Directors’
report
1. MAIN ACTIVITIES
Jotun’s primary business activities include the development, production,
marketing and sales of paints and coatings systems and related products for
the treatment, protection, and beautification of surfaces.
Jotun is a global company made up of 67 companies in 47 countries,
including 39 production facilities. The company extends its reach to other
countries through a network of subsidiaries, joint ventures, associated
companies, sales offices, and distributors. The parent company, Jotun A/S,
has its headquarters in Sandefjord, Norway. Of the Group’s operating
revenue, approximately 10 per cent is related to its activities in Norway,
while 90 per cent is related to the rest of the global network.
The Jotun Group is organised into seven regions: “Scandinavia”, “West
Europe”, “East Europe and Central Asia”, “Middle East, India and Africa”,
“North East Asia”, “South East Asia and Pacific” and “the Americas”.
Jotun’s business is organised into Decorative Paints and Performance
Coatings.
Decorative Paints
Jotun Decorative is a leading paint supplier to commercial buildings, public
buildings and homes, serving both professionals and homeowners, directly
and through a substantial network of Jotun Multicolor centres.
Performance Coatings
Jotun Marine Coatings is the market leader in high performance hull
solutions for the global shipping industry, delivering high quality coatings
for newbuilds, drydocking, seastock, tanks and cargo holds, including mega
yachts and leisure yachts.
Jotun Protective Coatings is a leading supplier of high quality coatings for
on- and offshore oil and gas, power generation, renewable energy and
infrastructure, projects including intumescent coatings, metallic finishes,
high temperature coatings and state-of-the-art anticorrosive protection.
Jotun is a leading supplier of powder coatings to companies active in
industries related to building components, general industries, pipeline,
appliances and furniture.
2. REVIEW OF THE ANNUAL ACCOUNTS
In 2021, the Jotun Group recorded total operating revenue of
NOK 22 809 million, which is an increase of eight per cent compared to
2020 (NOK 21 070 million). Excluding negative currency translation effects,
mainly due to a stronger Norwegian krone, underlying revenue growth was
15 per cent.
The strong underlying growth is primarily driven by increased sales prices
to compensate for the sharp increase in raw material costs. Growth was
particularly strong in Protective Coatings and Powder Coatings due to
positive development in all regions. Decorative Paints also achieved good
growth, mainly driven by a significant improvement in South East Asia,
the Middle East and Turkey. Marine Coatings was affected by the cyclical
downturn in marine newbuildings, but high activity in the maintenance
markets fully countered the impact.
Despite facing an unprecedented increase in raw materials prices, a global
supply chain crisis and business interruptions in many markets related to the
pandemic, Jotun delivered the second-highest profit in the Group’s history.
Board of Directors
Profits
The Group achieved an operating profit of NOK 3 138 million in 2021
compared to NOK 3 489 million in 2020. The strong profit is attributable to
increased sales volume, price increases and measures to control operating
costs.
Net financial costs decreased by NOK 83 million to NOK 248 million, mainly
due to lower currency losses. This resulted in a profit before tax of
NOK 2 890 compared to NOK 3 158 million in 2020. Jotun’s activities
are subject to ordinary company tax in the countries in which the Group
operates, and income tax amounted to NOK 779 million in 2021. This led to
a profit for the year of NOK 2 111 million compared to NOK 2 378 million in
2020.
The parent company, Jotun A/S, achieved a total profit for the year of
NOK 1 241 million in 2021, compared to NOK 970 million in 2020.
Allocation of profit for the year:
Jotun A/S posted a profit for the year of NOK 1 241 million. The Board of
Directors proposes the following allocation:
Proposed dividend NOK 770 million
Transfer to equity NOK 471 million
Financial position, capital structure and risk
Net cash flow from operating activities decreased by NOK 1 304 million to
NOK 1 968 million, following a significant increase in net operating working
capital. The growth in operating working capital is mainly attributable to
the rise in inventories following the extraordinary raw material inflation
and a strategic build-up of stock levels in the face of global supply chain
challenges. Growth in customer receivables, mainly driven by increased sales
prices, also contributed to the rise in working capital.
Jotun Annual Report 2021 I 9
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