Tikkurila Investor PresentationMAY 2020

▪ Tikkurila in brief

▪ Tikkurila’s strong market position and chosen market segments

▪ Key trends in the industry and competitors

▪ Tikkurila strategy

▪ Financial turnaround in 2017-2019

▪ Q1/2020 and market update

Content

2

Tikkurila in brief

3

Tikkurila in brief

Tikkurila is a leading Nordic paint company with expertise that spans decades. We operate in eleven

countries and have 2,700 dedicated professionals. In 2019, our revenue totaled EUR 564 million.

The company is listed on Nasdaq Helsinki. Nordic quality from start to finish since 1862.

REVENUE BY

MARKET SEGMENT

REVENUE BY

REGION

EXAMPLES OF CUSTOMER CHAINS

CORE PREMIUM BRANDS

OTHER(121M, +0%)40+ countries

RUSSIA(EUR 144M, +7%)

SWEDEN(EUR 119M, -7%)

FINLAND(EUR 91M, -3%)

POLAND(89M, +6%)

DECORATIVE(83%)

INDUSTRIAL(17%)

KEY FIGURES

IN 2019

TOP10 customers equal 1/3 of revenue

RevenueEUR 564 M+0.4% yoy

Adj. EBITEUR 46 M

+19.5% yoy

ROCE15.4%

+6.1%-p yoy

Gearing45.6%

-11.4%-p yoy

4

Tikkurila has been the consolidator in the Baltic Sea region

TIKKURILA

PRODUCTION UNITS

(7 sites in 6 countries)

COUNTRIES WITH

TIKKURILA’S OWN

OPERATIONS

In total Tikkurila’s

products are sold to

40+ countries

Brief history of Tikkurila’s current operations

1862 Tikkurila founded in Finland

1970s Export to Russia and the former Soviet Union started

1992 Paint production started in Estonia

1994 Sales company in Russia

2001 Acquisition of Alcro-Beckers in Sweden and Poland

2006 Acquisition of Kraski Teks in Russia

2006 Sales company established in Kazakhstan

2007 Sales company established in China

Operations divested or closed since 2010

2012 Hungary, Czech, Slovakia, Romania

2016 Ukraine, Belarus

2017 Serbia, Macedonia

2018 Germany

5

Adjusted EBIT (MEUR)

Tikkurila has made a clear turnaround

Failed ERP implementation

Global raw material inflation

Ti02Increasing currency fluctuation

in key markets

Challenges faced in 2017-2018

“Holding company”

style management culture

59

54

29

9,4%

4,9%

3,9%

6,9 %

8,2 %

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0

10

20

30

40

50

60

46

20172016 20192015 2018

39

% of revenue EUR million

6

A dedicated highly-professional management team is executing the turnaround

Elisa Markula

CEO

Since 2018

Fredrik Linde

SVP, Operations

Since 2019

(In Tikkurila

from 2010)

Markus Melkko

CFO

Since 2019

Meri Vainikka

SVP, Offering

Since 2017

Oskari Vidman

SVP, Sales

Since 2019

Anders Rotkirch

SVP, Transformation & ICT

Since 2018

Melisa Bärholm

SVP, Human Resources

Since 2017

7

Tikkurila’s strong market position and chosen market segments

8

We are the market leader in decorative paints in most of our key markets

62% 34% 18% 21% 24%

Finland Sweden Russia Poland Baltics

16% of revenue

EUR 91M

21% of revenue

EUR 119M

25% of revenue

EUR 144M

16% of revenue

EUR 89M

Sources: VTY, SVEFF, Chem Courier, GFK, company financials

Data: Market shares represent most recent data in value for 2019 (comparison 2018)

In industrial paints our market share is ~15-17 %

(63%) (37%) (19%) (20%) (24%)

1. 1. 1. 4. 1.

9

Tikkurila AkzoNobel PPG Local significant competitors Other

Premium brands are Tikkurila’s core strength

Share of value increasingWe focus on our key brands

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 20192016 2017 2018

Share of total

Premium

Medium

Economy

EconomyPremium Medium

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

20182017 2019 2020TARGET

2016

Number of SKUs cut in half

10

We have focused on the customer segments where we are the strongest

ConsumersProfessional

painters

Wood

industryOEM

Protective

coatings

83% of revenue* 17% of revenue*

Decorative paints Industrial paints

Core brands

in decorative

Core brand

in industry

11 *2019

Consumers Professionals Industrial

Renovators

Decorators

Gardeners

Home and garden builders

Professional

Contractors & subcontractors

Man & Van entrepreneurs

Designers

Developers & property owners

Industry

Wood industry

OEM

Protective coatings

Customers segments

17% of revenue*83% of revenue*

* 2019

12

Key trends in the industry & competitors

13

We operate in a large global market driven by stable structural growth

N. America

23 €B~4-5%CAGR

Europe

31 €B~3%

CAGR

APAC

72 €B~6-7%CAGR

Africa & Middle East

11 €B~5%

CAGR

World wide paintings &

coatings market, 2018

>145 €B44M Liters

World wide market growth

~5.4%(~4.5% in volume)

S. America

10 €B~5%

CAGR

Note: Market size for 2018, based on production; Compounded annual growth rate forecast 2019-2024 period.

Revenue growth expected to be higher than volume growth due to shift to higher value-add coating products.

Source: Markets & Markets P&C market analysis.

14

Urbanization, consolidation and customer needs drive the industry

Raw material

availability

Sustainability,

health & safety

UrbanizationDigitalization and

e-commerce

Changes in distribution,

"Professionalization" shift

from DIY to "do-it-for-me"

Increasing need for

efficiency and

sustainability

Increasing need for

premium products and

functional solutions

Increasing need for

understanding the

customer

Impact on painting industry:

Regulation will

continue to tighten Fragmented

needs, preference

for premium

15

Market split to two types of paint companies

Global top 945% market share globally

20% in our markets

Locals55% market share globally,

80% in our markets

10B€ average

revenue

1.5B€ average

EBITDA

~800M€ avg. peer

revenue

60M€avg. peer

EBITDA

~15% average

EBITDA%

~8% avg. peer

EBITDA%

Each with distinct competitive advantages – there is room for both local and

global players. Tikkurila is among the TOP25 paint producers globally.

16

Source: Capital IQ

80

400

20

60

60

100

40

01008020

65%

Aerospace

Wood

60%

Powder

40%35%

60%

Other

80%

60%

30%

40%

OEMDecorative

40%

40%

80%

Auto OEM

20% 20%

Auto refinish

Protective

70%

60%

20%

Marine

58%

42%

Share of total market (%)in value

80%

Tikkurila’s focus markets

Market

share of

global

players

(% of total

segment)

Decorative- Low global consolidation

Industry- Low global consolidation

~ 40 % ~ 40 % ~ 20 %

Industry- High global consolidation

Market

share of

local stars

(% of total

segment)

We focus on segments where local players are strong

17Source: IHS P&C market study, Redburn, BCG analysis

Tikkurila is operating in two different kind of markets

Mature markets

Flat total markets

Tikkurila’s market share

already strong

Opportunities to grow

especially in Industry

Growth markets

More room to improve

Tikkurila’s market share

Faster market growth

Continued premiumization

Opportunities to grow in both

decorative and Industry

18

1 094 1199 1 138

946 1 0101 405

Growth slowing down in our key markets– But growth expectations still from +2.0% to +3.5%

94 99 11080 83 90

174

20242017 2019

182 201

Total market value (deco and industry), M€

Finland

234 246 284

289 301338

20192017 2024

523 548622

2 504 2 7183 237

2 758

2 949

3 405

2017 2019 2024

5 261

5 667

6 641

+3.8% +3.2%

20242017 2019

2 040

2 542

2 209

+4.1%+2.9%

746983

2017

9278

88

20242019

133 142 169

+3.6%

Sweden Russia Poland Baltics

Source: Markets and Markets, Tikkurila

Deco Industry

+3.5%

+2.2% +2.0%

+2.3% +2.6%

19

Note: Data for different countries not in the same scale

Examples of key competitors

20

Based in USA

Revenue 2019: EUR 15.9 billion

Geography: Global

Segments: Decorative with focus on

Professionals, Industry (Protective & Marine,

Coil, Automotive, General Industrial, Wood,

Packaging)

Acquisition of Valspar in 2017 accelerated the

S-W global growth strategy and made the

company the global leader in paints and

coatings.

The company has a strong position in North

America and operates its own outlet network.

It is building a new HQ and R&D center in the

US.

Based in USA

Revenue 2019: 13.5 EUR billion

Geography: Global

Segments: Decorative, Industry (Automotive,

Aerospace, Packaging, Protective & Marine,

Specialty)

PPG’s strategy is focused on aggressively

managing the cost structure and also optimizing

business portfolio. In 2019 it completed four

acquisitions.

PPG invests heavily in R&D with strong focus

on innovation, especially functional coatings.

Based in the Netherlands

Revenue 2019: EUR 9.3 billion

Geography: Global

Segments: Decorative, Industry (performance

coatings)

AkzoNobel sold its Specialty Chemicals unit in

2017

to be a focused paints & coatings company.

The strategy Winning together: 15 by 20 has

focused on improved profitability and especially

value over volume strategy. Now the focus is

aimed more on growth.

The company has a strong position in Europe.

Based in Poland

Revenue 2019: EUR 168 million

Geography: Eastern Europe

(Poland, Hungary, Ukraine and Belarus)

Segments: Decorative, Industry

Śnieżka's strategy is to focus on its key

markets.

It acquired Hungarian Poli-Farbe in 2019 and

will investstrongly in successful integration and

improving

Poli-Farbe’s profitability.

In Poland Śnieżka is investing in new

warehouse andlogistics centers.

Based in Norway

Revenue 2019: EUR 1,992 billion

Geography: Global

Private company, 40% owned by Orkla ASA

Jotun’s strategy is to grow organically in its four

segments. Strong in premium Decorative Paints

and intumescent steel protection coatings.

Jotun has strong partnerships in Asia. Largest

part of the revenue in all its business segments

comes from Middle East or South-East Asia.

Based in Denmark

Revenue 2019: EUR 1,534 billion

Geography: Global

Owned by the Hempel foundation

Segments: Decorative, Wind, Marine,

Protective, Yacht, Services

Journey to Excellence strategy 2016-2019 to

modernize the company; ready for the next

phase with a new CEO as of July 2019:

Hempel plans to double in size and is actively

exploring M&A opportunities, after the

European decorative acquisition, J.W

Ostendorf, has now fully integrated.

Based in Denmark

Revenue 2019: EUR 243 million

Geography: Scandinavia, Poland

Segments: Decorative with focus on

Professionals

Flügger’s strategy, Securing the Legacy,

launched in August 2017 aims to consolidate

position in Scandinavia, assess potential

acquisitions in the existing market and to

improve efficiency.

Flügger expects its paint production to be 100%

water-based by 2021. It has removed all

Swedish production of water-based paints to

Denmark.

Based in Finland

Revenue 2019: EUR 398 million

Family business

Geography: Mainly Europe

Segments: Decorative, Industry (Wood, Metal,

Powder)

Teknos’ new strategy for 2019-2025 aims to

ensure fast and profitable growth and to reach

EUR 1 billion revenue by 2025 both with

organic growth and through M&A in Eastern

Europe and also outside Europe.

Stronger focus on industrial coatings (especially

functional coatings) than in decorative

paintings.

Acquired Powder coatings unit from Śnieżka in

2017. Market leader in European Wood

Coatings.

Tikkurila well-positioned to benefit from distribution shift

33% 31% 29% 7%

Big boxes (DIY)▪ E.g. K-Rauta, Bauhaus,

Leroy Merlin

▪ Big boxes are increasing

their market share

▪ As a market leader,

Tikkurila is preferred by

customers and chains

Distributors▪ Key partners to secure

scale and availability,

especially in Russia and

Poland

▪ Vital for industry and

export

Specialized paint stores▪ Continue to be preferred

by professionals, but are

loosing market share with

consumers

▪ Personal customer service

critical competitive

advantage

Own stores▪ Only in Sweden, Norway

and Denmark

▪ Retains a niche position in

direct selling to

professionals

Share of various distribution channels, % of Tikkurila revenue (2018)

21

Share of water-borne paints grows in decorative paints

76%

78%

82%83% 83%

60

70

80

2018 20192016 20172015

Share of water-borne paints in

Tikkurila’s decorative business*

* % of Tikkurila’s total gross revenue

22

1.7%

3.3%

2.5%

1.6%

1.4%

2.4%

1.7% 1.8%

Water-borne Solvent-borne

RUSSIA POLAND

SWEDEN FINLAND

WB WBSB

WB WBSB

SB

SB

CAGRs in 2019-2024 for decorative paints

in Tikkurila’s core market areas Source: Markets&Markets

Tikkurila’s strategy

23

This is our strategy

Tikkurila is committed to creating value by improving

efficiency and accelerating organic growth

Market leader in

North-Eastern Europe.

Among TOP20 globally.

Skillful employees with

close to 160 years

knowledge in surfaces

Well-known and preferred

premium brands

Revenue Growth Profitability

ROCE Gearing

EBIT > 12%

< 70%

Faster than home

market growth

> 20%

INCREASING

EFFICIENCY

ACCELERATING

PROFITABLE GROWTH

CREATING A STRONG

“ONE TIKKURILA”

CULTURE

This is Tikkurila This is our target

24

We continue to systematically execute our strategy action plan towardslong-term financial target Adjusted Operating Profit >12%

0

2

4

6

8

10

12

14

2018 Target

Market and raw

material volatility

Optimize

portfolio

Increase

efficiency in

raw materialsImprove sales

performance

management

Increase

efficiency in

operations

Adjusted Operating

Profit (%)

Grow in

Deco and

selected

industry

segments

Save in

fixed cost,

centralize

indirect

sourcing

25

• “We grow faster than the market by having the happiest customers”

• Aim is to provide the best customer experience with focus, speed, and performance

• Target is measured by NPS, customer preference, customer acquisition and

customer loyalty

Drive organic growth

Innovation based on

sustainability, functionality and

services.

Improve further cost

competitiveness

Create High Performance

Culture to execute the strategy

Tikkurila’s value creation is based to drive profitable growth and efficiency

A strong strategic target is set

for Tikkurila

Description

• Launch effective program management & projects execution

• Renew culture, implement management system and good leadership

• Develop talent and competences to deliver strategy

• Formula and portfolio harmonization

• Sourcing excellence

• Operational excellence

• Commercial excellence

• Fixed costs continuous improvement process by process

• Strong focus in Waterborne innovation, decrease usage of solvents

• Clean air and environmentally friendly products

• Wood as our special competence incl. fire protection

• Transformation from pure products to sell solutions and services

• Accelerate growth in current main markets

• Biggest growth from Industry, decorative to grow faster than the market growth

• Lead in premium & mass premium categories with international brands, local

brands to secure competitiveness in each market

26

Optimize

portfolio

Grow in Deco

and selected

industry segments

Improve sales

performance

management

Increase efficiency

in operations

Save in fixed

cost, centralize

indirect sourcing

Increase efficiency

in raw materialsActi

on

s t

o im

pro

ve p

rofi

tab

ilit

y a

nd

gro

wth

Multiple strategic actions executed in 2019

Less formulasLess raw

materialsLess sales articles

10,000 ➔ 5,000

New products

(e.g. fire retardant)

New Tikkurila

brand look rolled

out in Finland

R&D focus on

sustainability,

functionality & services

Continued price

increases to match

raw material inflation

Centralization of

core marketing

teams finalized

Sales leadership

strengthened

Continued to work

on the future Supply

Chain Footprint

Further optimized

S&OP

Fixed expenses

down by EUR

35.4M from 2017

Strict cost

discipline

continued

A large number of

cost reduction

actions identified

Commercial

negotiations with major

suppliers as planned

We continue to systematically execute our strategy action plan

27

We aim for profitable growth

Expand

partnerships

with DIY chains,

“Win with the

winners”

New products

and services:

especially for

industry customers

Expand

distribution:

strong focus on

store presence

and attraction

Successful sales

activities with

key accounts

eCommerce

28

Achieve Successful

turn-around

Fix the foundation

and feed growth

Maximize efficiency

and growth

Phase I

(2018)

Our long-term target is to achieve maximum efficiency and grow faster than the market

Phase II Phase III

29

Financial turnaround in 2017-2019

30

Increasing profitability, stable revenue

Revenue (EUR million) Adjusted operating profit (EUR million)

584 572 582562 564

0

50

100

150

200

250

300

350

400

450

500

550

600

20192015 20182016 2017

0,4%

59

54

29

39

46

0

5

10

15

20

25

30

35

40

45

50

55

60

201920162015 2017 2018

+19,5%

31

Tikkurila’s key indicators developed positively in 2019

20192018

201.3

2016 2017

215.8

185.9 180.4

2016

18.5%

2017 2018 2019

6.3%

9.3%

15.4%

Fixed costsReturn of Capital

Employed, %

2016 2017

22.7

2018 2019

4.4

36.3

52.7

Cash flow after

capital expenditure

9.4%

20172016 20192018*

4.9%

6.9%*

8.2%

Adjusted operating

result margin, %

* Including EUR 6 million of

insurance compensation for 2018

32

Q1/2020

33

➢ Revenue increased by +3.0% (+3.6% comparable currencies)

Growth in Russia and Finland, revenue stable in Sweden,

despite headwind from the weak Krona. Decline in Poland

reflected a strong comparison period.

➢ Adjusted EBIT also slightly improved to EUR 8.5 M (8.2)

Positive price/mix development

Currencies had a clear negative impact on profitability in Q1

➢ Tikkurila is fully operational

Restrictions did not have a major direct impact on Q1 financials,

Liquidity and funding positions are solid

➢ Visibility forward is now exceptionally weak

Increasing negative impact on demand expected due to

restrictions in coming months, regionally trends will differ

Key takeaways from Q1/2020

34

EUR million 1-3/2020 1-3/2019 Change, % 1-12/2019

Revenue 133.0 129.1 +3.0% 563.8

Excl. currency

effects+3.6%

Adjusted operating result 8.5 8.2 +4.4% 46.4

Adjusted operating result margin, % 6.4% 6.3% 8.2%

Operating result (EBIT) 8.5 7.9 +8.4% 43.9

Operating result (EBIT) margin, % 6.4% 6.1% 7.8%

Net result for the period* 3.8 7.4 -48.9% 33.2

Earnings per share (EPS), EUR* 0.09 0.17 -48.9% 0.75

Net interest-bearing debt at period-end 95.6 131.1 -27.1% 78.4

Cash and cash equivalents 70.5 17.1 +311.3 47.0

Gearing,% 57.5% 81.7% 45.6%

ROCE, % 15.8% 12.1% 15.4%

Cash flow after capital expenditure -17.4 -18.0 +3.7% 52.7

-0.7%

Volume

-1.5%

Price/mix

+5.1%

Currency effect

0.0%

Divestments and

closures

+3.0%

Total

Key figures – Tikkurila Group

The effects of various factors on revenue (y-o-y)

*Exchange rate differences on internal loans had an adverse impact on net result for the period and EPS.

35

Value continues to drive Tikkurila’s revenue

5.1%

0.6%

10.1%

3.3%2.8%

4.8%

3.7%

1.7%

-0.7%

0.9%

-6.3%

-1.5%-2.0%

-1.5%

-4.9%-4.3%

-3.1%

-0.4%

1.0% 1.2%

-0.7%

Q3/18 Q4/18 Q1/19 Q2/19 Q3/19

Impact of price/mix on revenue Impact of volume on revenue Impact of currencies on revenue

Q4/19 Q1/20 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20

Currencies had a more negative impact on

Adjusted EBIT

36

Country-specific development impacted by currencies, differences between mature and growth markets

2017

134.4

2018 2019 Q1/20

143.6143.4

27.7

89.4

76.8

20192017 2018 Q1/20

84.6

21.4

91.1

2019

27.6

2017 2018

94.3

Q1/20

92.8

2017 2018

31.0

127.6

2019 Q1/20

136.8

118.7

+27%

yoy-9%*

yoy

+4%

yoy-1%**

yoy

Revenue per country, EUR million

* Strong comparison period ** Revenue increased in SEK37

We are fully operational, demand expected to be impacted

Sourcing Operations Sales Finance

▪ Close cooperation with all

suppliers

▪ Managed to avoid critical

shortages

▪ Fully operational throughout

the year, except for Russia

between March 30 and April 7

due to nationally imposed

restrictions

▪ Restrictions having most impact

in Russia, where curfews have

closed most stores in large

cities

▪ In the Nordics consumer

mobility mostly not impacted by

restrictions

▪ Poland also easing restrictions

▪ Liquidity and funding position

solid

▪ Temporary cost savings

executed

▪ Prepared to rapidly adjust our

cost structure to match the

demand if necessary

38

Market demand is now driven by how the restrictions impact consumer behavior

CHINA

EXPORT

TIKKURILA’S

PRODUCTION

UNITS

39

Low impact

Moderate impact

High impact

Impact* on mobility and market demand

* Management estimate

➢ As announced on March 27, Tikkurila has withdrawn its guidance for 2020 due to increased uncertainty and weakened visibility, as the global coronavirus pandemic (Covid-19) and the related local regulation and restrictions are changing Tikkurila's business environment. Management continues to closely monitor the situation.

➢ The company’s long-term financial targets remain unchanged.

Guidance withdrawn for 2020

40

0

100

300

200

400

500

600

Price development of

oil (Brent), 2016-

Price development of

titanium dioxide, 2016-

0

500

1 000

1 500

2 000

2 500

3 000

EUR/TnEUR/Tn

2018 20192017

Raw material prices remain volatile

20202018 20192017 2020

41

Source: ICIS

Management focus during Covid-19

Health & Safety of employees

Customer & supplier relations

Daily internal coordination

Costs savings & financial controls

Digital transformation

Key activities

▪ Temporary savings

▪ Sales receivables

▪ Demand driven

planning

▪ Scenarios per each

Business Unit

(base case and worst

case)

Temporary savings

▪ Investments prioritized

▪ Indirect spending

scrutinized

▪ Recruitments freeze

▪ Travel ban

▪ Customer events, trade

fairs stopped

▪ All projects prioritized

▪ Marketing campaigns

heavily digitalized and

prioritized

▪ Strong restrictions to

use external consulting

42

Solid liquidity and funding position

Cash and cash equivalents

at end of period (Eur M)

14 17

71

Q1/18 Q1/19 Q1/20

Net interest-bearing debt at

period end (EUR M)

134 131

96

Q1/18 Q1/19 Q1/20

Gearing (%)

7782

58

Q1/18 Q1/19 Q1/20

Cash flow after capital

expenditure (EUR M)

-46

-18 -17

Q1/18 Q1/19 Q1/20

At the end of the quarter:

➢ Cash and cash equivalents were at EUR 70.5 million.

➢ Out of EUR 150 million commercial paper program 51% were in use at end of quarter. Revolving credit facility (EUR 100 million) remained unused.

In addition,

➢ Tikkurila has other short-term financing instruments at its disposal.

43

44

Our strong values