Tikkurila. Interim Report 1 6/2010. Erkki Järvinen, President and CEO August 11, 2010

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1 Tikkurila Interim Report 1 6/21 Erkki Järvinen, President and CEO

2 Contents Tikkurila in brief Review period Group highlights Review period Segment highlights Outlook 2

3 Tikkurila in brief

4 Tikkurila in brief Information on Tikkurila Market position in the decorative paint market Customers: Consumers, professionals and the industry Market position: Leading market position in decorative paints in Finland, Sweden and Russia Market area: Northern Europe, Central Eastern Europe, Russia and other CIS countries Products and services: Decorative paints, industrial wood and metal coatings, phone advisory service (customer hotline), Designer and Contractor Pool, customer training etc. 4

5 Business strategy Tikkurila aims to be the leading paint company in the Nordic area and Eastern Europe, including Russia Customer focus Geographical focus Profitable growth Strong brands One unified Tikkurila 5

6 Review period Group highlights 6

7 Revenue and EBIT improved from last year Development Q2/21 vs. Q2/29 Revenue increased by 12.3%, i.e. by EUR 2.1 million mainly due to exchange rate changes EBIT (excluding non-recurring items)* increased by 15.7%, i.e. by EUR 3.9 million mainly due to cost savings Gearing decreased clearly Markets are recovering slowly from the recession Despite the good start of the year the market environment remains uncertain Tikkurila upgrades its outlook for 21 due to the good start of the year * The non-recurring items in Q2/21 are related to an insurance compensation in Russia (EUR 1.5 million positive impact), as well as to a fine set by Polish competition authorities (EUR.8 million negative impact). 7

8 Key figures of the review period EUR million 4 6/21 4 6/29 Change % 1 6/21 1 6/29 Change % 29 Revenue % % 53.2 EBIT excluding nonrecurring items EBIT excluding nonrecurring items, % % % % 15.1% 11.9% 1.4% 9.5% EBIT % % 47.7 EBIT, % 15.9% 13.6% 12.1% 9.5% 9.% EPS*, EUR % %.63 ROCE, % p.a. 18.5% 14.2% 18.5% 14.2% 17.7% Free cash flow after investments Net interest-bearing debt at period-end % % % Gearing, % 87.% 235.6% 9.% Equity ratio, % 34.2% 19.7% 35.7% Personnel at period-end 3,946 3, % 3,538 * Calculated by using the amount of outstanding shares of 44,18,252 8

9 Revenue development by segment Q2/21 vs. Q2/29 EUR million Q2/29 Q2/ East Finland Scandinavia CEE 9

10 Revenue by segments (SBU) Q2/21 vs. Q2/29 Q2/21, total revenue EUR million Q2/29, total revenue EUR million 16% 35% 18% 33% 29% 28% 19% 21% East Finland Scandinavia CEE Decorative paints account for 86% of revenue Decorative paints account for 86% of revenue 1

11 Revenue development EUR million 4 6/21 4 6/29 Change % 1 6/21 1 6/29 Change % 29 Revenue % % 53.2 Increase/decrease, EUR million Different factors impacting revenue development, Q2/21 vs. Q2/ EUR 2.1 million 15 EUR 12.3 million 1 5 EUR 2.1 million EUR 5.5 million EUR. million Volume Price/Product mix Exchange rates Acquisitions/ divestments Total The figures on the graph above have been rounded to one decimal, which should be taken into account when analyzing the numbers. 11

12 EBIT* development by segments (SBU) Q2/21 vs. Q2/29 EUR million Q2/29 Q2/ East Finland Scandinavia CEE * Excluding non-recurring items 12

13 Seasonality Revenue by quarter EBIT* by quarter EUR million EUR million Q1 Q2 Q3 Q4-1 Q1 Q2 Q3 Q * Excluding non-recurring items 13

14 Water-borne paints becoming more popular Water-borne paints gaining ground Share of water-borne paints of Tikkurila's production in 29 Water-borne paints are gaining more popularity in all Tikkurila's market areas as the general environmental awareness increases. The development is slower in the east than in the west A significant share of Tikkurila's R&D is related to the development of water-borne paints The share of water-borne paints of Tikkurila's total production was 72% in 29 Tikkurila's goal is that 99 percent of its products sold in 21 in Sweden are waterborne Many products of Alcro-Beckers has the Nordic Swan environmental label 28% 72% Water-borne Solvent-borne 14

15 15 Review period Segment highlights

16 SBU East Q2/21 EUR million 4 6/21 4 6/29 Change % 1 6/21 1 6/29 Change % 29 Revenue % % EBIT* % % 17.7 EBIT*, % 17.4% 15.3% 12.% 1.% 1.6% Capital expenditure excl. acquisitions % % 7.2 Different factors impacting the revenue development of SBU East, Q2/21 vs. Q2/29 Increase/decrease, EUR million EUR 4.8 million EUR 1.4 million 6 4 EUR 1.7 million 2 EUR 3.9 million EUR. million Volume Volyymi Price/Product Hinta/Tuotemix mix Exchange Valuuttakurssit rates Yritysostot Acquisitions/ tai -myynnit Yhteensä Total divestments * Excluding non-recurring items 16

17 SBU East Q2/21 Comments on the review period Revenue Q2/21 Increase primarily due to exchange rate changes and sales volumes Sales volume +7% EBIT excl. non-recurring items Q2/21 Improvement mainly due to lower variable costs, as well as increased sales prices and volumes The exchange rate changes increased EBIT by EUR.6 million The positive development of the economies in the region, as well as stronger consumer confidence boosted the demand Demand shifting to some extent from economy to premium products * Excluding non-recurring items 17 EUR million EUR million Revenue by quarter Total EUR million EBIT* by quarter Total EUR 17.7 million Q1-Q2: EUR 92.7 million Q1-Q2: EUR 11.1 million Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

18 Tikkurila the best-known paint brand in Russia Brand awareness Tikkurila has been steadfast in strengthening its brand particularly in Russia According to TNS survey, Tikkurila is the best-known paint brand in Russia (awareness rate 4.3%) Lähde: TNS Marketing Index, Russia, 1, people, aged + 16 years (29) 18

19 Consumer confidence is rising in Russia Russian consumer confidence % I II III IV I II III IV I II III IV I II III IV I II III IV I II Source: Rosstat, July 21 19

20 Construction in Russia F EUR million 45, Value of Russian construction market F 4, 35, Optimistic scenario 3, 25, 2, 15, Pessimistic scenario 1, 5,, E 21F 211F 212F 213F 214F 215F Growth % 21F 211F 212F 213F 214F 215F Optimistic forecast 1.9% 16.2% 21.1% 27.5% 33.1% 36.4% Pessimistic forecast 3.2% 9.5% 14.1% 18.3% 22.1% 24.3% Source: Global Research & Data Services, March 21 2

21 SBU Finland Q2/21 EUR million 4 6/21 4 6/29 Change % 1 6/21 1 6/29 Change % 29 Revenue % % 16.8 EBIT* % % 14.2 EBIT*, % 22.8% 21.4% 19.9% 16.5% 13.3% Capital expenditure excl. acquisitions % % 2.1 1,6 1,4 1,2 1,8,6,4,2 Different factors impacting the revenue development of SBU Finland, Q2/21 vs. Q2/29 Increase/decrease, EUR million EUR 1.5 million EUR.4 million (negative) EUR. million EUR. million EUR 1.1 million Volume Volyymi Price/Product Hinta/Tuotemix mix Exchange Valuuttakurssit rates Yritysostot Acquisitions/ tai -myynnit Yhteensä Total divestments * Excluding non-recurring items 21

22 SBU Finland Q2/21 Comments on the review period Revenue Q2/21 Increase due to somewhat higher sales volumes The demand for industrial coatings still on a low level EBIT excl. non-recurring items Q2/21 Improvement mainly due to increased sales volumes and lower cost levels Consumer confidence on the highest level in three years and construction activity picking up Feedback for product launches has been positive * Excluding non-recurring items Revenue by quarter EUR million 12 Total EUR 16.8 million Q1-Q2: EUR 63.7 million EBIT* by quarter EUR million 2 Total EUR 14.2 million Q1-Q2: EUR 12.7 million Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 22

23 New products for sauna Interior design trends Interior design of saunas is a prevailing trend, strongly related to the general wellness and home spa thinking Tikkurila's succesful product launches in spring 21 include, among others, Supi Saunavaha (wax for sauna bench and panels) and Supi Arctic (pearlescent sauna finish for panels) Product launches Supi Saunavaha A protective material for the wooden surfaces in sauna. In addition to Black, White and Thermowood, the product can be tinted to 27 different shades 23

24 SBU Scandinavia Q2/21 EUR million 4 6/21 4 6/29 Change % 1 6/21 1 6/29 Change % 29 Revenue % % EBIT* % % 16.1 EBIT*, % 15.4% 14.3% 12.% 1.6% 1.2% Capital expenditure excl. acquisitions % % 2.1 Different factors impacting the revenue development of SBU Scandinavia, Q2/21 vs. Q2/29 Increase/decrease, EUR million EUR 5.2 million EUR 1.1 million 1 EUR 1.4 million EUR. million Volyymi Volume Price/Product Hinta/Tuotemix mix Valuuttakurssit Exchange rates Yritysostot Acquisitions/ tai -myynnit Yhteensä Total divestments * Excluding non-recurring items 24 EUR 7.7 million

25 SBU Scandinavia Q2/21 Comments on the review period Revenue Q2/21 Increase primarily due to changes in exchange rates, which had a EUR 5.2 million impact The sales volume and prices also developed favorably EBIT excl. non-recurring items Q2/21 Improvement mainly due to lower raw material prices and higher sales prices Exchange rate changes had a EUR.6 million positive impact Economic recovery is well underway particularly in Sweden * Excluding non-recurring items 25 EUR million EUR million Revenue by quarter Total EUR million Q1-Q2: EUR 93.5 million EBIT* by quarter Yht milj. euroa Q1-Q2: 11.2 milj. euroa Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

26 New Alcro Designers collection, ad.1 New color collection "ad.1 by Li Edelkoort" Alcro launched a new color collection, ad.1 by Li Edelkoort, in June 21 The color collection was designed in cooperation with one of the world's leading trend-gurus, Li Edelkoort 31 new colors are inspired by the world of birds Product launches AD Kashmir Alcro Designers Kashmir is a velvet-like, matt interior paint, which was developed to give perfect justice to the colors of the ad.1 collection 26

27 SBU Central Eastern Europe (CEE) Q2/21 EUR million 4 6/21 4 6/29 Change % 1 6/21 1 6/29 Change % 29 Revenue % % 98.5 EBIT* % % 5. EBIT*, % 7.5% 1.9% 4.9% 5.8% 5.1% Capital expenditure excl. acquisitions Figures include export to more than 2 countries % % 2.1 Different factors impacting the revenue development of SBU CEE, Q2/21 vs. Q2/29 Increase/decrease, EUR million 1,5 1 EUR.9 million,5 -,5-1 EUR. million Volume Volyymi Price/Product Hinta/Tuotemix mix Valuuttakurssit Exchange rates Yritysostot Acquisitions/ tai -myynnit Yhteensä Total divestments EUR 1.2 million (negative) EUR 2.3 million -1,5-2 * Excluding non-recurring items EUR.2 million (negative) 27

28 SBU CEE Q2/21 Comments on the review period Revenue Q2/21 Improvement due to exchange rate changes, which had a EUR 2.3 million impact EBIT excl. non-recurring items Q2/21 EBIT was hampered especially by lower sales volume and tightened price competition, as well as by a higher fixed cost level Exchange rate changes had a EUR.3 million positive impact A gradual recovery can be seen in the SBU CEE's operating area * Excluding non-recurring items 28 EUR million EUR million Revenue by quarter Total EUR 98.5 million EBIT* by quarter Total EUR 5. million 3.4 Q1-Q2: EUR 51.9 million Q1-Q2: EUR 2.6 million Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

29 Outlook

30 Pressure to increase raw material prices Information on raw materials Tikkurila's major raw materials include pigments (most commonly titanium dioxide), binders, solvents, additives, water and packing materials About 75% of raw materials from western suppliers In Russia about 5% of raw materials from local suppliers Raw material prices are affected e.g. by the balance between the supply and demand as well as by oil and energy prices The amount of alternative suppliers has decreased 3

31 Outlook for 21 Tikkurila's revenue and operating profit (EBIT) excluding non-recurring items are expected to exceed the corresponding 29 level. The revenue and operating profit estimates do not take into consideration possible effects from exchange rate fluctuations, which may have a significant impact on the revenue development, in particular. Previous outlook: In 21, Tikkurila's revenue and operating profit (EBIT) excluding nonrecurring items are expected to remain on the same level as in 29. The revenue and operating profit estimates do not take into consideration possible effects from exchange rate fluctuations. 31

32 Disclaimer All forward-looking statements in this presentation are based on the management's current expectations and beliefs about future events, and actual results may differ from the expectations and beliefs such statements contain. 32

33 Contact persons 33

34 Investor and media contacts Erkki Järvinen President and CEO Susanna Aaltonen GVP, Communications & IR Tel Mobile Jukka Havia CFO

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