Tikkurila's renewed financial targets Alternative options to greenfield factory investment in Russia explored
Tikkurila's Board of Directors has approved the company's strategy for 2019-2022, renewed the company's financial targets, and explores alternative options to greenfield factory investment in Russia.
Stock exchange release Insider information April 25, 2019 at 9.10 (CET+1)
The focus areas of Tikkurila's strategy are profitable growth, efficiency improving cost competitiveness and value-based corporate culture. Tikkurila’s target is to grow faster than the market in its market areas. Further, in line with its sustainability promises Tikkurila will accelerate the shift towards water-borne paint products and enhance their use.
Tikkurila's vision and mission have been united into one purpose: “We create sustainable Nordic quality surfaces that make a difference”. A sustainable way to act and promote the well-being of the environment is the key part of the strategy.
Long-term financial targets
Tikkurila has renewed its long-term financial targets as part of its strategy work. Regarding revenue, the target has been tied in market growth. As regards profitability, return on capital and balance sheet structure, the long-term financial targets remain unchanged.
The targets are:
- Revenue: Tikkurila aims for faster than market growth
- Relative profitability: adjusted operating profit margin over 12 percent
- Return on capital employed (ROCE): over 20 percent
- Balance sheet structure: gearing below 70 percent
Dividend policy remains unchanged.
Tikkurila explores alternative options to greenfield factory investment in Russia
Tikkurila's investment for the construction of a solvent-borne plant in Russia has been in the planning phase since 2017. As part of its strategy work, Tikkurila has re-evaluated the planned investment in terms of market development and return on investment. The estimated return on investment does not meet the company's target level. However, Tikkurila explores alternative options to support its business growth in Russia.
The total costs incurred amount up to approximately EUR 2.0 million, which will be recognized as an expense in the Q2.
"We are committed to further develop our business in Russia, which is the largest market of Tikkurila in 2018. Tikkurila is the clear market leader in decorative paints in Russia, and we will continue to strengthen our position in Russia by increasing our marketing and sales efforts. In particular, we will invest in increasing the sales of water-borne products. Water-borne paints are the safest option in terms of the environment and better indoor air, and their sales already represent more than 75% of the sales of Tikkurila's decorative paints in Russia. We are continuously improving and investing further in our water-borne factory in St. Petersburg," says CEO Elisa Markula.
The first modern-style paint factory in Russia was opened by Tikkurila in St. Petersburg in 1995. Tikkurila has three paint factories in St. Petersburg Russia.
For further information, please contact:
Elisa Markula, CEO, mobile +358 50 596 0978, firstname.lastname@example.org