FINANCIAL PERFORMANCE
76
Executive summary of the
financial statement for 2019
General
The consolidated financial statement for the Jotun Group
consists of Jotun A/S and 56 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 based on the equity method.
The Group’s consolidated financial statement has been prepared
in accordance with International Financial Reporting Standards
(IFRS) and interpretations as adopted by the International
Accounting Standards Board (IASB) and approved by the
European Union (EU).
Revenue
In 2019, the Group recorded total operating revenue of
NOK 19 652 million, an increase of 11 per cent compared to
2018 (NOK 17 660 million). Excluding positive currency effects,
underlying revenue growth was seven per cent, driven by
continued good growth in Decorative Paints, a strong recovery
in Protective Coatings and increased newbuilding sales in
Marine Coatings. Although low activity in key markets affected
sales in Powder Coatings, all segments and regions reported
higher sales in 2019 than in 2018.
Operating profit
Operating profit increased by 71 per cent compared to 2018 to
NOK 2 320 million, yielding an operating margin of 12 per cent
(2018: 8 per cent). The profit improvement is mainly attributable
to solid sales growth combined with higher gross margins,
driven by previously implemented price increases in combination
with easing raw material prices. The Group’s share of profit
from associates and joint ventures totalled NOK 497 million
compared to NOK 384 million in 2018. The increase is mainly
due to improved performance in the Marine Coatings segment
in North East Asia, where shipbuilding activity picked up after
the cyclical downturn in 2017 and 2018.
Profit for the year
Profit for the year amounted to NOK 1 549 million, an increase
of NOK 876 million from 2018. The development in net
financial items was flat compared to 2018 as higher interest
costs, partly due to effects from the implementation of IFRS 16
Leases, were offset by increased interest income as well as lower
net currency losses. While income tax expense increased to
NOK 529 million from NOK 442 million in 2018, the effective
tax rate based on reported profit before tax was 25 per cent,
down from 40 per cent in 2018.
Investments
Total purchase of property, plant and equipment (PP&E) and
intangible assets amounted to NOK 1 464 million for 2019
(2018: NOK 1 089 million), representing seven per cent of
operating revenue (2018: 6 per cent). The largest investments
relate to the new headquarters and Research and Development
centre in Sandefjord, Norway, new production facilities in Egypt
and Vietnam, and the acquisition of territorial rights to the
Qatari market from Jotun U.A.E. Ltd. (L.L.C).
The Group’s share of total equity in associates and joint ventures
amounts to NOK 1 486 million (2018: NOK 1 533 million) and
is reported as non-current assets in the statement of financial
position.