Financial performance
Executive summary of
the Financial Statement for 2021
78 I Jotun Group Report 2021 GENERAL
The consolidated financial statements for the Jotun Group
consist of Jotun A/S and 58 subsidiaries, three joint ventures
in China and South Korea and five associates in the UAE and
Saudi Arabia. Subsidiaries are fully consolidated independent of
shareholding, while associates and joint ventures are accounted
for using the equity method.
The Group’s consolidated financial statements have
been prepared in accordance with International Financial
Reporting Standards (IFRS) and interpretations as adopted
by the European Union (EU), as well as Norwegian disclosure
requirements that follow from the Norwegian Accounting Act.
REVENUE
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
selling prices to compensate for the sharp rise in raw material
prices. 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.
OPERATING PROFIT
The Group achieved an operating profit of NOK 3 138 million
in 2021 compared to NOK 3 489 million in 2020. The reduction
in profit is largely due to lower gross margins caused by a rise in
raw material prices of almost 60 per cent in 2021. However, the
impact of raw material price inflation was partly mitigated by
increased selling prices and low underlying cost growth.
Jotun Group’s share of profit from associates and joint ventures
totalled NOK 496 million compared to NOK 746 million in
2020. The decrease is mainly caused by a significant reduction
in South Korea related to the cyclical downturn in the marine
newbuilding industry.
PROFIT FOR THE YEAR
The profit for the year amounted to NOK 2 111 million
compared to NOK 2 378 million in 2020. Net financial costs
decreased by NOK 83 million to NOK 248 million, mainly due
to lower currency losses as currency markets stabilised in
2021 compared to 2020. Income tax expense amounted to
NOK 779 million, which is on par with 2020 (NOK 780 million).
This resulted in an effective tax rate of 27 per cent based on
reported profit before tax (2020: 25 per cent).
INVESTMENTS
Total investments in property, plant and equipment (PP&E)
and intangible assets amounted to NOK 1 363 million for
2021 (2020: NOK 1 407 million), representing six per cent of
operating revenue (2020: 7 per cent). The largest investments
relate to new production facilities in Egypt and Vietnam,
construction of a new regional headquarter and R&D facility in
Dubai as well as facility upgrades in Norway.