Tikkurila Oyj has entered into an agreement to sell the entire share capital of its subsidiaries in Serbia and Macedonia to the local management of Tikkurila. The buyer will continue the distribution of Tikkurila branded products in the Balkan area.
Tikkurila's Balkan business operations have been unprofitable for a long time. The general economic development in the region has been weaker than anticipated and the demand for premium products has remained modest. Divestment of the subsidiaries in Serbia and Macedonia is part of a more extensive programme to boost the profitability and competitiveness of Tikkurila.
The combined revenue of the two companies to be sold was approximately €13M in 2016, and the number of employees totalled 130. It is estimated that the transaction, subject to fulfilment of agreed preconditions, will be closed during Q1, 2018.
Based on these divestments it is estimated that a total of approximately €7M one-off non-cash impairment and sales losses will be recognised in Tikkurila Group 2017 financial statements, hence having an adverse impact on 2017 net profit.
"The market development in the Balkan area has not met our expectations. Tikkurila has a strong focus on premium products, the demand of which has not developed as well as hoped in Serbia and the countries near-by," saids Jukka Havia, Interim President and CEO.
Tikkurila entered the Balkan area in 2011 by acquiring the business operations of a Serbian paint company Zorka Color. In addition to Serbia, the company operated also in Macedonia, Bosnia and Herzegovina, Montenegro, Croatia, and Kosovo.