Profitability increased clearly in Q2/2020 TIKKURILA OYJ, HALF - PowerPoint PPT Presentation

Profitability increased clearly in Q2/2020 TIKKURILA OYJ, HALF YEAR FINANCIAL REPORT

How did the Covid-19 impact Tikkurila? Overall, Tikkurila’s second quarter was strong, despite Covid -19. Demand fluctuated rapidly Tikkurila remained fully operational* between April-June Professional Exceptionally and industry Continued focus on high sales in businesses health & safety of consumer The “Stay at home” impact boosted consumer were impacted, employees, customers sales towards the end of the quarter, and driven by DIY Tikkurila’s marketing efforts were focused to still less than and partners business support the trend. expected * Due to nationally imposed restrictions by authorities, in Russia production was closed for 10 days in early April 2

Key financial takeaways from Q2/2020 Adjusted operating profit (EUR million) Adjusted operating profit (EUR million) ➢ Revenue increased by +1.3%, and by +4.6% in comparable currencies 34,7 34,7 ➢ Strong growth in Finland, Sweden and Poland ➢ Decline in Russia was due to stricter and longer local Covid-19 restrictions 23,2 23,2 22,6 22,6 ➢ In June, revenue was in strong growth in all main markets: +24%, also Russia in clear double-digit growth 8,5 8,5 8,2 8,2 ➢ Adjusted operating result clearly improved to EUR Q4 34.7 million (23.2) ➢ Positive price/mix development Q3 Q1 Q2 ➢ Continued efficiency actions and temporary savings contributed -7,6 -7,6 2019 2019 2020 ➢ Liquidity and funding position is good ➢ Interest-bearing net liabilities improved to EUR 96.9 million (151.8) ➢ Operative cash flow improved 7/23/2020 3

Key figures – Tikkurila Group The effects of various factors on revenue, 1- EUR million 4-6/2020 4-6/2019 1-6/2020 1-6/2019 Change% Change% 12/2019 Q2/20 vs Q2/19 Revenue 171.8 169.7 +1.3% 304.8 298.8 +2.0% 563.8 4.3% Comparable revenue +4.6% +4.2% +1.4% growth 1) Operating result (EBIT) 33.1 21.2 41.7 29.1 43.9 +56.2% +43.3% Operating result margin, % 19.3% 12.5% 13.7% 9.7% 7.8% 34.7 23.2 43.2 31.4 46.4 Adjusted operating result +49.2% +37.6% 1.3% Adjusted operating result 20.2% 13.7% 14.2% 10.5% 8.2% -3.3% margin, % 0.3% Net result for the period 27.0 16.1 +67.5% 30.8 23.5 +30.9% 33.2 Volume Price/mix Currencies Total Earnings per share (EPS), 0.61 0.37 +67.6% 0.70 0.53 +30.9% 0.75 EUR* Interest-bearing net 96.9 151.8 -36.2% 78.4 liabilities at period-end Cash and cash equivalents 100.8 34.2 +194.9% 47.0 Gearing,% 55.8% 94.2% 45.6% ROCE, % 20.5% 12.2% 15.4% Cash flow after capital 11.4 -12.0 +194.9% -5.9 -30.1 +80.2% 52.7 1) Comparable revenue excludes currency expenditure effects, divestments and closures. 4

Key figures – SBU West The effects of various factors on revenue, EUR million 4-6/2020 4-6/2019 Change % 1-6/2020 1-6/2019 Change % 1-12/2019 Q2/20 vs Q2/19 Revenue 119.4 107.5 +11.1% 216.4 204.7 +5.7% 370.0 Comparable +13.1% +7.3% 3.8% revenue growth 1) 11.1% Revenue in 38.2 35.3 +8.3% 69.2 66.5 +4.1% 118.7 Sweden -2.0% 9.3% Revenue in 33.5 28.4 61.1 55.0 +17.9% +11.1% 91.1 Finland Revenue in 25.7 23.7 +8.5% 47.1 47.3 -0.2% 89.4 Poland Adjusted operating 25.3 14.8 35.7 25.4 30.7 +70.8% +40.4% result Adjusted operating 21.1% 13.7% 16.5% 12.4% 8.3% result margin, % Volume Price/mix Currencies Total Highlights from April – June (Q2) • In Sweden (revenue +8%), increase in all segments (consumer, professional, industry). Growth was 1) Comparable revenue excludes currency driven by increasing consumer DIY demand, especially for exterior paints. effects, divestments and closures. • Finland (revenue +18%) had the fastest growth with revenue increasing in consumer and industry businesses. The recovery driven by consumer DIY demand especially for exterior paints was strong in Finland. SBU West consists of Sweden, Denmark, • In Poland (revenue +9%), revenue increased in decorative paints, offsetting the slight decline in Norway, Finland, Poland, Estonia, Latvia, and industry paints. Lithuania. • Weak currencies had a negative impact of EUR -2 million to revenue in SBU West. 5 7/23/2020

Key figures – SBU East The effects of various factors on revenue, Change Change EUR million 4-6/2020 4-6/2019 1-6/2020 1-6/2019 1-12/2019 Q2/20 vs Q2/19 % % Revenue 52.4 62.2 -15.6% 88.5 94.1 -6.0% 193.8 Comparable -10.0% -2.7% revenue growth 1) Revenue in 39.1 47.3 66.8 69.1 -17.3% -3.3% 143.6 Russia Adjusted operating 5.1% 11.0 9.8 +12.1% 10.0 9.1 +10.1% 22.0 result Adjusted operating 20.9% 15.7% 11.3% 9.7% 11.4% result margin, % -15.1% -5.6% -15.6% Highlights from April – June (Q2) Volume Price/mix Currencies Total • In Russia (revenue -17%), revenue decreased reflecting the severity and long duration of the national Covid-19 lockdown. Decline in April-May was due to curfews in major cities, while June grew in double-digit. • Most of the retail stores were closed until end of May 1) Comparable revenue excludes currency effects, divestments and closures. • Local Russian factories were closed for 10 days in early April • The strong comparison period in 2019, during which decorative paints sales had SBU East consists of Russia, Central Asian increased ahead of price increases countries, and China. Furthermore, SBU East • is responsible for the exports to more than 30 The weak Russian Ruble countries. The figures on the graph have been • independently rounded, which should be taken Due to Covid-19 impacts revenue declined also in China , where our exposure is limited into account when calculating total figures. 6 7/23/2020

Value continues to drive Tikkurila’s revenue, while currencies had a clear negative impact Impact of price/mix on revenue Impact of volume on revenue Impact of currencies on revenue 10.1% 5.1% 4.8% 4.3% 3.7% 3.3% 2.8% 1.7% 1.2% 1.0% 0.9% 0.6% 0.3% -0.4% -0.7% -0.7% -1.5% -1.5% -2.0% -3.1% -3.3% -4.9% -4.3% -6.3% Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 7 7/23/2020

Key indicators continued to develop positively Cash flow after Fixed costs ROCE Net interest-bearing capital expenditure EUR million % liabilities EUR million, Rolling 12m Rolling 12m Rolling 12m EUR million 76.9 20.5% 157.2 157.3 215.8 151.8 201.3 18.5% 185.9 180.4 175.6 15.4% 52.7 96.9 36.3 9.3% 6.3% 22.7 4.4 2016 2017 2018 2019 R12M 2016 2017 2018 2019 R12M 2016 2017 2018 2019 R12M H1/17 H1/18 H1/19 H1/20 2016-2018 excluding IFRS 16, 2019-2020 including IFRS 16 8

Demand clearly recovered after the initial Covid-19 related decline Quarterly revenue growth (yoy) in 2019-2020 Q2/20 monthly revenue growth (yoy) 30% 24% 25% 20% 15% 10% Covid-19 Strong restrictions recovery 5% 3% 3% 2% 1% 0% -1% -2% -2% -5% -10% -15% -16% -20% Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 April May June 9

In the end of Q2 (June), recovery was strong in all core markets Q2 revenue, -17% +8% +18% +8% growth, % June, revenue Double-digit Double-digit Double-digit Double-digit growth, % 10 7/23/2020

* 2019 Differering trends in end-customer segments 83% of revenue* 17% of revenue* Consumers Professionals Professional Industrial Industry Consumers spent more time and Weak macroeconomic Professional business also recovered money at home: DIY growth development has decreased in June, in most core markets demand in the metal industry Online activity and ecommerce Mobility of professional painters More local wood industry has within and across borders Restrictions currently eased in remained in growth our core markets 11

Visibility forward remains weak - Extraordinary demand in consumer paints expected to normalize Forecasted* GDP decline in 2020 Demand expected to Macroeconomic continue to fluctuate uncertainty -6% -6% expected to impact especially Consumer demand our B2B expected to normalize -5% -5% business after extraordinary Q2 New construction projects Will there be a second impacted by uncertainty Covid-19 wave ? *Sources for GDP growth rates: Russia (World Bank, June 2020, Global Economic Prospects), Finland, Poland and Sweden (European Commission, Summer 2020 Economic Forecast, 7 July 2020) 12