Tikkurila – Nordic quality from start to finish

Contents

• Tikkurila as a company

• Business environment

• Business Units

Tikkurila Oyj2

Tikkurila as a company

Tikkurila Oyj3

Tikkurila – Sustainable Nordicness

Tikkurila is a leading Nordic paint company

with expertise that spans decades. We

develop premium products and services that

provide our customers with quality that will

stand the test of time and weather.

We operate in around ten countries and our

3,000 dedicated professionals share the joy

of building a vivid future through surfaces

that make a difference.

In 2017, our revenue totaled EUR 582

million. The company is listed on Nasdaq

Helsinki.

Nordic quality from start to finish since 1862.

Revenue EUR 582 million

Adjusted operating profit EUR 29

million (4.9% of revenue)

More than 3,000 employees

Production in eight countries

Products available in over 40

countries

Leading market position in main

markets

Revenue by

segment

Operating profit*

by segmentPersonnel

by segment

* Adjusted, excl. Group items

65%

35%

SBU West SBU East

54%46%

SBU West SBU East

55%45%

SBU West SBU East

Tikkurila Oyj4

Our locations

Production units in 8 countriesSales units in 12 countriesTraining centers in 9 countries

Production, distribution center, sales

Distribution center, sales

Training center

FinlandSweden

Estonia

GermanyPoland

Kazakhstan

China

Russia

Denmark

Tikkurila Oyj5

Our end-customers

CONSUMERS 50%* PROFESSIONALS 35%* INDUSTRY 15%CONSUMERS 50%*

Tikkurila Oyj6 *Tikkurila estimate

*Tikkurila estimate

Our products and services

CONSUMERS 50%*

Comprehensive home

interior and exterior

surface treatment

products

OUR SERVICES

Ideas, work instructions and

methods online

Personal painting advice

and technical support over

the phone, online, on site

and on production lines

Color cards, color design

and tinting service

Training events

On-site visits, inspections

and analysis services

Contacts with other

professionals in the industry

PROFESSIONALS 35%*

Comprehensive surface

treatment products for

masonry surfaces, wood

facades and concrete floors,

effect and decorative paints

Functional coatings

Floor coatings for

demanding environments

INDUSTRY 15%

Durable solutions to protect

steel structures, machinery

and equipment

Paints and lacquers for

wood industry

Functional coatings for

line application

Tikkurila Oyj7

Over 150 years of decoration and protection

1862 1950 1960 1970 1980 1990 2010

1862

An oil press was

founded on the

banks of the

Keravanjoki River

in Tikkurila.

1920s

The manufacture of

paints and lacquers

began in Tikkurila in

1919. Extensive

marketing and

customer training

began in the 1920s.

1950s

Tikkurila introduced its

first water-borne

product, the Joker

paint. Tikkurila's

coloring service was led

by designer Yki Nummi.

1960s

Entering the Scandinavian

market through Sweden.

A clear leading position was

obtained through

the acquisition of Alcro-

Beckers in 2001.

Tinting technology was

introduced.

1970s

Entering the Eastern

trade. Tikkurila was

known as "Firma

Miranol" in Soviet

Union. The acquisition

of Kraski Teks in 2006

made Tikkurila the

leading decorative paint

company in Russia.

1980s

To the Eastern

European market

and the Baltics

through Poland.

2010s

Tikkurila listed on

the stock exchange.

Entering the Balkan

area through the

acquisition of

Serbian Zorka Color.

Tikkurila turned

150 yrs.

Tikkurila Oyj8

Tikkurila is the market leader in decorative paints

SWEDEN RUSSIA FINLAND POLAND

#1 #1 #1 #4Russia accounts for 25%

of Group revenue

Sweden accounts for 23%

of Group revenue

Finland accounts for 16%

of Group revenue

Poland accounts for 13%

of Group revenue

37%(37%)

63%

Tikkurila Others

>50%(>50%)

50%

Tikkurila Others

15%(16%)

84%

Tikkurila Others

14%(15%)

85%

Tikkurila Others

Source: SVEFF (Sweden, value), Chem-Courier (Russia, volume), Association of Finnish Paint Industry (Finland, value), IBP Research (Poland, volume), 2016

Tikkurila Oyj9

Tikkurila Group structure

OFFERING

RDI

Marketing & Brand

Management

Business & Portfolio

Development: Consumers,

Professionals

and Industry

OPERATIONS

Procurement

Manufacturing

Product care

Logistics

HSEQ

SALES

Consumers

Professionals

Industry

Group KAM

Sales support

TIKKURILA

Tikkurila Oyj10

SUSTAINABILITY PROMISESWe improve and protect

air quality.

VALUES We are trustworthy. We are innovative. We are professionals.

We drive our portfolio towards maximized

performance with minimum environmental impact.

We drive at better resource

efficiency.

We are an active partner

in our communities.

MISSION

Nordic quality from

start to finish.

STRATEGY

We offer competitive surface

treatment solutions, and are

committed to improving the

overall user experience and

efficiency of our customers.

FOCUS AREAS

Pleasant and professional

customer journeys.

Unified customer segment

specific portfolio.

More efficient use of

resources.

VISION

Surfaces that make

a difference.

MEGATRENDS

• Urbanization

• Climate change

• Growing middle class

• Digitalization Tikkurila strategy 2022

Tikkurila values

We are trustworthy.

We create and offer quality brands, services, and products that

people can trust are safe, reliable, and environmentally sustainable.

We are innovative

We drive change in the market and offer novel solutions for

our customers' needs.

We are professionals

We add value to our customers, owners, and the community –

every day.

Tikkurila Oyj12

Strong and well-established brands

Strategic international brands

Tactical regional or local brands

Strategic regional or local brands

Tikkurila Oyj13

Distribution channels

TIKKURILA

Wholesale* Retail**

Retail**

Tikkurila’s own paint shops in Scandinavia

Tikkurila Industrial Paint Service, direct sales

CONSUMERS

PROFESSIONALS

CONSUMERS

PROFESSIONALS

PROFESSIONALS

PROFESSIONALS

* Only in some markets

** Big boxes, specialized paint shopsTikkurila Oyj14

INDUSTRY

We help customers to succeed in surface protection

INSPIRATION IDEAS COLORS STORES

CONSUMER SERVICES DIGITAL CHANNELS TRAININGPROFESSIONAL

SERVICES

Tikkurila Oyj15

Succesful end-results

• We enhance the quality of painting, environmentally sustainable use of products, product and user safety, as well as the knowledge of surface treatment.

• We train our customers, retailers, and other professionals and students in our training centers and in stores regarding paints, painting, and tinting.

• We invest in developing solutions that make selecting, buying and selling of paints easier.

• We offer our customer technical consultation, advice on selecting colors and paints as well as tips and work instructions in all channels.

Tikkurila Oyj16

Unique colors

• Tikkurila is one of the forerunners in the production of paints for tinting and in the development and marketing of colors.

• Color cards are based on the tinting system and made with color card paints. Thus the color card sample will be as close to the color of the final painted surface as is technically possible.

• Tikkurila provides color cards for both indoor and outdoor painting.

Tikkurila Oyj17

The many advantages of tinting

Enhances

the service

level of

retailers

Deepens the

cooperation of

retailers and

paint producer

Ecological

and cost-

efficient way

of operating

Economical

way to

produce small

batches of

different

colors

Practically

unlimited

amount of

shades

Enables lower

inventory

levels

Emphasizes

the quality

of paint

Tikkurila Oyj18

Sustainability promises for 2018–2022

WE DRIVE OUR PORTFOLIO

TOWARDS MAXIMIZED

PERFORMANCE WITH MINIMUM

ENVIRONMENTAL IMPACT.

WE IMPROVE AND PROTECT

AIR QUALITY WITH

OUR PRODUCTS AND

PROFESSIONAL SERVICES.

WE DRIVE AT BETTER RESOURCE

EFFICIENCY WITH QUALITY,

SAFETY AND DURABILITY

ON TOP OF OUR MINDS.

WE ARE A RESPONSIBLE

AND ACTIVE PARTNER

IN OUR COMMUNITIES.

WE DRIVE OUR PORTFOLIO

TOWARDS MAXIMIZED

PERFORMANCE WITH MINIMUM

ENVIRONMENTAL IMPACT.

WE IMPROVE AND PROTECT

AIR QUALITY WITH

OUR PRODUCTS AND

PROFESSIONAL SERVICES.

WE DRIVE AT BETTER RESOURCE

EFFICIENCY WITH QUALITY,

SAFETY AND DURABILITY

ON TOP OF OUR MINDS.

WE ARE A RESPONSIBLE

AND ACTIVE PARTNER

IN OUR COMMUNITIES.

Tikkurila Oyj19

Durable and user-friendly products that are safe for people and the environment

High-quality raw

materials

High-quality raw materials

• Carefully selected raw

materials that have as low

health and environmental

impacts as possible.

• We aim to ensure that our

suppliers act responsibly

and ethically.

Quality and durability

• Product and user safety in

focus in our operations.

• Long service life of painted

surfaces and long

maintenance painting

intervals.

• Eco-labels indicate the

environmental impacts of

products and their proven

quality and safety

characteristics.

Water-borne and low

emission paints

• Almost odorless paint,

which ensures better

indoor air quality and

lower allergy risks.

• Ease of use and fast

drying times.

Tikkurila Oyj20

75% of paints

produced are

water-borne

(2017)

*products awarded international or national eco-label,

allergy or asthma label or M1 classification

300+ eco-labeled

products*

(2017)

Tikkurila Oyj21

High-quality raw materials

• When selecting raw materials, the health, safety and

environmental aspects are carefully considered.

• More than 90% of the raw materials and packaging

materials for Tikkurila units in the EU are bought from

the EU region. In Russia, more than 60% of all raw

materials and packaging materials are bought from

local suppliers.

• Chemical legislation sets restrictions on paint import

to the EU region from the third countries.

• Raw material prices affected mainly by oil prices,

supply capacity, and currencies.

Tikkurila Oyj22

Committed product development

• Key principles for product development are quality, durability and safety.

• R&D develops new products, creates new business opportunities, renews existing products, and studies use of alternative and renewable raw materials.

• R&D units located in Finland, Poland, Russia, Sweden, Estonia and Denmark.

• The desired properties of products are ensured in thorough field testing and extensive laboratory testing.

Tikkurila Oyj23

Certified supply chain

• Tikkurila has 11 production units in 8 countries.

• Approx. half of Tikkurila personnel work in the supply chain.

• Production manufactures and packages the products in an economical, safe, and eco-efficient manner. We constantly work to develop our production processes and the resource efficiency of our production sites.

• Majority of Tikkurila’s production sites have independently audited and certified quality, environmental, and safety management systems.

Tikkurila Oyj24

10 sites

ISO 9001

QUALITY

9 sites

ISO 14001

ENVIRONMENT

6 sites

OHSAS 18001

HEALTH

& SAFETY

Tikkurila Oyj25

Paint-making process

Tikkurila Oyj26

Business environment

Tikkurila Oyj27

Value of the global paints and coatings market; USD ~130 billion

12%

10%

9%

6%

6%

6%3%3%3%

43%

Decorative paints 43%

Industrial coatings 57%

Source: IPPIC 2015

Decorative paints

Metal Industrial

Coatings

Transportation

Industrial Maintenance

and Protective

Automotive Refinish

Powder Coatings

Wood Coatings

Marine CoatingsCoil Coatings

Packaging Coatings

Industrial segments where

Tikkurila is present

Tikkurila Oyj28

Megatrends that drive our business

Climate change affecting the whole globe:

Changing weather conditions and

temperatures, increasing air pollution and

indoor air problems, different health risks.

By 2050, more than 65% of world's

population lives in urban areas: Improved

economic well-being, social development,

increasing building construction, increased

energy consumption and emissions.

Share of middle class is growing: Increases

in economic income and consumption,

changing consumption patterns, increasing

demand for premium brands, health and well-

being related products and services.

Digitalization: Comprehensive way to connect

with customers and understand their needs in

detail through data, optimize operations and

develop new growth opportunities.

Tikkurila Oyj29

Paint consumption and demand structure

= High

= Medium

= Low

Factors impacting paint demandEstimated paint consumption per capita*

• Living standards

• Local habits and painting methods

• Construction styles and available materials

• Trends in interior decoration, colors etc.

• Level of activity in new construction, renovation and

industry

• Functional paints

Markets in Western Europe mature, growth

opportunities in areas with increasing income per

household

Tikkurila has an established presence in areas with

expected growth in consumption per capita and

increasing demand for premium products* Paint consumption source: Management estimates, IPPIC

Tikkurila Oyj30

Long-term financial development

0

2

4

6

8

10

12

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Revenue Revenue from acquisitions Divestments Adjusted operating profit margin

Development of sales and profitability 2000–2017

Acquisition of Alcro-

Beckers in 2001

(Revenue ~MEUR 190)

Sale of tinting business in

2000

(Revenue ~MEUR 130)

Acquisition of Kraski Teks

in 2006

(Revenue ~MEUR 80)

Acquisition of Zorka Color

in 2011

(Revenue ~MEUR 16)

Major acquisitions and divestments

Reve

nu

e, E

UR

mil

lio

n

Ad

jus

ted

op

era

tin

g p

rofi

t %

530

648625

563

457441 439450445

345

589

644670

653618

584 572 582

Tikkurila Oyj31

Business units

Tikkurila Oyj32

Tikkurila Strategic Business Units (SBU)

Russia, Central Asian countries, and China. Furthermore, this SBU is responsible for the exports to approximately 20 countries.

SBU EastSBU West

Sweden, Denmark, Norway, Finland, Poland, Germany,

Estonia, Latvia, and LithuaniaOperational area

Production sites

Current demand

structure

Expected demand structure

Competitors

Distribution channels

St. Petersburg, Russia

Stary Oskol, Russia

Almaty, Kazakhstan

Nykvarn, Sweden Lunderskov, Denmark

Vantaa, Finland

Debica, Poland

Ansbach, Germany

Tallinn, Estonia

Economy price and quality segment productsPremium and medium price and quality segment products

Premium price and quality segment products expected to

risePremium and medium price and quality segment products

Akzo Nobel, Lakra-Sintez, Empils, ABC-Farben, Meffert,

CaparolAkzo Nobel, PPG, Flügger, Jotun, Sherwin-Williams,

Teknos, Nor-Maali, Sniezka

Deco: DIY retailers, independent retailers, wholesalers

Industry: direct sales, Tikkurila Industrial Paint Service

Deco: DIY retailers, independent retailers, Alcro professional

stores, wholesalers

Industry: direct sales, Tikkurila Industrial Paint Service

VantaaNykvarnOslo

CopenhagenStockholm

Tallinn

Riga

Vilnius

AnsbachDebica

Warsaw

SzczecinLunderskov

SBU West key facts

Operational area Sweden, Denmark, Norway, Finland, Poland, Germany, Estonia, Latvia, and Lithuania

Revenue 2017 EUR 379.8 (395.2) million, 65% of Group

Adjusted operating

profit 2017EUR 18.1 (45.3) million, 54% of Group*

Employees 1,605 (at year-end)

Production sitesNykvarn, Sweden; Vantaa, Finland; Debica, Poland; Ansbach, Germany; Tallinn, Estonia;

Lunderskov, Denmark

Development in West

1862 Tikkurila founded in Finland

1865 Beckers founded in Sweden

1906 Alcro founded in Sweden

1930 Customer training started in Finland

1958 Color card development and color advisory service started in Finland

1970 Monicolor tinting system launched in Finland

1992 Paint production started in Estonia

1995 Sales company established in Lithuania

2000 Maalilinja customer helpline launched in Finland

2001 Acquisition of Alcro-Beckers in Sweden

2001 Production plants in Germany and Poland

2003 Customer training center Paletti opened in Finland

2007 New production plant in Nykvarn Sweden

2009 Avatint tinting system launched

2012 Divestment of subsidiaries in Hungary, Czech Republic, Slovakia, and Romania

2014 Acquisitions of ISO Paint Nordic and KEFA Drytech

SBU West locations

* Excluding Group items

Khabarovsk

Novosibirsk

Almaty

Ekaterinburg

Chelyabinsk

St. Petersburg

Mytishchi

Stary Oskol

KrasnodarBeijing

Shanghai

Samara

SBU East key facts

Operational areaRussia, Central Asian countries, and China. Furthermore, this SBU is

responsible for the exports to approximately 20 countries.

Revenue 2017 EUR 202.6 (176.8) million, 35% of Group

Adjusted operating

profit 2017EUR 15.2 (13.4) million, 46% of Group*

Employees 1,409 (at year-end)

Production sites

St. Petersburg, Russia (3)

Stary Oskol, Russia

Šabac, Serbia

Almaty, Kazakhstan

Development in SBU East

1970s Export to Russia and the former Soviet Union started

1994 Sales company in Russia

1995 First western paint factory opened in St. Petersburg

1998 Sales company OOO Tikkurila Coatings

established

2004 Acquisition of Kolorit in Ukraine

2006 Acquisition of Kraski Teks

2006 Sales company established in Kazakhstan

2007 Sales company established in China

2008 Sales company established in Belarus

2009 Completion of logistic centre in Mytishchi, Moscow region and new

water-borne production lines to Obukhovo site in St. Petersburg

2011 Divestment of the powder coatings business

2011 Acquisition of the business of Serbian Zorka Color

2012 Expansion of sales and ware house network in Russia

2015 New factory opened in Almaty, Kazakhstan focusing on water-borne

products

2016 Divestment of subsidiaries in Ukraine and Belarus

2017 Divestment of Serbia and Macedonia

* Excluding Group items