Jotun delivered its second best result ever in 2016. Led by solid growth in the Decorative Paints and Powder Coatings segments, the company had an operating revenue of NOK 15.8 billion and an operating profit of NOK 1.8 billion, the company said in its press release.
Jotun recorded good profitability and increased total sales volume in 2016. These positive results were supported by solid growth in Powder Coatings and record-breaking growth in the Decorative Paints segment, which was the strongest contributor to Jotun’s net income.
According to Morten Fon, Jotun President and CEO, Jotun’s rapid growth in the Decorative Paints segment has been the result of customer-focused innovation and successful marketing of premium interior and exterior paints. “Driven primarily by Jotun’s rapid development in the Middle East and South East Asia, Jotun’s growth in this segment has been outstanding,” he says. “And after some years of modest gains, the Group is encouraged by robust growth within the Powder Coatings segment in 2016.”
While Jotun’s overall results were positive, Fon acknowledges that the company’s 2016 results were impacted by lower demand in the shipping and offshore markets, which led to reduced sales in the Marine and Protective Coatings segments. “Sharp declines in newbuilding orders affected our growth last year and will likely impact Jotun’s business going forward,” says Fon. “However, we believe the offshore market is set for a modest recovery some time in 2017.”
Other factors that impacted Jotun’s result included the currency devaluation in Egypt, losses on accounts receivable and product claims.
While overall sales in Marine Coatings were down compared to the year before, demand for Jotun’s Hull Performance Solution (HPS) grew. Since its launch in 2011, Jotun has collected and published long-term hull performance data from multiple users, showing definitive proof that HPS lowers both fuel use and corresponding emissions significantly, resulting in more cost-effective and sustainable ship operations.
Capital spending increased compared to last year, with Jotun investing NOK 1 133 million in 2016 (2015: NOK 922 million), representing seven per cent of sales. The largest investments are related to factories and facilities in Oman, Norway, Philippines, Myanmar and Malaysia.