JOTUN A/S
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10 Financial and commercial risk management
Jotun A/S is exposed to market risks like fluctuations in prices
of raw materials, currency exchange rates and interest rates.
Jotun A/S uses financial instruments to reduce these risks in
accordance with the Group’s treasury policy.
Categories of financial risks and risk policies
for Jotun A/S
FOREIGN CURRENCY RISK
Foreign currency risk on net investments
As NOK is the functional currency for Jotun A/S and the
presentation currency, Jotun A/S is exposed to currency
translation risk for net investments in foreign operations. Jotun
A/S finances most of the investments for the Jotun Group,
and therefore has a substantial intercompany loan portfolio
in different currencies, see table below. Jotun A/S has a USD
102 million external loan established in 2013, see note 13. The
currency gains/losses are presented as part of net finance costs
in the income statement, see note 4 for more information.
Jotun Group’s note 12 gives additional information regarding
financial risk management.
Total loans given in foreign currency from Jotun A/S to its
subsidiaries, joint ventures and associates as of 31 December
2018 was NOK 2 579 million, of which NOK 2 509 million was
in foreign currency. The following table gives an overview of
the main currency exposures related to internal loans in foreign
currency.
Product liability claims
Product liability claims consist of a number of separate and
specific warranty claims arising from products sold. By nature,
the related amounts and timing of any outflows are difficult to
predict. Assumptions used to calculate the provision for product
liability claims are based on technical assessment of product
failures and the related expected repair costs for each specific
case. It is expected that most of these costs will be payable in
the next three years, and all will have been payable within five
years after the reporting date.
Environmental provisions
Jotun A/S has recorded provisions for environmental liabilities at
some currently owned sites. Pre-studies and analysis of relevant
areas have been undertaken to reliably estimate the provisions
that have been recognised. These provisions are estimates of
amounts payable or expected to become payable. The majority
of the non-current liability amount will be realised within 2020.
These provisions are estimates of amounts payable or expected
to become payable.
9 Provisions
2018 Claims Environmental Other Total
(NOK THOUSAND)
Balance as of 1 January 2018 187 998 31 370 15 000 234 368
Provisions arising during the year 250 510 1 000 9 900 261 410
Utilised –56 914 –4 129 –9 452 –70 494
Unused amounts reversed –6 349 – – –6 349
Balance as of 31 December 2018 375 246 28 241 15 449 418 935
Current 368 409 5 741 5 549 379 699
Non-current 6 837 22 500 9 900 39 237
Total 375 246 28 241 15 449 418 935
2017 Claims Environmental Other Total
(NOK THOUSAND)
Balance as of 1 January 2017 159 828 31 851 – 191 679
Provisions arising during the year 102 089 4 000 15 000 121 089
Utilised –72 252 –4 481 – –76 733
Unused amounts reversed –1 666 – – –1 666
Balance as of 31 December 2017 187 998 31 370 – 234 368
Current 178 920 4 870 15 000 198 790
Non-current 9 078 26 500 – 35 578
Total 187 998 31 370 – 234 368