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Financial Status 1st tertiary 2010 - external

Published on 2010-06-02. Author : SpecialChem

SANDEFJORD -- Jotun had its best result ever at the end of the first four months in 2010. The group has never before sold as much paint, neither in litres or kilos. Currency effects contributed to a somewhat lower operating income measured in NOK. A poorer result for the year is expected.

"We are satisfied with the development. Having positioned the group in growth markets, such as Asia and the Middle East, we are securing a good position in the market," says Morten Fon, CEO.

Jotun's partly late-cyclical nature means delayed effects of the turbulent global financial crisis. At the same time, segments that were affected early on by the market turbulence have now seen growth. This applies particularly to the Powder Coatings division, where a large part of the products are sold to industries that are sensitive to the downturn. Towards the end of the period, an improvement was also seen for Jotun Dekorativ, covering the Scandinavian market. As expected, Jotun Coatings is starting to notice the effects of challenging times in for example the new building market, but the division continues to deliver good results. Jotun Paints also had good results, despite experiencing a downturn in some areas, including the Middle East.

Long-term focus

Jotun's long-term positioning strategy is being continued, with a recently made decision to build two new factories in China and one in Brazil. The construction of new factories is underway in the USA, Malaysia, Libya and Norway. Russia is probably awaiting its turn. With a 54 per cent equity ratio, the company is in a position to act in the long term.

Raw materials and exchange rates

Procurement of raw materials makes up about 60 per cent of the group's costs. Higher raw material prices led to pressure on margins in many business areas during the period.

Income and assets are converted from foreign currencies to Norwegian kroner. With more than 80 per cent of turnover outside Norway, the currency effects can be substantial.

Weaker in 2010

"A poorer development is expected in a number of business areas," says Morten Fon. The markets for new ships and major property projects are two of those expected to decline."Despite improvements in other segments, we are expecting a poorer 2010 overall," he adds.

Source: Jotun


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