Tikkurila: Well positioned ahead of tough quarters – Danske Bank
Impact on the investment case. Q1 was decent, with good sales (+4% y/y local FX) and EBIT increasing by 4% y/y, but below our estimates, mainly due to exceptional FX-related items. Going forward, COVID-19 is likely to affect Tikkurila, but the company did not provide a clear outlook or comments on April trading. Tikkurila has low visibility because it has no order book and customers place orders at short notice.
The outlook differs by country, with the toughest restrictions currently in Russia, while in Finland and Sweden retail outlets have been open as normal. Construction projects are not disrupted much and demand from the professional segment looks set to weaken with a lag if volume of new projects declines. DIY trend may be stronger than we thought.
We have noted from several sources (e. g. Danske Bank spending data and Kesko’s Q1 report) that Nordic consumers tend to spend more on home improvement and this trend has continued in April.
We expect this to benefit Tikkurila too and have reduced our assumptions for a Q2-Q4 volume drop.
