Tikkurila Oyj - Interim report (Q1 and Q3)

Tikkurila's Interim Report for January-June 2011 - Favorable revenue development continued while cost inflation weakened profitability

Tikkurila Oyj
Stock Exchange Release
August 11, 2011 at 9:00 a.m. (CET+1)

April-June 2011 highlights

  * Revenue for the second quarter increased by 8.7 percent in comparison to the
    corresponding period last year and was EUR 198.3 million (4-6/2010: EUR
    182.5 million).
  * Operating profit (EBIT) excluding non-recurring items was EUR 27.5 (28.4)
    million, i.e. 13.8 (15.5) percent of revenue.
  * Non-recurring items totaled EUR 0.0 (0.7) million.
  * EPS was EUR 0.39 (0.46).
  * Tikkurila reiterates its outlook for 2011.
  * General economic uncertainty has increased, in particular after the review
    period.

January-June 2011 highlights

  * Revenue for the first half of the year increased by 10.3 percent in
    comparison to the corresponding period last year and was EUR 332.8 million
    (1-6/2010: EUR 301.8 million).
  * Operating profit (EBIT) excluding non-recurring items was EUR 34.0 (35.9)
    million, i.e. 10.2 (11.9) percent of revenue.
  * EPS was EUR 0.42 (0.55).

Key Figures

(EUR million)                         4-6/  4-6/ Change  1-6/  1-6/ Change 1-12/
                                      2011  2010      %  2011  2010      % 2010
--------------------------------------------------------------------------------
Income statement

Revenue                              198.3 182.5   8.7% 332.8 301.8  10.3% 588.6

Operating profit (EBIT),
excluding non-recurring items         27.5  28.4  -3.2%  34.0  35.9  -5.2%  59.7

Operating profit (EBIT) margin,
excluding non-recurring items, %     13.8% 15.5%        10.2% 11.9%        10.1%

Operating profit (EBIT)               27.5  29.1  -5.5%  34.0  36.6  -7.0%  60.8

Operating profit (EBIT) margin, %    13.8% 15.9%        10.2% 12.1%        10.3%

Profit before taxes                   23.9  27.9 -14.6%  27.3  33.8 -19.3%  52.0

Net profit                            17.0  20.5 -17.0%  18.5  24.1 -23.2%  36.5


Other key indicators

EPS*, EUR                             0.39  0.46 -17.0%  0.42  0.55 -23.2%  0.83

ROCE, % p.a.                         18.8% 18.5%        18.8% 18.5%        19.2%

Cash flow after capital expenditure    1.7   5.1 -67.2% -26.0 -25.0  -3.8%  51.4

Net interest-bearing debt at period-
end                                                     137.7 155.3 -11.3%  78.6

Gearing, %                                              77.1% 87.0%        41.4%

Equity ratio, %                                         34.4% 34.2%        41.1%

Personnel at period-end                                 3,794 3,946  -3.8% 3,468

* As calculated by using the amount of shares outstanding of 44,108,252.
Comments by Erkki Järvinen, President and CEO:"Our revenue developed according to our expectations in the second quarter of
the year. The market situation continued to be reasonably favorable in all of
our key operating areas, and our revenue grew particularly due to sales price
increases. Growth was brisk in the SBU East area and in its largest market
Russia, where both sales volumes grew and the transfer of demand to the higher
price and quality grade products continued. In Finland, the sales development
did not meet our expectations.

Our profitability in the second quarter was weakened by the continued
challenging development in the prices and availability of the key raw materials,
as well as the extensive cost inflation in other areas. Salary expenses rose in
Russia, in particular, where we also further increased our sales and marketing
inputs. During the first half of the year, we managed to transfer the increased
raw material costs to our sales prices reasonably well, although not in full.
During the review period the prices of the key raw materials were approximately
20 percent higher than in the corresponding period last year. It would seem that
challenges related to both the prices and the availability of the raw materials
will continue during the remainder of the year as well. We will continue to
raise the sales prices in the coming months in order to cover the increased
costs.

The recent rapid weakening of the outlook of the global economy and the possible
escalation of the European debt crisis have increased the uncertainty of the
market development. Consumer confidence has declined in Finland and Sweden in
the past few months.

Immediately after the end of the review period at the beginning of July 2011, we
completed the acquisition of the operations of the Zorka Color paint company in
Serbia. The acquisition strengthens our foothold in the interesting and
developing market in the Balkans."

Outlook for 2011

After the review period financial uncertainty has gained momentum, and therefore
it is more difficult to forecast the development during the rest of the year.
The purchase behavior of Tikkurila's customers and their customers might change
due to the prevailing uncertainty in the international markets. GDP growth is
expected to continue in the key market areas of the Tikkurila Group in 2011, but
regional and country-specific variances might increase. Further raw material
cost increases are predicted. The suppliers for the paint industry will probably
not be able to fully match the increasing demand, due to some of the capacity
shutdowns carried out during the recession.

Tikkurila reiterates its revenue growth and EBIT margin guidance for the
financial year 2011. In 2011, Tikkurila expects revenue growth to exceed the
average GDP growth in Tikkurila's main market areas. In spite of the rising raw
material prices, Tikkurila expects EBIT margin as a percentage of revenue to
stay at the same level as in 2010. These estimates are based on the assumption
that foreign exchange rates would stay close to the end of 2010 level and that
the gradual economic recovery of Tikkurila's key markets would continue. The
estimates are also based on Tikkurila's current business structure, when the
impact of mergers, acquisitions or divestments carried out in 2011 is excluded.
In order to enhance profitability and competitiveness, Tikkurila has decided to
continue to increase sales prices as well as to implement additional measures to
increase efficiency and decrease expenses.

Disclosing procedures of financial reviews

Tikkurila Oyj follows the new disclosure procedure enabled by Standard 5.2b
published by the Finnish Financial Supervision Authority, and discloses relevant
information (i.e. information likely to have a material effect on the value of
Tikkurila's share price) related to its Interim Report with this Stock Exchange
Release. Tikkurila's Interim Report for January-June 2011 is attached to this
release and is also available on company's website at www.tikkurilagroup.com/fi.

Press conference and conference call

Tikkurila will hold a press conference regarding its January-June 2011 Interim
Report for the media and analysts today on August 11, 2011, at 12:00 p.m.
(CET+1) in the Akseli Gallén-Kallela 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 (CET+1). The Interim Report will be presented by Erkki Järvinen, President
and CEO, and Jukka Havia, CFO.

A conference call in English will be held at 3:00 p.m. (CET+1). The participants
will be asked to provide their full name and a conference ID (80352169). To
participate in the conference call, please dial one of the following numbers
5-10 minutes before the conference:

From Finland (no charge): 0800 112 363
From Russia (no charge): 8108 002 097 2044
From Sweden (no charge): 0200 890 171
From the USA (no charge): 1866 966 9439
UK Standard International (from all countries): +44 (0) 1452 555 566

The stock exchange release and presentation materials will be available before
the event at www.tikkurilagroup.com/investors. A recording of the conference
call will be available at the same address after the conference.


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

Susanna Aaltonen, Group Vice President, Communications & IR
Mobile +358 40 593 4221,susanna.aaltonen@tikkurila.com


Tikkurila provides consumers, professionals and the industry with user-friendly
and environmentally sustainable solutions for protection and decoration.
Tikkurila is a strong regional player that aims to be the leading paint company
in the Nordic area and Eastern Europe including Russia. - Tikkurila inspires you
to color your life.

www.tikkurila.com





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Attachments:

Tikkurila s Interim Report Q2/2011.pdf