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Good Start for Jotun in 2004

Published on 2004-06-16. Author : SpecialChem

Sandefjord, Norway; June 16, 2004: The Jotun group generated sales of NOK 2,039 million in the first four months of 2003 which is NOK 244 million more than for the same period in 2003. The group generated a profit on operating profit before tax of NOK 228 million compared to NOK 185 million last year. Sales measured in volume have increased and the strong currency fluctuations of recent years have moderated so that sales measured in NOK more closely reflected the group's growth.

Profit in 2003 was one of the biggest in Jotun's history. The first four months of 2004 showed continued improvement but profit development for the rest of the year is uncertain, primarily due to the increase in raw materials and reduced margins. Jotun predicts that income for 2004 in total can be maintained at a satisfactory level and similar to last year.

Jotun Dekorativ

had somewhat higher sales than for the same period last year and the division also improved its earnings. Sales in Norway are high.

Competition from own-brand products (private labels) increased. Jotun's sales in Sweden and Denmark increased in line with expanded distribution.

Several ongoing projects shall facilitate the efficiency improvements and cost reductions for the division. It was agreed to expand the warehouse capacity in Norway and approximately NOK 55 million will be invested.

A new data-based business system (ERP) is undergoing implementation and will be introduced in Norway by the end of 2004 and in the Swedish and Danish organisation during the first four months of 2005.

Jotun Paints

continued to see strong growth in demand for decorative products in the Middle East and South-East Asia. In the Middle East profits for all the companies were higher than the previous year.

Competition from local players and international paint companies increased in the Middle East. Jotun has been especially successful with multi-color systems for mixing colors in stores. Increasing numbers of our international and local competitors are strengthening their efforts in this area.

Jotun Coatings

increased sales, but profits were lower than for the same period last year. A relatively strong increase in raw material prices had a particular influence on the division's profit. Work is being carried out to increase prices in line with the increase in raw material prices, but this takes time and will not give rapid financial results.

The downturn for marine paints in the Norwegian market continued, while protective coatings to industry and offshore saw progress in Sweden and Norway. In Europe activity varied. There was strong growth in China, and in the USA sales increased.

Powder Coatings

had a good start to the year, both in terms of sales and financial results. The extensive turnaround carried out by the division helped improve earnings.

The market in Western Europe continued to drop but was counter- balanced by the continued growth in Eastern European markets. The downturn in the Scandinavian market stopped. In the Middle East demand remained high but in South-East Asia demand varied, partly due to increased competition from Chinese manufacturers. A new factory was opened in Pakistan in April and is seeing strong growth in powder coatings for domestic appliance and new oil and gas pipelines. More was invested in research and development as well as marketing in order to increase sales and market shares.

Many projects

Investments were made in a number of projects to upgrade the group's factories and new paint factories in Indonesia and China have been planned. Manufacturing facilities in Vietnam are undergoing expansion and a new paint factory in Dubai and a powder coatings factory in Pakistan were opened in April.

Increasing raw material prices

A number of matters have contributed to the increase in raw material prices since the new year. The strong growth in the global economy and the growth in China led to price pressure on a number of raw materials. High oil prices are also a factor in increasing raw material prices and are now affecting many raw materials, metals being affected the most.

Source: Jotun Group

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