Jotun expects the difficult global economy to continue to have a greater impact. When compared with the record level of 2008, the figures in the first eight months of 2009 are still satisfactory. In litres and kilos the group sold one per cent less paint than it did for the same period last year.
There are market-related variations in the group. Jotun continues to have growth, including in China, South Korea and key markets in the Middle East. A weak development has taken place in many parts of Europe, including Norway.
In the first eight months of 2009 the operating profit was NOK 858 million, compared with NOK 807 million in the same period in 2008.
Operating income amounted to $1.3b compared to $1.1b last year. A relatively weak NOK exchange rate contributed to the increase in operating income.
Jotun has a strong financial position, and the equity ratio is 50 per cent.
Jotun has a presence in a number of late-cyclical segments. While the Powder Coatings Division was one of the areas to be affected by the slowdown at an early stage, areas such as the new ships and property markets have so far been less affected. The maintenance market has continued to perform relatively well. Otherwise, the Powder Coatings Division has experienced improved conditions recently.
Raw materials and exchange rates Procurement of raw materials makes up about 55 per cent of the group’s costs. Key raw materials have become more expensive in recent months, but this element is nevertheless lower than the corresponding period in 2008. Income and assets are converted to Norwegian kroner from foreign currencies. With more than 80 per cent of turnover outside Norway, the currency effects can be substantial.
“As Jotun operates in some late-cyclical markets, we are preparing for a number of the group’s areas to have a poorer development in the years ahead,” said Morten Fon, President and CEO. He is referring to areas such as newbuilding of ships and major property projects, where long-term orders mean that the first strong effects are not expected until well into 2010. Fon indicates that since summer 2008, extraordinary steps have been taken to deal with the economic situation, for example in relation to costs and receivables.