Significant investments and strong growth in its Asian and Middle Eastern markets yielded double-digit profits for The Jotun Group in the first eight months of 2010, the company reports.
Operating profits for the period increased by 21% over the same period in 2009. Profit before tax rose by 32%. Operating revenue was up by 3%.
The Jotun Group reported, in Norwegian krone, total operating income of NOK 8.044 million and a profit before tax of NOK 1.032 million for the eight-month period.
"We are continuing the same positive trend as in the first four-month period,” said president and CEO Morten Fon.
Sales volume for the period increased in all divisions except Decorative Paints, Fon said. The company also made “substantial investments in strategically important markets and infrastructure" over the period, he added.
Overall, the company said, the final result for 2010 is expected to be comparable to that of 2009.
The Jotun Group, headquartered in Sandefjord, Norway, is one of the world's leading manufacturers of paints, protective and marine coatings, decorative paints and powder coatings. The group has 74 companies and 40 production facilities in more than 80 countries across all continents.
Growth in Differentiated Markets
Jotun’s Decorative division showed significantly improved earnings compared with the same period last year, the company said. Sales volume in Norway has declined, but sales value has increased. Denmark's results are lower than in 2009, while the division’s growth in Sweden is significant.
Jotun Coatings reported growth in both sales volume and sales value, with the greatest growth in China and South Korea. Higher raw-material prices remain a challenge that the company has met with price increases, product mix modifications, and other measures.
Jotun Paints continues to show good growth, with sales particularly strong in Vietnam, Indonesia and Oman. Libya, Pakistan and other new markets are also reporting “healthy growth,” the company said.
All of the divisional units in Jotun Powder Coatings are expected to report solid growth in sales this year, despite the spiraling raw material costs.
Caution and Restructuring
"The global financial crisis has had less impact than expected for the Jotun Group, due to the late-cyclical nature of the business, and because we have managed to effectively steer the group through a differentiated approach to the markets,” said Fon.
“We have acted in a precautionary manner, restructured quickly, and managed to direct resources towards segments and markets with the best growth and profitability.”
Investments and Outlook
Jotun has invested NOK 295 million thus far this year. The largest investments are related to factories in Norway, Malaysia and the United States, as well as implementation of Jotun's new global ERP system to improve control, production flow and service level, the company said.
“The high level of investment in facilities will continue in order to meet the increasing demand for Jotun's products,” it said.
Jotun expects good results for 2010, based on improvements in the Decorative division, increased profitability in Powder Coatings, “promising growth” in the Protective segment, and “better than anticipated” performance in the marine market, the company said.
Said Fon: "We are very satisfied with the group's performance."