The sales growth of eight per cent is strongly affected by positive currency translation effects due to a weak Norwegian krone. Adjusted for currency, the underlying sales growth was one per cent. The increase is driven by modest growth in Marine Coatings and Decorative Paints, while sales in Protective Coatings were flat and sales of powder coatings declined.
Operating profit is up 37 per cent compared with the same period last year and is mainly explained by positive currency translation effects and improved margins.
Consequences of the corona virus pandemic
Due to COVID-19, government authorities in markets where Jotun operates have introduced strict restrictions and infection control measures. These steps have had a negative effect on sales in all segments. But according to President and CEO Morten Fon, the negative impact is easing as restrictions have started to lift in several countries.
“There are large differences between regions and countries,” he says. “For example, our companies in South East Asia and the Middle East are strongly affected by the pandemic with lower sales so far this year. As these are large and important markets for Jotun, it affects our performance. At the same time, we have seen strong growth throughout the period in other important markets, like Scandinavia.”
Investments in research and increased capacity
Jotun invested NOK 813 million in the first eight months of the year, which accounts for about six per cent of operating revenue. Completion of Jotun’s new headquarters and research and development centre and a factory upgrade in Sandefjord represent the largest part of the investments. In addition, the company also continues to invest overseas, including construction of a new factory in Vietnam, a capacity expansion in Egypt, and a new regional office and research and development centre in Dubai.
Despite good results so far this year, Fon cautions that many uncertainties remain. “In the short term, we anticipate that the pandemic will continue to impact Jotun, although the impact will vary between segments and regions,” he says. “In the longer term, we also expect lower activity in the offshore industry and the newbuilding market for ships. However, with solid equity, good cash flow and access to increased liquidity when needed, Jotun is in a strong position to manage whatever may come”, Fon says.
|Financial key figures (NOK million)
Result before tax
For further information:
Christian Espolin Johnson, Group Communications Director. Mobile +47 976 45 494. Morten Fon, President and CEO. Mobile +47 909 19 822.