Frequently asked questions

This page contains questions that are frequently asked about Tikkurila.


Market position

What is Tikkurila’s market share?

Tikkurila is a leading decorative paint company in Finland (market share in decorative paints: more than 50%), Sweden (approximately 38%), Russia (approximately 18%), and the Baltic countries (approximately 20%). In Poland, Tikkurila is the fourth largest player (approximately 15%). More than 80% of Tikkurila’s revenue is generated by decorative paints.

 

What are Tikkurila’s largest countries in terms of revenue?

Russia (revenue in 2013, EUR 204.3 million, 31% of the Group’s revenue), Sweden (EUR 151.3 million, 23%), Finland (EUR 104.0 million, 16%) and Poland (EUR 60.1 million, 9%).

 

Who are Tikkurila’s major competitors?

On one hand, Tikkurila’s competitors include global corporations in the industry, such as AkzoNobel and PPG, and, on the other, mid-size companies focusing on certain product areas or geographical regions, such as Teknos, Flügger, Jotun, Caparol, Empils and Lakra-Sintez.

 

What are Tikkurila’s growth objectives?

Tikkurila’s goal is to be the leading paint company in the Nordic countries and Eastern Europe, including Russia. Tikkurila aims at revenue of EUR 1 billion in 2018. 

 

What are the plans to improve profitability in Central Eastern Europe?

The competitive situation, demand structure of products, and Tikkurila’s several small units in Central Eastern Europe affect profitability in the SBU Central Eastern Europe (CEE) reporting segment. Tikkurila aims to improve its position in Central Eastern Europe through more cost-effective operations, organic growth, and acquisitions.



 

Revenue and distribution channels

Who are Tikkurila’s customers?

Consumers and professionals (incl. industry). Tikkurila sells decorative paints to consumers and professionals mainly through retailers (e.g. hardware stores). The professional segment includes contractors, designers, house managers, construction companies, developers and influencers. On the industry side, Tikkurila sells paints and coatings to customers within the wood and metal industry.

 

How does Tikkurila sell paints?

Tikkurila sells decorative paints primarily to DIY retailers (hardware stores), paint retail store chains, and independent paint retailers, who in turn sell paint to consumers. In Scandinavia, Tikkurila also has its own paint stores. In Central Eastern Europe and Russia, distribution routes are more complex (e.g. wholesalers). Tikkurila sells industrial paints directly to customers or through the Temaspeed sales network.

 

How does Tikkurila’s revenue break down between industry, professionals, and consumers?

In 2013, the share of professionals and consumers was 84% of revenue (decorative paints), and the share of industry was 16% (industrial coatings).

 

How does Tikkurila’s revenue break down between new construction and renovation?

Renovation has a greater impact on the demand for decorative paints than new construction. According to Tikkurila’s estimate, the share of renovation is, on average, approximately 2/3 and that of new construction about 1/3.

 

The development of Tikkurila’s revenue is attributable to, among others, changes in sales prices and in the sales mix. What does the sales mix mean?

The sales mix means the whole of products sold by Tikkurila within a certain time period, and, in particular, the share of each product group and products of the total sales of the period in question. The proportionate share of different products in the sales varies depending on, among others, economic trends and seasons. A downward economic trend usually has more effect on the demand of industrial paints than decorative paints. In addition, for example as construction recovers, demand for the larger container sizes grows as the professionals’ activity increases. Certain longer-term trends such as switching to higher price and quality grade products in the developing markets and increased demand for more environmentally-friendly product groups also affect the sales mix. 




Raw materials

What are Tikkurila’s most important raw materials?

Tikkurila’s most important raw materials include pigments (e.g. titanium oxide), binders, solvents and additives. In addition to the raw materials, packaging materials, metal and plastic containers in particular, are a significant expense item.

 

How do changes in raw material prices affect Tikkurila?

Raw materials are Tikkurila’s greatest individual expense item, and thus changes in raw material prices have a significant effect on Tikkurila’s operations. Traditionally, Tikkurila’s pricing power has been good, and the company has been able to cover the increase in raw material prices well by raising its own prices, although sales price changes do not necessarily coincide with the changes in the cost basis.

 

How does the price of oil affect Tikkurila’s operations?

The development of oil prices impacts Tikkurila’s operations through raw materials and also through the operations in Russia. The importance of oil-based raw materials has decreased on the long term as waterborne paints have gained popularity. In all, increases in the price of oil usually have a positive effect on Tikkurila's business since there has been a trend of positive correlation between increased oil prices and the development of Russia’s national economy. The overall economic development has a significant impact on demand for paints.




Cost structure

What is Tikkurila’s cost structure like?

Raw material and packaging material costs are Tikkurila's largest expense item, accounting for approximately a half of revenue in total. Sales and marketing costs amounted to approximately 14% of revenue in 2013. Research and development costs are approximately 2% of revenue annually.




Capital expenditure

What is Tikkurila’s capital expenditure need?

In 2013, gross capital expenditure excluding acquisitions amounted to EUR 13.2 (18.1) million. The capital expenditure level in 2014 is estimated to be around the annual depreciation and amortization level. Over a longer term, the volume of replacement investments and reinvestments, excluding significant new construction sites, can be expected to be reasonably close to the depreciation level of the income statement. Paint manufacturing does not require as much capital as the chemical industry in general.

 

What is Tikkurila’s acquisition policy?

Tikkurila seeks growth both organically and through acquisitions. Significant acquisitions include, among others, the purchase of the Swedish Alcro-Beckers in 2001 (revenue of approximately EUR 190 million) and of the Russian Kraski Teks in 2006 (revenue of approximately EUR 80 million). Acquisition opportunities will be surveyed, in particular, in Central Eastern European countries where Tikkurila’s market position is weak. The acquisitions will focus on companies that have a good market position in the target market, known and strong brands as well as an extensive distribution and customer network.




Corporate responsibility

Does Tikkurila apply Sustainable Development Indices?

Tikkurila’s share does not belong to Sustainable Development Indices. As part of its Annual Report, Tikkurila publishes a Corporate Responsibility Report, verified by a third party, which is compiled in accordance of the international GRI guidelines and which also presents Tikkurila’s measures to promote sustainable development.

 

What kind of environmental impacts Tikkurila’s operations have?

The burden caused by paint products on the environment includes, among other things, production of raw materials and packaging materials, energy used during the manufacturing of the product, emissions and wastes generated during production, and distribution of raw materials, packaging materials and products, as well as compounds evaporating from the paint during painting and drying (e.g. the solvents released from the use of solvent-borne paints), and disposal of paint waste.


Tikkurila aims to continuously minimize the environmental impact of its operations and products, e.g., by developing paint combinations and solutions that extend the life-cycle of the product and allow for longer maintenance painting intervals, investing in promoting the use of water-borne products, and selecting the options which burden the environment less, whenever it is technically and financially possible, as well as developing the eco-efficiency of the production processes by minimizing loss and utilizing generated waste. In 2013, the share of water-borne products in production was 71.6%.




Exchange rate effect

What are Tikkurila’s invoicing currencies? How do exchange rate fluctuations impact Tikkurila’s business?

Tikkurila’s subsidiaries invoice their customers in the currency of their home market. For the Group, the most significant of these currencies are Russian ruble, Swedish krona, and Polish zloty. Exchange rate fluctuations have an effect on the Group’s key figures reported in euro through the income statement, balance sheet and cash flow statement.  The company’s equity is subject to currency risk when subsidiaries’ foreign currency equity items are translated into euro. Tikkurila hedges against currency risks with forward exchange agreements.  




Shares and dividend

What is Tikkurila’s policy in terms of dividend payments?

Tikkurila's dividend history:

 

2010 dividend per share EUR 0.70

2011 dividend per share EUR 0.73

2012 dividend per share EUR 0.76

2013 proposed dividend per share EUR 0.80

 

Historical dividends have corresponded to 69–88% of the operative net income. In accordance with Tikkurila’s dividend policy, Tikkurila aims to distribute a dividend that is no less than 40 percent of its annual operative net income. Operative net income is the net profit for the period excluding non-recurring items and adjusted with tax effects.

 

Does Tikkurila’s Management Board own the company’s shares or have options?

The Tikkurila Group Management Board and their related parties owned a total of 30,025 Tikkurila's shares at the end of 2012, which corresponds to 0.1 percent of the company’s share capital and voting rights. In early 2013, Tikkurila announced a share-based commitment and incentive plan for key personnel.

 

What is the taxation value of the share received in connection with Tikkurila's listing?

The taxation value and purchase price of Tikkurila’s share received as share dividend is EUR 15.80 (the  volume weighted average price of the first trading date, or March 26, 2010).