Tikkurila doing good in Russia

The company EUR 26.2 mln in Russia, up by 41.1 pct y-o-y, while in Poland it made EUR 16.5, down by 2.1 pct.

The adjusted operating profit totalled EUR 5.2 mln, compared to EUR 12.5 mln last year. "Demand for our products increased over January-March, particularly in the Nordic countries and Russia. However, significant fixed expenses and other initial challenges caused by the deployment of our new enterprise resource planning (ERP) system, particularly in Scandinavia, weakened our operating profit for the first quarter. In such a situation, we prioritise reliable deliveries and customer service resources to keep customer satisfaction as high as possible,” said Erkki Järvinen, the president and CEO of Tikkurila.

“In raw material markets, the situation remained difficult, but despite the tight market situation we managed to secure the availability of our key raw materials, such as titanium dioxide, during the first months of the year. However, raw material and packaging material prices have increased and are expected to increase even more in the months to come. As a result of this, we increased our sales prices in Russia in February, and will be introducing price increases also in other markets to compensate for inflation. However, the impact of sales price increases will materialise after a certain delay, and pricing will vary depending on the market and customer segment. We are continuing to improve efficiency in order to ensure our cost competitiveness,” added the CEO.

“In 2016, our market share strengthened or remained stable in all key markets with the exception of Russia where our market share decreased by approximately one percentage point," said Erkki Järvinen.

Higher sales volumes increased Tikkurila Group's revenue in the first quarter by 7 pct. Also the strengthening of foreign exchange rates, particularly of the Russian ruble, increased revenues. Unfavorable developments of the sales mix and sales prices as well as divestments had a negative impact on revenue.

Profitability was weakened by costs, which were clearly higher than in the same period of the previous year, especially due to the introduction of the new ERP system. These costs mainly occurred at the beginning of the year when the system was being introduced step by step in several of our key markets.

Tikkurila expects its revenue and adjusted operating profit for the 2017 financial year to ibe higher than that of 2016.