Annual Report 1999 - Kemira

TIKKURILA
EARNINGS HIT BY THE FALL IN
EASTERN EXPORTS
Tikkurila had net sales in 1999 of EUR
357 million (361 million in 1998). Operations
outside Finland accounted for
75% of Tikkurila’s net sales.
Operating income was EUR 23 million
(33 million in 1998), or 6% of net
sales. Operating income was mainly
reduced by the significant fall in exports
to the east and outlays on new
markets.
MARKET SITUATION
A strong market for Tikkurila Paints.
The company manufactures paint
products for consumers and professional
painters. Its production plants
are located in Finland, Estonia, Latvia,
Russia, Poland and Italy. In addition,
Tikkurila has sales companies in Sweden,
Lithuania, Hungary and the UK.
Paint sales were very good in Finland.
The weather favoured house
painters during the outdoor painting
season. Economic activity was also at
a fairly good level, leading to a pickup
in building construction and in the
housing market. Market share in Sweden
was increased as a result of structural
changes in trade channels.
A number of new product releases,
such as tinted interior lacquers, were
well received. Benetton interior paints
were brought out on the new product
market and full-scale marketing of the
products got started in the UK. In addition,
marketing was launched in
Sweden, Finland and Japan, and it is
getting under way in Central Europe.
Despite the crisis in Russia, St Petersburg-based
ZAO Finncolor succeeded
in maintaining its dealer network
intact. In part, this was attributable
to the expansion of the company’s
own production. Russia’s economic situation
has begun to improve, and
there are already clear signs of a revival
in trade.
Tikkurila Baltcolor Sp. z o.o. in
Szczecin, Poland, a company that is
run jointly by Tikkurila and Baltchem,
operated in accordance with plans.
The Hungarian sales company Tikkurila
Festék Kft. has continued its positive
development. The customer network
has been strengthened further and
Tikkurila products have achieved a
permanent foothold in Hungary.
The economic crisis in Russia and
its repercussions in the Baltic countries
cut into the earnings of Baltic Color, the
joint venture between Tikkurila Paints
and Alcro-Beckers. The company has
nevertheless further strengthened its
leading position in the Baltic Rim.
Uneven markets for Tikkurila Coatings.
The company manufactures and
markets paints and coatings for industry.
Production plants are located in
Finland, the UK, the Netherlands, and
Poland. The unit has sales companies
in Sweden, Ireland, Estonia, Russia
and Hungary.
The plant in Finland increased its
sales, with the largest growth coming
in products for the woodworking industry.
New, water-borne products
were introduced in both the metal and
woodworking industry. Sales of coil
coatings declined in the first months of
the year owing to the weak market situation
for the end product – coated
thin sheet – but they picked up considerably
in the latter months of the
year in both the domestic and export
markets.
The shrinkage in the total market
for the Finnish metal industry has also
led to a reduced need for paints used
by this industry. Exports, however, are
growing, especially to Russia.
The overseas subsidiaries fared reasonably
well. Dickursby Färg AB in
Sweden was slightly behind last year’s
sales figures, primarily owing to the
weak sales of coil coatings.
Tikkurila Coatings has a solid position
in the Baltic furniture and joinery
industry. Sales to the metal industry
TIKKURILA
EUR million 1999 1998 1997 1996 1995
Net sales 357 361 349 255 237
Cost of sales –316 –312 –288 –208 –202
Depreciation –18 –16 –13 –10 –11
Operating income 23 33 48 37 24
Net financing expenses –4 –5 –4 –4 –4
Income before extraordinary items 19 28 44 33 20
Capital invested (average) 234 211 181 170 172
Return on capital invested % 10 16 27 22 15
Capital expenditure 23 23 47 25 10
Personnel (average) 2,301 2,214 1,902 1,520 1,585
EUR
million
400
300
200
100
0
Raimo
Piironen
NET SALES
Net sales
Operating margin, %
95 96 97 98 99
CAPITAL EXPENDITURE
95 96 97 98 99
MANAGEMENT
Tikkurila Oy
President: Raimo Piironen
Tikkurila Coatings Oy
President: Tapio Käär
Tikkurila CPS Oy
President: Raimo Piironen
Vice President: Vesa Aulanko
Tikkurila Paints Oy
President: Visa Pekkarinen
Tikkurila Services Oy
President: Tom Nurmi
%
20
15
10
5
0
EUR
million
50
NET SALES BY MARKET AREA
Finland
25 %
Other
countries
12 %
East Europe
16 %
Other EU
43 %
40
30
20
10
0
Other West
Europe
4%
45