Tikkurila as an investment
Our equity story:
A leading player in its region
Tikkurila is a strong regional player which focuses on the Nordic countries and Eastern Europe. The most important markets are Sweden, Finland, Russia and Poland, which account for approximately 80 percent of the Group’s revenue. Tikkurila is the market leader in decorative paints in Sweden, Finland, Russia and the Baltic countries. Tikkurila relies on strong brands and sustainable products which support the life cycle philosophy. A strong quality image and market leadership are the company’s key competitive advantages.
Tikkurila focuses on higher price and quality grade paints, which are manufactured in 12 production units in nine countries. The highest production capacity is located in Russia, where the company has been operating since the 1970s.
Tikkurila’s customers comprise consumers and professionals. A significant portion of the Group’s revenue is generated by the sales of decorative paints. Furthermore, Tikkurila serves customers in the wood and metal industries. Tikkurila’s operations are largely based on consumer business as well as renovation and repair, which greatly reduces the company’s sensitivity to economic fluctuations.
Tikkurila was established in 1862, and it has been listed on NASDAQ OMX Helsinki since 2010.
Tikkurila’s reporting segments are SBU West and SBU East.
Tikkurila Group key figures 2016:
• Revenue EUR 572.0 million
• Adjusted operating profit EUR 54.0 million
• Personnel some 3,000
2010 EUR 0.70 per share
2011 EUR 0.73 per share
2012 EUR 0.76 per share
2013 EUR 0.80 per share
2014 EUR 0.80 per share
2015 EUR 0.80 per share
Historical dividends have corresponded to 69–88% of the operative net income.
Tikkurila's financial targets for 2018
Revenue: Revenue EUR 1 billion
Relative profitability: Adjusted operating profit margin over 12 percent
Return on capital: Operative return on capital employed (ROCE) over 20 percent
Balance Sheet structure: Gearing less than 70 percent
Strong and stable profitability over business cycles
Tikkurila has grown profitably during the 21st century.
Paint business characteristics
Market trends provide opportunities
The growth in paint consumption has historically correlated with an increase in the standard of living. The market in Western Europe is relatively mature and there the paint consumption per capita is 8–15 liters. In Central Eastern Europe as well as in the CIS countries, the current decorative paint consumption per capita is significantly lower than in Western Europe. In Russia, for instance, the per capita paint consumption is some 6 liters. The consumption is expected to pick up in Central Eastern Europe and the CIS area as the standard of living increases. Moreover, the improving standard of living in the emerging economies is expected to increase the relative share on higher quality and price category paints.
Market drivers for paint demand and costs: