OREANDA-NEWS. Tikkurila's revenue for the third quarter totaled EUR 159.9 million (7-9/2016: EUR 158.0 million). Adjusted operating profit totaled EUR 21.9 (23.7) million, i.e. 13.7 (15.0) percent of revenue.

"Third-quarter revenue was at the same level as last year. However, SBU East's revenue increased especially due to improved sales mix and higher sales prices. Refunds paid to customers in Sweden and the lower sales volumes in Finland and Sweden decreased SBU West's revenue. Demand grew slightly in Russia and Poland. Profitability in the third quarter was maintained close to the level of the same period a year ago despite a clear rise in raw material costs. Profitability development was particularly good in Russia. In order to ensure deliveries, we have raised the level of raw material and end product inventories in different parts of the Group.

During the third quarter, corrective actions related to the new ERP system implementation proceeded well with majority of identified challenges being fixed. We have been able to normalize our operations to a large extent.

As part of the program to boost profitability, we have decided to discontinue manufacturing and warehousing operations in Stary Oskol in Russia and to move the unit's production to our St. Petersburg site during the next year", says Jukka Havia, Interim President and CEO and CFO.

Revenue for January-September amounted to EUR 480.2 million (1-9/2016: EUR 467.8 million). Adjusted operating profit decreased to EUR 47.1 (64.6) million, i.e. 9.8 (13.8) percent of revenue.

Key figures            
(EUR million) 7-9/2017 7-9/2016 Change % 1-9/2017 1-9/2016 Change %
Group data            
Revenue 159.9 158.0 1.2% 480.2 467.8 2.6%
Adjusted operating profit 21.9 23.7 -7.7% 47.1 64.6 -27.1%
Adjusted operating profit margin, % 13.7% 15.0%   9.8% 13.8%  
EPS, EUR 0.36 0.43 -14.7% 0.77 1.19 -35.2%
Net interest-bearing liabilities (at period-end) 99.8 64.1 55.7% 99.8 64.1 55.7%
Total equity (at period-end) 203.5 211.5 -3.8% 203.5 211.5 -3.8%
Total assets (at period-end) 473.1 451.0 4.9% 473.1 451.0 4.9%
Segment data            
SBU West revenue 101.6 104.9 -3.2% 318.5 328.0 -2.9%
SBU West adjusted operating profit 13.8 18.5 -25.2% 36.5 55.0 -33.7%
SBU East revenue 58.4 53.2 9.8% 161.7 139.8 15.6%
SBU East adjusted operating profit 8.7 6.1 43.3% 14.2 13.1 8.4%
Revenue by country            
Sweden 35.4 39.4 -10.3% 114.0 124.2 -8.2%
Russia 42.3 37.5 12.8% 116.2 94.6 22.8%
Finland 22.7 23.2 -2.0% 80.9 85.3 -5.2%
Poland 22.3 20.8 7.0% 61.7 57.1 8.1%

Financial development in July-September 2017

Tikkurila Group's revenue in the third quarter was at the comparison period's level. Lower sales volumes decreased revenue by 2 percent. The sales price increases in Russia during the early part of the year, favorable sales mix development and a stronger Russian ruble had a positive impact on revenue.

Profitability in the third quarter was maintained close to the level of the same period a year ago despite a clear rise in raw material costs.

Financial development in January-September 2017

Tikkurila Group's revenue increased in January-September 2017 particularly due to stronger Russian ruble. Sales volumes were at the comparison period's level. Divestments decreased revenue.

Profitability was weakened by the costs being higher than in the comparison period, which was related to the implementation of the new ERP system, the higher level of raw material and packaging material prices and the sales investments being higher than in the comparison period.

The lower profitability of the business and the costs resulting from the introduction of the ERP weakened the cash flow considerably during the period under review. Net working capital increased due to higher inventory levels and trade receivables.