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Jotun's growth continues: Sales up by more than NOK 600 million

Published on 2006-10-10. Author : SpecialChem

Coatings manufacturer Jotun had a good first eight months of the year. The group is continuing to make progress, reporting higher sales and better earnings than at the same time last year.

The Jotun group generated sales and other operating income of NOK 5,228 million in the first eight months of the year, which is NOK 609 million better than in the same period last year. The group recorded profit on ordinary activities before taxation of NOK 489 million, against NOK 450 million in 2005. Sales are growing, but persistently high raw material prices and a weaker USD have undermined margins in core areas.

"We anticipate continued growth and stronger market positions in the last four months of the year," says CEO Morten Fon. "The main challenge going forward is the continued growth in raw material prices, which will result in higher prices for our products. Earnings for the year as a whole are expected to be slightly up on 2005 and in line with budget."

Investing to meet demand

In order to meet the ever-growing demand for its products, the group will continue to invest in new facilities. Jotun made total investments of NOK 156 million during the first eight months of the year. These included several projects to upgrade existing factories.

Jotun Dekorativ - holding its position

Division Jotun Dekorativ produces paints, stains and varnishes for the trade and DIY markets in Scandinavia. Competition from retailers' private labels in the interior market is constantly growing, and the division's earnings were slightly down on the same period last year. Jotun Dekorativ is holding its position in Norway, and has also seen good sales growth in Sweden. In Denmark a sharper focus on the trade market has resulted in healthy sales growth.

Jotun Coatings - strong sales growth

The Coatings division has global segment responsibility for marine and protective coatings. There were good market conditions and high levels of activity in both the marine and protective segments during the period. A sharper local focus and strong demand have led to sales growth for the division.

The marine coatings segment is fiercely competitive. A weak USD and high raw material prices have eroded margins. Jotun has launched new products in this segment, which has contributed to growth in sales, and the group anticipates better profitability for the division in the time ahead. The protective coatings segment's underlying performance is stable, with substantial sales growth in Asia and the Middle East, especially in the oil and gas industry. Jotun is constantly looking at new markets, and has decided to build a coatings factory in India.

Jotun Paints - further growth

The Paints division produces decorative exterior and interior coatings for the project and retail markets outside Scandinavia. The division has continued the sales growth seen last year and is reporting healthy earnings. Demand for its products continues to grow strongly, especially in the Middle East where construction activity is very high. Jotun is now the market leader in decorative coatings in this region. The big construction companies in the Middle East are moving into new markets in North Africa and projects in India and Pakistan, which is opening up market opportunities for the division. In Southeast Asia the division has seen good sales growth in Malaysia and Indonesia. Due to this increased demand, it has been decided to build a new coatings factory in Saudi Arabia and extend the factory in Egypt.

Jotun Powder Coatings - stable development

The Powder Coatings division has global segment responsibility for decorative, industrial and functional powder coatings. The division has grown its volumes and sales, and margins have stabilised at a slightly higher level than last year. This has contributed to a substantial improvement in earnings after a period of poor performance. The market situation is generally good, and there has been particularly strong growth in the markets of the Middle East where the division has won several major projects. The division is also growing its sales in India, Pakistan, Eastern Europe and Russia. In Southeast Asia growth has been slightly slower than anticipated, due mainly to high oil prices.

Source: Jotun


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