Water-borne and low emission paints: ease of use, odorlessness and fast

drying times.

• Eco-labels indicate the environmental impacts of products and their proven

safety characteristics as well as make consumption habits more

environmentally sound. March 16, 2017 19Tikkurila company presentation

73.8% of paints produced are

water-borne (2016)

More than 300 eco-labeled products (2016)*

*products awarded international or national eco-

label, allergy or asthma label or M1 classification

Sustainability principles

March 16, 2017 20

• Long service life of surfaces

• High product and user safety

• Water-borne and low-emission products

• Eco-labels and allergy labels

• Sustainable packaging solutions

• Training and advice services

• Good partner with retail and customers

• Supplier management and raw material traceability

• Resource-efficient and certified supply chain

• Ethical business operations

• Active in the local communities

USER

EXPERIENCE

QUALITY,

SAFETY &

DURABILITY

Tikkurila company presentation

Raw materials

• When selecting raw materials, we carefully consider the different health,

safety and environmental aspects.

• Paint typically consists of binders, pigments, fillers, thinner and additives.

• More than 90% of the raw materials and packaging materials for

Tikkurila’s units in the EU are bought from the EU region. In Russia,

more than 60% of all raw materials and packaging materials are bought

from local suppliers.

• Chemical legislation sets restrictions on paint import to the EU region

from the third countries.

• Raw material prices affected mainly by oil prices, supply capacity, and

currencies.


Product development

• Key principles for product development are quality, durability and

safety.

• R&D develops products for various purposes and with various

functionalities, studies use of alternative and renewable raw

materials, and improve properties of existing paints and coatings.

• Largest R&D units located in Finland, Sweden, Russia and Poland.

• The desired properties of products are ensured in thorough field

testing and extensive laboratory testing.


Supply chain

10 9 6SITES SITES SITES

ISO 9001 ISO 14001 OHSAS 18001

QUALITY ENVIRONMENT HEALTH & SAFETY

• Tikkurila has 12 production units in 9 countries.

• Approx. half of Tikkurila’s personnel work in the supply chain.

• Production manufactures and packages the products in an economical, safe, and eco-efficient

manner. We constantly work to develop our production processes and the resource efficiency of

our production sites.

• Majority of Tikkurila’s production sites have independently audited and certified quality,

environmental, and safety management systems.


Paint-making process


Business environment


12%

10%

9%

6%

6%

6%3%3%3%

43%

Value of the global paints and coatings market;

USD ~130 billion

March 16, 2017

Decorative paints 43% Industrial coatings 57%

Source: IPPIC 2015

Decorative paints

Metal Industrial

Coatings

Transportation

Industrial Maintenance

and Protective

Automotive Refinish

Powder Coatings

Wood Coatings

Marine CoatingsCoil Coatings

Packaging Coatings

Industrial segments where

Tikkurila is present



• Functional products that improve energy

efficiency of buildings and address

construction problems.

• Low-emission and high-quality products

that are safe for both health and the

environment.

• Understanding and analyzing the

customer needs.

• Mapping the business opportunities

brought by digitalization.

• Resource efficiency and opportunities of

circular economy in own operations.

• Increasing the use of renewable raw

materials.

Trends affecting Tikkurila's business operations

URBANIZATION

CHANGES IN

CONSUMPTION

BEHAVIOR

RISE OF THE

MIDDLE CLASS

EXHAUSTING

NATURAL

RESOURCES

CLIMATE CHANGE

DIGITALIZATION

Paint consumption and demand structure

March 16, 2017

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


Key figures and financial

targets


0

2

4

6

8

10

12

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenue Revenue from acquisitions Divestments Adjusted operating profit margin

Long term financial development Development of sales and profitability 2000–2016

Acquisition of Alcro-

Beckers in 2001

(Revenue ~MEUR 190)

Sale of tinting business in

2000

(Revenue ~MEUR 130)

Acquisition of Kraski Teks

in 2006

(Revenue ~MEUR 80)

Acquisition of Zorka Color

in 2011

(Revenue ~MEUR 16)

Major acquisitions and divestments

Reve

nu

e, E

UR

mill

ion

Ad

juste

d o

pe

ratin

g p

rofit %

530

648625

563

457441 439450445

345

589

March 16, 2017 30

644670

653618

584 572

Tikkurila company presentation

Long-term financial targets

2009 2010 2011 2012 2013 2014 2015 2016

Revenue 530 589 644 670 653 618 584 572

Adjusted operating

profit, %9.5% 10.1% 9.7% 11.0% 11.1% 10.4% 10.1% 9.4%

ROCE 15.7% 19.2% 19.4% 21.0% 23.5% 22.9% 22.2% 18.5%

Gearing 90.0% 41.4% 51.9% 40.6% 23.4% 24.6% 23.7% 28.1%

Dividend paid; share

of adjusted net

income, %

84% (EUR

0.70 per

share)

88% (EUR

0.73 per

share)

72%

(EUR 0.76

per

share)

69%

(EUR 0.80

per

share)

73%

(EUR

0.80 per

share)

90%

(EUR

0.80 per

share)

78%1

(EUR

0.80 per

share)

March 16, 2017

Historical performance

• Revenue of EUR 1 billion

• Adjusted operating profit >12%

• Operative return on capital employed

(ROCE) >20%

• Gearing <70%

• Dividend policy: Target is to pay at

least 40% of annual adjusted net

income as dividends

1) Board of Directors' proposal


Tikkurila's ownership at the end of December 2016

Tikkurila's ownership structure on December 30, 2016• Number of shareholders ~20,000

• Foreign ownership in Tikkurila has

increased

• Largest shareholders:

Oras Invest Oy (18.1%), Varma

(5.7%), and Ilmarinen (5.6%)

20%

9%

13%

12%2%

45%

Private companies

Financial and insuranceinstitutions

Public sector organizations

Households

Non-profit organizations

Foreigners and Nomineeregistered


Business Units


Tikkurila Strategic Business Units (SBU)

Russia, Central Asian countries, Serbia, Macedonia, and

China. Furthermore, this SBU is responsible for the exports to

approximately 20 countries.

SBU EastSBU West

Sweden, Denmark, Norway, Finland, Poland, Germany,

Estonia, Latvia, and LithuaniaOperational area

Production sites

Current demand

structure

Expected demand structure

Competitors

Distribution channels

St. Petersburg, Russia

Stary Oskol, Russia

Almaty, Kazakhstan

Sabac, Serbia

Nykvarn, Sweden Lunderskov, Denmark

Vantaa, Finland

Debica, Poland

Ansbach, Germany

Tallinn, Estonia

Economy price and quality segment productsPremium and medium price and quality segment products

Premium price and quality segment products expected to

risePremium and medium price and quality segment products

Akzo Nobel, Lakra-Sintez, Empils, ABC-Farben, Meffert,

CaparolAkzo Nobel, PPG, Flügger, Jotun, Sherwin-Williams,

Teknos, Nor-Maali, Sniezka

Deco: DIY retailers, independent retailers, wholesalers

Industry: direct sales, Tikkurila Industrial Paint Service

Deco: DIY retailers, independent retailers, Alcro professional

stores, wholesalers

Industry: direct sales, Tikkurila Industrial Paint Service


SBU West key facts

Operational area Sweden, Denmark, Norway, Finland, Poland, Germany, Estonia, Latvia, and Lithuania

Revenue 2016 EUR 395.2 million, 69% of Group

Adjusted operating

profit 2016EUR 45.3 million, 77% of Group*

Employees 1,649 (at year-end)

Production sitesNykvarn, Sweden; Vantaa, Finland; Debica, Poland; Ansbach, Germany; Tallinn, Estonia;

Lunderskov, Denmark

Development in West

1862 Tikkurila founded in Finland

1865 Beckers founded in Sweden

1906 Alcro founded in Sweden

1930 Customer training started in Finland

1958 Color card development and color advisory service started in Finland

1970 Monicolor tinting system launched in Finland

1992 Paint production started in Estonia

1995 Sales company established in Lithuania

2000 Maalilinja customer helpline launched in Finland

2001 Acquisition of Alcro-Beckers in Sweden

2001 Production plants in Germany and Poland

2003 Customer training center Paletti opened in Finland

2007 New production plant in Nykvarn Sweden

2009 Avatint tinting system launched

2012 Divestment of subsidiaries in Hungary, Czech Republic, Slovakia, and Romania

2014 Acquisitions of ISO Paint Nordic and KEFA Drytech

SBU West locations

VantaaNykvarnOslo

CopenhagenStockholm

Tallinn

Riga

Vilnius

AnsbachDebica

WarsawLodz

* Excluding Group items

Lunderskov


SBU East key facts

Operational areaRussia, Central Asian countries, Serbia, Macedonia, and China. Furthermore,

this SBU is responsible for the exports to approximately 20 countries.

Revenue 2016 EUR 176.8 million, 31% of Group

Adjusted operating

profit 2016EUR 13.4 million, 23% of Group*

Employees 1,353 (at year-end)

Production sites

St. Petersburg, Russia (3)

Stary Oskol, Russia

Šabac, Serbia

Almaty, Kazakhstan

Development in SBU East

Šabac

Khabarovsk

Novosibirsk

Almaty

Ekaterinburg

Chelyabinsk

St. Petersburg

Mytishchi

Stary Oskol

Krasnodar

SkopjeBeijing

Shanghai

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 Kazakhstan

2007 Sales company established in China

2008 Sales company established in Belarus

2009 Completion of logistic centre in Mytishchi, Moscow region and new

water-borne production lines to Obukhovo site in St. Petersburg

2011 Divestment of the powder coatings business

2011 Acquisition of the business of Serbian Zorka Color

2012 Expansion of sales and ware house network in Russia

2015 New factory opened in Almaty, Kazakhstan focusing on water-borne

products

2016 Divestment of subsidiaries in Ukraine and Belarus

* Excluding Group itemsSamara


tikkurila inspires you to color your life! · pdf filecontacts with other professionals ......

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