Tikkurila Oyj - Interim report (Q1 and Q3)

Tikkurila's Business Review for January-September 2017

Tikkurila Oyj
Stock Exchange Release
October 26, 2017 at 9:00 a.m. (CET+1)

Tikkurila's Business Review for January-September 2017

Tikkurila's revenue for the third quarter totaled EUR 159.9 million (7-9/2016:
EUR 158.0 million). Adjusted operating profit totaled EUR 21.9 (23.7) million,
i.e. 13.7 (15.0) percent of revenue.

"Third-quarter revenue was at the same level as last year. However, SBU East's
revenue increased especially due to improved sales mix and higher sales prices.
Refunds paid to customers in Sweden and the lower sales volumes in Finland and
Sweden decreased SBU West's revenue. Demand grew slightly in Russia and Poland.
Profitability in the third quarter was maintained close to the level of the same
period a year ago despite a clear rise in raw material costs. Profitability
development was particularly good in Russia. In order to ensure deliveries, we
have raised the level of raw material and end product inventories in different
parts of the Group.

During the third quarter, corrective actions related to the new ERP system
implementation proceeded well with majority of identified challenges being
fixed. We have been able to normalize our operations to a large extent.

As part of the program to boost profitability, we have decided to discontinue
manufacturing and warehousing operations in Stary Oskol in Russia and to move
the unit's production to our St. Petersburg site during the next year", says
Jukka Havia, Interim President and CEO and CFO.

Revenue for January-September amounted to EUR 480.2 million (1-9/2016: EUR
467.8 million). Adjusted operating profit decreased to EUR 47.1 (64.6) million,
i.e. 9.8 (13.8) percent of revenue.

Key figures



(EUR million)              7-9/2017 7-9/2016 Change % 1-9/2017 1-9/2016 Change %
--------------------------------------------------------------------------------
Group data

Revenue                       159.9    158.0     1.2%    480.2    467.8     2.6%

Adjusted operating profit      21.9     23.7    -7.7%     47.1     64.6   -27.1%

Adjusted operating profit     13.7%    15.0%
margin, %                                                 9.8%    13.8%

EPS, EUR                       0.36     0.43   -14.7%     0.77     1.19   -35.2%

Net interest-bearing
liabilities (at period-        99.8     64.1    55.7%
end)                                                      99.8     64.1    55.7%

Total equity (at period-      203.5    211.5    -3.8%    203.5    211.5
end)                                                                       -3.8%

Total assets (at period-      473.1    451.0     4.9%    473.1    451.0
end)                                                                        4.9%

Segment data

SBU West revenue              101.6    104.9    -3.2%    318.5    328.0    -2.9%

SBU West adjusted              13.8     18.5   -25.2%
operating profit                                          36.5     55.0   -33.7%

SBU East revenue               58.4     53.2     9.8%    161.7    139.8    15.6%

SBU East adjusted               8.7      6.1    43.3%
operating profit                                          14.2     13.1     8.4%

Revenue by country

Sweden                         35.4     39.4   -10.3%    114.0    124.2    -8.2%

Russia                         42.3     37.5    12.8%    116.2     94.6    22.8%

Finland                        22.7     23.2    -2.0%     80.9     85.3    -5.2%

Poland                         22.3     20.8     7.0%     61.7     57.1     8.1%


Financial development in July-September 2017

Tikkurila Group's revenue in the third quarter was at the comparison period's
level. Lower sales volumes decreased revenue by 2 percent. The sales price
increases in Russia during the early part of the year, favorable sales mix
development and a stronger Russian ruble had a positive impact on revenue.

Profitability in the third quarter was maintained close to the level of the same
period a year ago despite a clear rise in raw material costs.

Financial development in January-September 2017

Tikkurila Group's revenue increased in January-September 2017 particularly due
to stronger Russian ruble. Sales volumes were at the comparison period's level.
Divestments decreased revenue.

Profitability was weakened by the costs being higher than in the comparison
period, which was related to the implementation of the new ERP system, the
higher level of raw material and packaging material prices and the sales
investments being higher than in the comparison period.

The lower profitability of the business and the costs resulting from the
introduction of the ERP weakened the cash flow considerably during the period
under review. Net working capital increased due to higher inventory levels and
trade receivables.

Changes in Group management

Based on the decision of Tikkurila's Board of Directors, President and CEO Erkki
Järvinen left the company at the end of September. The recruitment process for a
new President and CEO is ongoing.

Guidance for 2017 intact

Tikkurila expects its revenue to remain at last year's level and adjusted
operating profit for the financial year 2017 to remain below the 2016 level.


Tikkurila Oyj
Jukka Havia, Interim President and CEO, CFO


For further information, please contact:

Jukka Havia, Interim President and CEO, CFO
Mobile +358 50 355 3757, jukka.havia@tikkurila.com

Minna Avellan, Director, Communications and Investor Relations
Mobile +358 40 533 7932, minna.avellan@tikkurila.com


Tikkurila 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.

www.tikkurilagroup.com



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