Industry News

Jotun Affected by Turbulent Global Economy

Published on 2009-02-19. Author : SpecialChem

The group's operating profit totalled NOK 919 million in 2008, compared with NOK 804 million in 2007. Operating income was NOK 10.4 billion compared with NOK 8.9 billion in 2007. As with previous periods, growth in Asia and the Middle East was particularly high.

"We are pleased that we strengthened our market position in 2008. At the same time, we are feeling the effects of developments in the global economy more, and we are assuming the worst is yet to come. We implemented measures to tackle more turbulent markets a long time ago," says Morten Fon, president and CEO. The measures have been adapted to local conditions and include cost-control measures and moratoria on investments. There is special focus on outstanding debts.

Sensitive to raw materials and exchange rates

Jotun felt the effects of high raw material prices throughout most of last year, however, lower raw material prices towards the end of the year gradually improved the situation for the group. Jotun is also exposed to fluctuations in exchange rates. Income and assets are converted to Norwegian kroner from other currencies, the effect of which was considerable in 2008. Around 80 per cent of the group's operating income comes from outside Norway.

Long-term investments

Jotun's long-term strategy will continue; this includes positioning in countries and segments where long-term growth is expected to be relatively strong. "We opened a new factory in India in 2008. Before Easter, we will open a new factory in South Korea, and we will probably build new factories in Libya and USA," says Fon.

Weaker 2009

Jotun anticipates the difficult global economy will be far more noticeable month-on-month in the future. Significant falls in activity levels in property and shipping projects are expected to affect demand for Jotun's products. Jotun faces the situation from a solid financial position. The group's equity ratio is 50.7 per cent.

Source: Jotun

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