Core sector headwinds cut into profits at Jotun

Leading paint producer Jotun of Norway is facing headwinds in both shipping and offshore sectors, leading to lower earnings despite an increase in sales.

The privately-owned company logged a pre-tax profit of NOK 1.24bn ($155m) in the first eight months this year.

That is down 25% on a profit of NOK 1.65bn in the same period last year.

Jotun president Morten Fon says low oil prices have slowed development in the offshore sector, while "tonnage overcapacity has depressed newbuilding orders" in the shipping industry.

Fon says these conditions have persisted for some time, adding that “we do not expect to see significant improvement in the short term”.

He adds that demand for maintenance products for ships and land-based industry has grown.

Lower profits are due to higher raw material prices, and lower average selling prices in some markets. The Norwegian krone has strengthened against US dollar, which also affected the results.

Operating revenue increased from NOK 10.9bn to NOK 11bn in the first eight months of this year.

Jotun has an extensive investment programme, which represents 5% of operating revenue. This includes building a head office in Sandefjord, Norway, and factories in Malaysia, Myanmar and the Philippines.

It has about 10,000 employees and plans to double this by 2020.

The company was founded in 1926 by Odd Gleditsch. The Gleditsch family holds 54% of the shares, while industrial conglomerate Orkla controls 42%.