Jotun profits remain satisfactory

“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,” says Morten Fon, President and CEO.

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 NOK 7.8 billion compared to NOK 6.7 billion
last year. A relatively weak NOK exchange rate contributed to the increase
in operating income.

50 per cent equity
Jotun has a strong financial position, and the equity ratio is 50 per
cent.

Major variations
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.

Weaker in 2010
“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,” says 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..