JOTUN VALUES
LOYALTY
Reliable and trustworthy
Long term relationships between customers, Jotun and colleagues
Commitment to Jotun’s values, strategies, policies and decisions
CARE
Help and support others
Display trust and empathy
Appraise and judge fairly
Protect internal and external environment
2
OUR BUSINESS RESPECT
Values differences in people
Be honest and fair
Build diverse teams across culture and gender
Follow laws and regulations
Treat others the way they expect to be treated
BOLDNESS
Take initiatives to create the future
Initiate and nurture change
Communicate openly, honestly and with integrity
Be proactive
Address difficulties constructively CONTENTS
Jotun factory Opening Ceremony, The Philippines, November 6 2017. From left: Princess Märtha Louise of Norway, General Manager, Stamatis Solomakos, Chairman of the Board, Odd Gleditsch d.y., the Hon. Hermilando Mandanas, Governor of Batangas, Kristian Nedland, Charge d’affaires of the Norwegian Embassy and entertainer, Alexander Rybak.
INTRODUCTION … 02 ENVIRONMENTAL COMMITMENT … 52 At a glance … 02 GreenSteps forward … 54 Group key figures … 06 Ensuring environmental performance … 56 Investing in process improvements … 58 OUR BUSINESS … 08 Going green … 59 Jotun Group … 10 Management summary … 12 JOTUN AND SOCIETY … 60 Marine Coatings … 14 On hand to help … 62 Powder Coatings … 18 Sailing through time … 63 Protective Coatings … 22 Setting the right example … 64 Decorative Paints … 26 Playing our part … 66
CUSTOMERS AND INNOVATION … 30 FINANCIAL INFO … 68 The gold standard in steel production … 32 Chairman of the Board … 70 Connecting Jotun Multicolor … 34 Consolidated financial statements … 71 Sales accelerator … 36 Executive summary of the financial statement … 76
CORPORATE RESPONSIBILITY (CR) MM COMPANY OVERVIEW … 78 AND GOVERNANCE … 38 Organisation … 80 It’s all about attitude … 40
EMPLOYEES AND THE WORKPLACE … 42 Growth through sustainable workforce development … 44 Creating a culture of opportunity … 46 Changing for the better … 47 A culture of teamwork … 48 Raising the bar … 49 Safety always comes first … 50 Reducing risk, step by step … 51 AT A GLANCE FOUR SEGMENTS
25 % MARINE COATINGS 41 % DECORATIVE PAINTS BUSINESS SEGMENTS 24 % PROTECTIVE COATINGS 2 25+241041M 10 % POWDER COATINGS INTRODUCTION
DECORATIVE PAINTS
Jotun Decorative is a leading paint supplier to commercial buildings, public buildings and homes, serving both professionals and home owners, directly and through a substantial network of Jotun Multicolor centres. pipelines andgeneralindustries. furniture, buildingcomponents, industries relatedtoappliances, supplier tocompaniesactivein Jotun PowderCoatingsisaleading COATINGS POWDER hydrocarbon processing. to offshore, energy, infrastructureand companies activeinindustriesrelated Jotun’s protectivecoatingsaresoldto COATINGS PROTECTIVE yachts. solutions formegayachtsandleisure addition, Jotunsuppliescoating DryDock andSeaStockmarkets.In marine coatingstotheNewbuilding, Jotun isaworldleadingproviderof COATINGS MARINE
INTRODUCTION 3 REGIONAL HIGHLIGHTS
SCA SCANDINAVIA
• Jotun Scandinavia opens regional HQ at Vindal factory in Sandefjord • Jotun secures marine coatings contract for the world’s largest plug-in hybrid ferry built for Color Line at Ulstein Verft • Jotun Decorative Paints launches 10 products in Scandinavia, helping the region achieve rapid growth in the interior category • ISO frame agreements secured by Jotun in Norway with Kaefer and Energy Bilfinger. The 13-year agreements include NORSOK-approved maintenance systems • Jotun Powder Coatings achieves second consecutive year of double-digit growth in Sweden
1926 1142 2
4 INTRODUCTION
AM THE AMERICAS WE WEST EUROPE
• Jotun Brazil secures five aframax tankers at the • Jotun Powder Coatings secures two-year contract with E. Atlantico Sul shipyard in Recife Schneider Electric, a French-based company specialising • Together with steel fabricator Metasa, Jotun wins in energy management and equipment contract for Brazil’s largest PFP project • Jotun Greece wins exclusive SeaStock contract with the • Jotun USA delivered Jotachar JF 750 to Shell Angelicoussis Group, which controls 136 vessels Appomattox project and Jotachar 1709 to the • Jotun to supply NORSOK M 501 protective coatings ConocoPhillips Chemical Cedar Bayou petrochemical systems to Dolwin Gamma, an offshore converter plant in Texas station owned by the Dutch/German energy network • Jotun supplies protective coatings to Gestamp, a company, TenneT leading manufacturer of wind towers in Brazil • Jotun continues to deliver protective coatings to the • Jotun Brazil achieves strong growth in hydrocarbon Jaworzno coal-fired energy block project in Poland processing industry (HPI) concept through agreements • Jotun opens new R&D centre in Flixborough, UK to with Blaspint, RIP and Elfe, among others develop and test intumescent coatings 1974 243 2 1969 793 3 EECA MEIA • • • • • • • • • • Radio Tower iconic buildings:the365-metre highÇamlıcaTV& Jotun Turkey secures contractforoneofIstanbul’s most Diamond region: RevealLightMatt,DandPrimax Jotun launchesthree powdercoatingsproducts inthe 90 millionpassengersayear Airport, designedtohaveaworld-leadingcapacityof Jotun Turkey secures contractfortheIstanbulNew paint solutionforceilings first product: JotunFenomastic TAVAN, aspecialised Jotun’s regional laboratoryinIstanbul,Turkey produces Jotun’s factoryinRussiabeginscommercial production decorative products Wonderwall and RoyalVelvet Jotun achievesexcellentresults withpremium interior landmark, theDubaiFrame,inUAE Riyadh Metro inSaudiArabiaandthearchitectural Jotun selectedtoprovide powdercoatingstothe Kuwait University, DubaiArena, amongothers Jotun suppliescoatingstoDangoterefinery (Nigeria), Abu DhabiLouvre Museum Single Source Solutionconceptdelivered totheiconic region Jotun secures 26HPScontractsforkeyaccountsinthe 1962 1991 INDIA ANDAFRICA MIDDLE EAST, CENTRAL ASIA EAST EUROPEAND 2735 762 14 3 SEAP NEA • • • • • • • • • • development formarineandprotective coatings. Jotun CoatingsTaiwan continuedpositivesales Upper Hill“supercity”complexinChina Jotun powdercoatingsselectedfortheShenzhen Yangzijiang ShipbuildingHoldings(YZJ),amongothers COSCO KHIShipEngineeringCo.,Ltd.(NACKS)and Shanghai Waigaoqiao Shipbuilding(SWS),NanTong strengthens relationships withleadingyards, including Jotun Marinesecures newbuildingprojects and skyscraper thatwillbethethird highestintheworld located inKualaLumpurMalaysia,amixed-used Jotun PowderCoatingssecured theKL118project the Macau&ZhuhaiPassengerCustomsBuilding Jotun Chinadeliversprotective intumescentcoatingsto Singapore’s ChangiAirport,Terminal 4 Jotun completesdeliveryofprotective coatingsto audit Jotun Indonesiaawarded green certificateinHSEQ City for Landmark80,thetallestbuildinginHoChiMinh winscontractsasSingleSourceJotun Vietnam Supplier interior decorativerange,across theregion Successful launchofMajesticDesign,apremium Philippines andMalaysia)inoneweek Jotun celebratesopeningofthree factories(Myanmar, 1983 1968 NORTH EASTASIA NORTH AND PACIFIC SOUTH EASTASIA 1933 2181 12 4
INTRODUCTION 5 GROUP KEY FIGURES
The Jotun Group is a matrix organisation divided into seven regions responsible for the sale of Decorative Paints and Marine, Protective and Powder Coatings. The company has 40 production facilities in 24 countries, 64 companies in 45 countries and is represented in more than 100 countries around the world.
45 9 789 40 EMPLOYEES FACTORIES COUNTRIES
6
SALES EBITA
INTRODUCTION 21 000 2100
SALES AND EBITA DEVELOPMENT 18 000 1800 (NOK MILLION)
15 000 1500
12 000 1200
9 000 900
6 000 600
3 000 300
0 0 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2017 PROFITABILITY 100 percentinjointventures andassociated companies Number ofemployeesintheGroup, including Equity /assetsratio,in% Equity (includingnon-controlling interests) Investments inintangibleandfixedassets Total assets YEAR-END FINANCIALPOSITIONS Net cashflowfrom operatingactivities Profit before tax Operating profit Sales revenue outsideNorway, in% Operating revenue PROFIT/LOSS (NOK MILLION) A T Retur Operating r Operating pr Operating margin,in% A Operating pr Retur otal compr verage equity verage capitalemployed n onequity n oncapitalemployed,in% evenue ehensive incomefortheyear ofit ofit +amortisationofintangibleassets , in% 15.1 RETURN ONCAPITAL EMPLOYED x 100 x 100 x 100
% 2013
2017 2014 OPERATING MARGIN 15 708 16 401 8.3 9 789 8 254 1 097 1 236 1 354 52.5 967 88 15 158 15 785
%
1 133 9 819 8 035 2 027 1 594 1 763 2015 2016 20152014 53.0 88 15 187 16 282 9 842 7 932 1 500 1 918 2 064 52.2 922
88 2016 RETURN ONEQUITY 9.8 13 300 13 171 9 676 6 739 1 301 1 314 50.7 911 919
85 2017
% 10 799 12 034 8 991 5 515 1 191 1 258 2013 51.1 733 819 30 % 0 10 20 83 % %
INTRODUCTION 7 8 OUR BUSINESS OUR BUSINESS Management summary…12 Protective Coatings…22 Decorative Paints…26 Powder Coatings…18 Marine Coatings…14 Jotun Group…10
OUR BUSINESS 9 JOTUN GROUP
THE POWER OF DIVERSITY
Jotun believes in strength through diversity. By building an organisation rich in different nationalities, cultures, gender, products, segments and customers, the Group develops market understanding and competitive advantages that benefit all our global stakeholders.
Jotun employs individuals from more than 88 different Meeting the needs of so many different end users in different countries, encouraging an open and inclusive working culture markets requires more than expertise on the technical merits whereby everyone, regardless of gender, race or belief, is of different paints and coatings systems; Jotun personnel accepted and encouraged to fulfil their potential. This benefits must understand the specific needs of customers in different the business on a multitude of levels. It creates a positive industries. Also, some projects may involve stakeholders from workplace and builds market reputation, while giving Jotun a many different countries, requiring Jotun project teams to broad-based wealth of knowledge, understanding and ideas cooperate across borders and time zones to secure contracts. that help us cater to the complex demands of the dynamic And finally, even companies operating in the same industry global marketplace. Jotun will continue to invest in developing a may have different business objectives, there is no ‘one size fits talented and varied workforce, delivering a competitive edge for all’ solution. both the Group and its customers around the world. COMBINED STRENGTH INDIVIDUAL UNDERSTANDING Managing Jotun’s regional and segment diversity represents a 10 As a paints and coatings manufacturer active in four different genuine challenge, but also helps mitigate financial risk. For segments, Jotun’s customer base is remarkably diverse. On example, while low demand in Saudi Arabia impacted sales of any given day, Jotun employees interact with a broad range of Jotun Powder Coatings, the segment performed well in Sweden, end users, from shipowners to real estate developers, interior the Czech Republic, India, Vietnam, Turkey and Indonesia. designers to energy companies, appliance manufacturers to Likewise, weak demand for new ships and offshore installations
OUR BUSINESS steel fabricators, and many, many more. At the same time, slowed growth for Jotun marine and protective products. Jotun is active in more than 100 countries all over the world, However, strong growth in the Decorative Paints segment helped where the company works with customers representing the company achieve positive overall growth. By leveraging both different business cultures, ethnicities and religions. segment and regional diversity, Jotun can secure overall growth, even when some regions or segments underperform.
Jotun celebrates the opening of a new factory in Myanmar. From left, Thiha Aung Ding, May The Win, Odd Gleditsch d.y. Chairman of the Jotun’s Board of Directors, and General Manager, Jotun Myanmar, Vo Chi Linh. OUR BUSINESS 11 JOTUN GROUP
A DURABLE BUSINESS MODEL
A number of external factors impacted Jotun’s results in 2017, but overall sales volume increased, a clear sign the company remains on the right track.
In 2017, the rising cost of raw materials, including epoxies, In 2017, Jotun invested in new laboratories (in Turkey, the Czech titanium dioxide, copper and zinc, had a negative impact on Republic, and the UK), the ongoing construction of factories, profits. And because Jotun is active in more than 100 different and celebrated the completion of new factories in Malaysia, countries, the company is sensitive to currency effects and Myanmar, The Philippines and Russia. In Norway, construction changes in local economic conditions. For example, investment is underway for the company’s new head office and R&D activity in Saudi Arabia has declined, impacting Jotun’s growth centre. Jotun also continues to allocate resources towards IT in this important market. At the same time, weak demand tools and systems to modernise the company and to build the for the construction of new vessels and offshore installations competence of employees. has impacted Jotun’s sales of marine and protective coatings, notably in China and South Korea. STAY THE COURSE
While Jotun is working to improve profitability going forward, VOLUME GROWTH the company’s results in 2017 have not led to any significant Despite challenges, Jotun recorded overall positive sales volume changes to Group strategy. Jotun continues to identify and growth in 2017, with strong support from the Decorative invest in promising markets, new technologies, production Paints segment. For a company active in four segments in many capacity and employees. Jotun has faced many challenges in 12 countries, Jotun has both the ability to shift resources where its 90-year history, but by leveraging the company’s strengths they are needed and the flexibility to adjust to local market and taking a long-term perspective, Jotun is in a strong conditions without impacting other parts of the network. By position to continue the growth trend it has enjoyed for more narrowing the gap between growth in sales and manageable than a decade. costs, the company remains in a strong financial position to
OUR BUSINESS support its growth strategy.
FULL TIME EMPLOYEES PRODUCTION FACILITIES
SCA SCA
WE WE EECA EECA 2017 MEIA 2007 MEIA SEAP SEAP NEA AM NEA Corporate AM
0 500 1000 1500 2000 2500 3000 03691215 EECA MEIA Litres/kilos (1000tonnes) PRODUCTION VOLUME Executive Vice President/CFO,Morten Fon,President&CEOandGeirBøe,GroupExecutiveVice President–PerformanceCoatings. Jotun GroupManagement(fromleft):BårdK.Tonning, GroupExecutiveVice President–DecorativePaints,Vidar Nysæther, Group SEAP SCA NEA AM WE 05 0 100 150 200 250 300 350 EECA MEIA Sales inNOKbillion TOTAL SALES SEAP NEA SCA AM WE 0123456 7
OUR BUSINESS 13 MARINE COATINGS
POSITIONED FOR RECOVERY
Despite continued uncertainty in the newbuilding market, Jotun Marine Coatings is working according to strategy by maintaining a market leading position and growing the DryDock and SeaStock business.
Weak demand for ocean transportation, tonnage overcapacity has also gained ground in the Tank Coating concept and is and low freight rates continued to act as a drag on the preparing to launch a product with a cutting-edge technology shipbuilding industry in 2017, impacting Jotun’s Marine in 2018. Coatings segment. Profitability was also impacted by rising prices of raw materials. While a rise in newbuilding orders Consolidation in the shipping industry has created fewer, larger (mostly for containerships and bulk carriers) in China and players which seek long-term partnerships with suppliers. For South Korea in the second half of the year suggests a modest example, some customers prefer to outsource the management recovery, it will take some time for these vessels to be built. By of SeaStock to Jotun for a fixed fee. Product quality remains contrast, yard activity in Western Europe has picked up, thanks vital to Jotun’s offering, but the company recognises that to growing demand for cruise vessels, where over 90 vessels are owners are increasingly looking to suppliers for solutions to currently on order. Jotun has also secured a five-year contract improve their business. By leveraging digital tools, sensor with a leading cruise shipyard. technologies and data analytics, Jotun can quantify results, customise services and provide better decision support. SEIZING OPPORTUNITIES BUILDING LOYALTY Jotun has moved quickly to adjust to the new market reality 14 by focusing on the DryDock and SeaStock concepts. In 2017, Over the past five years, Jotun has taken significant steps the company recorded growth in the DryDock concept of 17 to adjust to challenging markets. While uncertainty in the per cent, driven in part by increased demand for Jotun Hull newbuilding market is likely to continue to impact sales in the Performance Solutions, a concept applied to over 160 vessels. short-term, the company has retained its leading market position In the SeaStock concept, Jotun continues to perform well with by responding to the evolving needs of owners for solutions-
OUR BUSINESS six per cent growth, despite increased pressure on prices. Jotun based services and improved environmental performance.
JOTUN MARINE COATINGS
5 % 6 % AM SCA SALES IN BILLION NOK
21 % 2017 WE 2016 SALES 2015 43 % PER REGION 7 % 2014 NEA EECA 6 % 2013 MEIA 12 % 01234567 6SEAP +217612435M OUR BUSINESS 15 16 OUR BUSINESS to maintaintheirvessels. yacht captainsandcrews informationonwhat,whenandhow “Jotun Care”, aconceptsupportedwithanappwhichprovides on thesuperyachtmaintenancemarket,companylaunched focus MegaFiller andImperialAntifoulingproduct ranges.With growth wasdrivenpartlybythegrowing successofJotun’s superyachts, achievinga33percentincrease involume.This In 2017,thecompanyprovided coatingsforover100 SPECIALISED MARKET: JOTUNYACHTING scheduled maintenancetorecommend thebestcoating specific trade,averagespeed,cargoandtimebetween Prior tothedrydocking,Jotuncollectsdataonvessel’s drydocking process. operational profile oftheirvessel, but alsobyoptimisingthe not onlybyrecommending thehull coatingsthatbestfitthe closely withownerstohelpthemmeettheirbusinessobjectives, owner. Thisprovides Jotunwiththeopportunitytoworkmore the coatingssupplier, decisionsaboutcoatingsare madebythe market. Unlikenewbuildings,where theshipyard oftenselects systems andenhancedservicestogrow itsshare inthedrydock Over thepastfiveyears,Jotunhasdevelopedanumberoftools, FOCUSING ONTHEOWNER leading torisingdemandforJotunpremium marinecoatings. corresponding emissionsare focusedonhullperformance, repair yards. Finally, ownersseekingtoreduce fuelcostsand and exhaustgascleaningsystems,resulting inmore activityat owners torefit vesselswithballastwatertreatment systems the sametime,increasingly strictregulations haveencouraged require periodicdrydockingsforscheduledmaintenance.At are about50000vesselsnowactiveintheworld fleetthat While weakdemandfornewshipconstructioncontinues,there based drydockingservices. As theindustrycontinuestocyclethroughchallengingmarkets, Jotunhasfoundsuccessofferingsolutions- OPTIMISING DRYDOCKINGS MARINE COATINGS contracts whentheindustry’s recovery gainsstrength. owners, Jotunwillbeinastronger position tocompetefornew the newbuildingmarket.Byforgingcloserrelationships with share inthedrydockingmarkethashelpedoffset lossesin new tonnage,thecompany’s efforts toexpanditsmarket Coatings segmenthavebeenimpactedbyweakdemandfor and executionservices.WhileJotun’s results intheMarine allowing thecompanytoprovide comprehensive planning has alsonegotiatedfleetwidecontractswithlargerowners, 160 vesselsaddedtoJotun’s portfolioin2017alone.Jotun Jotun haswonalmost700HPScontracts,includingmore than Performance Solutions(HPS)concept.Sinceitslaunchin2011, market islinkedtogrowing demand forJotun’s Hull Another keydrivertothecompany’s successinthedrydock SOLUTION DRIVENSUCCESS professionalise services,Jotuncanhelpowners avoiddowntime. schedule. Byusingdigitaltechnologiestobothcustomiseand rely onrepair yards andsupplierstocompletetheirworkon process. Becausevesselsindrydockare owners notearning, determines thebestserviceleveltooptimisedrydocking to choosethebestpre-treatment plan(spotorfullblast)and Once acoatingsolutionisselected,Jotunworkswiththeowner solution, includinghull,topsideandtankcoating,ifappropriate. along withcontinuoussuccessofNonStop Supreme antifouling. doubled duetooutstandingresults achievedbytheyachtpainters were stablein2017,salesofJotun’s Xtreme Glosstopcoat fibreglass hulls.Whileoverallsalesintheleisure yachtmarket a naturallyoccurringprocess thatcanimpacttheintegrityof local professionals ontheprevention andtreatment ofosmosis, network of75global“Osmosiscentres”, providing trainingto In theleisure yachtmarket,Jotunhasstrengthened itsEuropean
OUR BUSINESS 17 POWDER COATINGS
INNOVATION, SERVICE AND TEAMWORK
Jotun’s powder coatings business grew modestly in 2017 as the company strengthened its position in key markets.
In 2017, Jotun had slower growth than expected in the In 2017, the company developed new premium solutions to powder coatings business due to weakening demand for meet specific customer demand. Products included Ultra One, pipeline and rebar coating products, particularly in the an effective substitute to liquid technology that can be applied Middle East. Coatings for steel rebar were affected by lower on Medium Density Fibreboard (MDF); Primax Xtend, a zinc investment in projects in Saudi Arabia and Qatar. Three key free primer for cost effective steel corrosion protection for markets for Jotun’s powder coatings business were affected building components and general industrial applications; the in different ways in 2017, the economic downturn in Saudi Jotun Architectural Trends Collection, a selection of colours to Arabia, sharp devaluation of the Egyptian currency in late inspire architects for their most prestigious projects and Primax 2016, and supply chain disruption in Qatar from mid-2017. At Diamond, a specialised primer for diamond cut alloy wheels. the same time, two large scale pipeline projects in Turkey and The company also continues to work closely with global key Pakistan have been completed. Finally, a sharp rise in the costs account customers, such as Electrolux, Panasonic and IKEA, of key raw materials impacted profitability. and has developed closer links with companies like Mubea and Maxion, which manufacture automobile components. REGIONAL AND CONCEPT DIVERSITY ADJUSTING TO MARKET CHANGES Jotun’s regional and concept diversity helped the company 18 to offset volume declines in the pipeline and rebar coating Looking ahead, Jotun is implementing segment-wide price products with positive results in other concepts and markets. increases to compensate for increased raw material prices. The For example, Jotun performed well in the Furniture concept and company has also built client teams that include sales, technical General Industries concept, which includes electrical switchgear, service and laboratory personnel (the “Troika approach”) to shelving, interior lighting and automotive components. Sales help customers realise value by optimising their processes. While
OUR BUSINESS of products for the Appliances concept were flat. The company Jotun does not anticipate market conditions in the Middle East is encouraged by rapid development in China, India, Indonesia will fully recover next year, the company remains confident and Vietnam, and by satisfactory double-digit growth in Eastern that by tailoring solutions for individual customers, working Europe & Central Asia (led by Turkey). Jotun also performed more closely with global key account clients and continuing well in Western Europe (led by the Czech Republic) and in to develop innovative products, the company can accelerate Scandinavia (led by Sweden). growth in the years ahead.
JOTUN POWDER COATINGS
5 % 5 % NEA SCA 11 % SALES IN BILLION NOK WE 23 % 2017 SEAP 2016 SALES 16 % PER REGION EECA 2015 2014
2013 40 % 0123 5MEIA +111640235M OUR BUSINESS 19 20 OUR BUSINESS results basedontheproducts used. the applicationline,sothatcustomerscanachievebest provides know-howonoptimisingsystemsandcomponentsof when required, tomeetthoseneeds.Technical salessupport laboratory personnelare taskedwith product adaptations, are responsible forunderstandingthecustomer’s needs,while applicators tohelpthemachieveoptimalresults. Salespersonnel approach, theseteamsworkwithindustrialmanufacturers and sales supportandlaboratorypersonnel.KnownastheTroika In 2016,Jotuncreated clientteams thatincludesales,technical PREPARING THEORGANISATION competitors inallconcepts. with customers,italsohelpsJotundifferentiate itselffrom problem-solving approach notonlystrengthens relationships to deliversolutionsthataddvalueforthecustomer. This understanding ofspecificapplicationneedshelpsJotun Jotun’s offering, thecompanyhasrecognised thatenhanced While product qualityandinnovationremain acriticalpartof of surfacepreparation andapplicationtechnologiesused. become increasingly sophisticatedintermsoftherange Over thepastfiveyears,powdercoatingsindustryhas partner. insights leadingtotailoredsolutionshelpthecompanymigrate fromtheroleofsuppliertobusiness In 2017, JotunPowder Coatingslaunched the “Troika approach”, away togainimprovedcustomer FROM SUPPLIER TO PARTNER POWDER COATINGS win basisforhealthylong-termrelationships withkeycustomers. Jotun notonlydeliversaddedvalue,butalsoestablishesawin- partnering withcustomerstohelpthemimprove theirbusiness, centres, hashelpedJotunmovemuchclosertothecustomer. By The Troika approach, togetherwithsupportfrom RegionalR&D FROM SUPPLIERTOPARTNER and findtechnicalsolutionsfastermore efficiently. invested infiveRegionalR&Dcentres tosupportthe Troika teams solution bestfitstheneedsofapplicator. Jotunhasalso conditions, theygainabetterunderstandingofwhattechnical laboratory personneltogainfirst-handknowledgeofapplication key applicationandcuringparameters.Andbyencouraging technologies totrackandgathermore reliable datarelated to industry partnerstodevelopsuitablesensorandmeasurement efficiency. Technical salessupportteamsalsoworkwith on howtooptimiselinesspeedproduction andimprove energy costsrelated tocuring,whileothersmay seekadvice have different needs.Forexample,somemayfocusoncutting This process beginswithunderstandingthat different customers
OUR BUSINESS 21 PROTECTIVE COATINGS
MANAGING COMPLEXITY
Jotun’s protective coatings business recorded growth in sales volume, but challenging conditions in some industries and markets, combined with increased raw material costs, impacted profitability.
Jotun supplies protective coatings to companies active in a has launched a series of products in the Thermosafe range, broad range of industries, from offshore to infrastructure, enabling customers to operate at higher temperatures with hydrocarbon processing to energy. These industries are subject enhanced safety, efficiency and productivity. In the Infrastructure to different global and local economic forces and, like all concept, which includes residential buildings, stadiums and segments, profits are impacted by rising costs of raw materials. airports (among other projects) Jotun has found success with To manage these variables, Jotun has invested in product its range of thin film passive fire protection products (the innovations and sales force training to better meet the evolving Steelmaster range) and Green Building Solutions, a concept needs of different industry stakeholders. The company is also developed to support project owners seeking points toward expanding its dealer network to make products available to environmental certification (LEED, BREEAM, etc.). Jotun’s more customers. performance in the Energy concept, which includes wind farms and thermal and hydroelectric power, also experienced satisfactory growth in 2017. FOCUS ON MAINTENANCE
Jotun’s results in the Offshore concept, traditionally an area of THE ROAD TO IMPROVED PROFITABILITY strength for the company, were impacted in 2017 by continued weak demand for the construction of offshore units. To offset this While Jotun does not anticipate a full recovery in the offshore 22 expected market development, Jotun has launched new products industry for some time, the company remains confident that and solutions to capture more of the maintenance market. In through growth in other concepts it will be in a stronger 2017, Jotun introduced a new range of maintenance products position to build both sales volume and profitability in the years and solutions, consisting of Barrier Smart Pack, Jotamastic Smart ahead. Keys to improving profitability will be new innovations Pack HB and Hardtop One, which represents the world’s first and managing the rising cost of raw materials that has occurred
OUR BUSINESS NORSOK-approved solution for brush and roller application. over the past 18 months.
With the current weak demand in offshore new construction, Jotun has developed the sales focus further in the other concepts. In the Hydrocarbon Processing Industry concept, Jotun
JOTUN PROTECTIVE COATINGS
4 % 3 % AM SCA 7 % SALES IN BILLION NOK WE 10 % 2017 33 % EECA 2016 NEA SALES PER REGION 2015 26 % 2014 MEIA 2013 17 % 0123456 3SEAP +7102617334M OUR BUSINESS 23 24 OUR BUSINESS Jotun-concertina-fold-Thermosafe-leaflet-V03-July-1317-aw.indd 1 jotun.com Tel:+47 33457000 N-3202 Sandefjord, Norway P.O. Box2021, Jotun A/S areas, regardlessofthetemperature. protection onbothinsulatedanduninsulated loss oflife.Ourcoatingsoffer corrosion under insulationcanleadtoexplosionsand massive. Intheworstcase,hiddencorrosion the consequencesofcorrosioncanbe From bothaneconomicandHSEperspective Corrosion temperature needs. than 1000ºC.Ourproductscancoverallyour temperature range,fromcryogenictomore chemical plantsoperateoverawide productivity andyield,refineries In ordertoensurethehighestlevelof Thermal exposure EXTREME. TO THE THERMOSAFE YOUR ASSETS degree of protective insulation. degree ofprotectiveinsulation. nearby flarestacksrequiresaneffective The effects ofradiatedheatfrom Flare radiation temperature brittlefracturing. structures maybesubjecttolow accidentally released,criticalsteel Where cryogenicliquidsare Cryogenic spill
fire scenariosisacriticalHSErequirement. Effective protectionagainst hydrocarbon Fire repair meshcontainingPFPproducts. free, itisexceptionallywellsuitedto operations. SinceourepoxyPFPismesh shut-downs duringmaintenance minimizes theneedforcostlyfacility on hotsubstrates,upto150ºC.This Our productsaredesignedtobeapplied Shut-downs PROTECTIVE COATINGS faced bycontractorsandproject owners. Bydemonstrating more informalwebcastaddressing specificissuesandchallenges contractors. Thecompanyalsooffers “Teach MeTuesdays”, a they understandwhatismostimportanttoproject ownersand is designedtobuildHPIcompetenceamongJotunpersonnelso Rather thanfocusexclusivelyonJotunproducts, theprogramme web-based concept-specificsalesforce trainingprogramme. initiative,alive, In 2017,Jotunlaunchedadistancelearning SOLUTIONS PROVIDER deliver theproducts andsolutionsthat bestfittheirneeds. and contractorstounderstandtheirbusinessdevelop company hasfocusedonworkingmore closelywithowners growth opportunityforJotun.To reach thesecustomers,the due forscheduledmaintenance,representing asignificant (notably intheUS),manyfacilitiesconstructedpastare stakeholderstotenderfornewconstruction international a localfocus.WhileJotuncontinuestointeractwithmultiple farms andotherspecialisedfacilities,requires bothaglobaland refineries, gasprocessing facilities,petrochemical plants,tank The hydrocarbon processing industry(HPI),whichincludes number ofinitiativestoalignitsbusinessmeettheevolvingneedscustomers. To gainmarket shareinthecomplexand dynamichydrocarbonprocessingindustry, Jotunhaslauncheda CUSTOMERCLOSER TO THE Applied Performance 13/07/2017 16:43 solutions. new way, Jotunismore directly showingthevalue ofquality reduced maintenancecosts.Bylookingatthemarketinthis spills, enablingbettercorrosion protection, improved safetyand thermal exposure tocorrosion underinsulation,fire tocryogenic in theThermosaferangeprovide protection foreverythingfrom environments withinatemperature range–196 in theThermosafehavebeenengineered forextreme found inoffshore oilandgasfacilities.Theproducts enhance overalloperationalefficiencyandon-sitesafety Launched in2017,theThermosaferangeisproven to THERMOSAFE growth intheHPIconceptyearsahead. Jotun isinastrong positiontoachieve significantvolume maintenance products availablewhere theyare neededmost, offering completeproduct solutionsandmakingJotun Jotun isexpandingitsdealernetwork.Bybuildingcompetence, Dealer networkshelpcustomerssource Jotunproducts and WORKING WITHDEALERS temperature rangefrom –196 products created tosuitspecificextreme environments, witha Jotun alsolaunchedThermosafe,acomprehensive suiteof reputation asasolutionsprovider. even duringperiodsoflowactivity, Jotuncanstrengthen its Jotun’s expertiseinHPIandinteractingwithcustomers spills, thermalexposure tocorrosion underinsulation. 1000 o C, providing protection from fire tocryogenic o C to1000 o C. Thefiveproducts o C to
OUR BUSINESS 25 DECORATIVE PAINTS
BUILDING ON OUR STRENGTHS
Jotun continued to deliver good results in the Decorative Paints segment by remaining true to the company’s proven, long-term strategy.
Jotun sells decorative paints in about 37 different countries, all Jotun distributes and sells decorative paints through about over the world. To serve these diverse markets, Jotun develops 8 000 dealer shops, all over the world. While the company user-focused products and works to build strong long-term continues to expand its dealer network, Jotun has focused relationships with dealers and project stakeholders, including on improving the shopping experience for consumers and contractors, architects, interior designers and real estate supporting dealers through a systematic approach to marketing. developers. In 2017, Jotun achieved positive growth in all This work includes providing dealers with tools to upgrade markets. shops, training programmes for shop sales staff, and investing in global television commercials and targeted social media campaigns. Jotun is also working more closely with architects, MARKET LEADER interior designers and developers to raise awareness for the Jotun is a recognised leader in the premium segment in many Jotun brand. In 2017, Jotun launched its fifth annual Global countries, building on the success of established brands and Colour Trends at events in more than 30 different countries the development of innovative products. For example, in South worldwide. East Asia, where the company saw double-digit growth in 2017, Jotun continues to find success with the premium interior range, A HISTORY OF SUCCESS Majestic, recording excellent growth with Majestic True Beauty 26 Sheen and Majestic Perfect Beauty and Care. In the Middle East, While Jotun will continue to focus on the development of its India and Africa, Jotun saw strong growth in sales of interior premium products, these efforts also support growth for the products, such as Fenomastic Wonderwall, and specialised company’s medium range paints, which represent significant exterior products, such as Jotashield Décor, Jotashield Textures volume sales. Looking ahead, Jotun will continue to pursue its and Jotashield Colour Xtreme. Despite challenging markets, long-term strategy to remain a market leader in the premium
OUR BUSINESS Jotun outperformed its competition in Turkey. In Scandinavia, segment, a strategy that has proven successful for many years. the company saw double-digit growth in the interior segments, supported by the successful 2017 relaunch of Lady Pure Color.
JOTUN DECORATIVE PAINTS
2 % NEA 22 % SALES IN BILLION NOK 22 % SCA SEAP 2017 2 % 201 SALES WE 2015 PER REGION 3 % EECA 2014 2013 49 % 03 22MEIA +234922M Jotun worksclosely withinteriordesigners,architects anddeveloperstosharefreshideas andenvironmentalsolutions.
OUR BUSINESS 27 28 OUR BUSINESS the schemethatbestfitstheirvision. schemes, makingiteasierforconsumersanddesignerstoselect that helpstaketheguessworkoutofchoosingdifferent colour In addition,JotunGlobalColourTrends ispresented inaway moods andemotionstoappealdifferent targetaudiences. are organisedintothree different schemesthatevokedifferent Trends ismadeupofaseriescomplimentarycolours.These who present a“ColouroftheYear”, JotunGlobalColour trends incolour. Unlikesomecompetingpaintmanufacturers Global ColourTrends isJotun’s annual presentation ofthelatest SETTING THETREND of JotunGlobalColourTrends. these efforts are supportedby, andbuildon,theannuallaunch has establishedastrong socialmediapresence inmostmarkets, the companydoesinvestintelevisionandprintadvertising coordinated local,regional andglobalmarketingstrategy. While on qualityproducts, closerelationships withdealersanda Jotun’s successintheDecorativePaintssegmentisbuilt the consumerthroughaninnovative, globalapproachtomarketing. Marketing decorative paintsreliesasmuchonqualityitdoesmakinganemotionalconnectionwith THE EMOTION OFCOLOUR DECORATIVE PAINTS interior design. strengthen Jotun’s brandasanimportantvoiceintheworldof by eventsinmore than30countries worldwide,helpingto (“Rhythm ofLife”),launchedin2017,hasbeensupported designers andfashioninfluencers.The2018collection gaining recognition from someoftheworld’s toparchitects, colourtrendsetter,Jotun hasemergedasaleadinginternational Since thefirstlaunchofJotunGlobalColour Trends in2013, BUILDING THEBRAND with sandybrowns. and SilentSerenity, whichcontrastscreamy, terracottapinks the blue-greens ofwaterwiththereddish-browns oftree bark; with warmerbrowns andbeiges;LushGarden, whichmatches schemes: CityMotions,whichpairs industrialbluesandgreys The RhythmofLifecollectionisdivided intothree primarycolour RHYTHM OFLIFE Jotun GlobalColourTrends are presented allovertheworld. and languageversions.Andtogeneratemaximumpublicity, leading photographersandtranslatedinto15different brand assembled inanattractivebrochure, featuringinteriorsshotby Jotun’s in-houseColourantTechnology laboratory, samplesare Jotun’s network.Onceeachcolourisspecificallyformulatedby involving Jotuncolourspecialistsrepresenting eachregion in Colour schemesare selectedafteranexhaustiveprocess
OUR BUSINESS 29 30 CUSTOMERS AND INNOVATION CUSTOMERS AND The goldstandardof steelprotection…32 INNOVATION Connecting JotunMulticolor …34 Sales accelerator …36
CUSTOMERS AND INNOVATION 31 32 CUSTOMERS AND INNOVATION Jotun intumescentPassiveFireProtection testfurnace,DubaiU.A.E. Jotun offers Steelmaster1200WF, intumescent awaterborne towards “green certification”(e.g.LEED,BREEAM,etc.), For example,forproject points ownersseeking toearn project owners. they havealsobeenengineered to meet thediverseneedsof standardscompliance withlocalandinternational forfire safety, solution. Whiletheseproducts have beentestedtoensure Steelmaster rangeandJotachar, ameshfree, epoxyPFP (PFP) products, includingthethin-filmcellulosicfire protection Jotun produces abroad assortmentofPassiveFire Protection MEETING CUSTOMERNEEDS 400 will starttoloseitsstructuralintegrityattemperatures reaching Steel, theworld’s mostcommonlyusedconstructionmaterial, both meetfiresafetyrequirementsandtheneedsofcustomers. In 2017, Jotunenjoyedremarkablesuccessinthesaleofintumescentpassivefireprotectionproductsthat IN STEELPROTECTION THE GOLDSTANDARD underneath fromtemperatureunderneath external increases. when exposedtoheatthusinsulatingthesteelsubstrate intumescent paints.Theseare specialisedcoatingsthatexpand constructions are treated withpassivefire protection suchas to safelyevacuateincaseoffire, regulations require thatsteel o C. To provide occupantsofbuildingsorworksitestime Dubai, UAE. centre willcomplementthecompany’s existingR&Dfacilityin laboratories, millrooms, officesand plantspace.The research (todeveloptheintumescentproducts),featuring twofurnaces is housedina1600square-metre, two-storey complex opened anewresearch centre inFlixborough, UK.Thefacility regulations andsatisfycustomerdemand.In2017,thecompany Jotun willcontinuetodevelopsolutionsthatmeetorexceed INVESTING INTHEFUTURE maintenance costsandreduced structuralweight. fires, provides project ownerswitheasyapplication,lower hydrocarbon industry, whichrequires protection againstpool demands jetfire protection) andanotherfortheonshore made upoftwosolutions,onefortheoffshore segment(which the architectural designofthesteelwork.The Jotacharrange, appreciate thatthisthin-filmcoatingssystem canenhance coating offering 120minutesoffire protection. Architects also
CUSTOMERS AND INNOVATION 33 34 CUSTOMERS AND INNOVATION via Internetandsome havebeenequippedwithtouch screentechnology. By theendof2017, morethan6000JotunMulticolor machineshavebeenconnected consumers tobeautifytheirhomes. provides supporttodealersupgradetheirshopsinspire 8 000Multicolormachinesinoperationworldwide.Jotunalso tint paints,andtechnicianstoupgradeservicemore than that don’t fade,engineerstodevelophardware andsoftware to make colourselectioneasier, chemiststoformulatenewcolours Multicolor teamresponsible forthe identificationoftrends to the consumer. Inpursuitofthisgoal,Jotunhasadedicated of Jotun’s efforts tocreate thebestshoppingexperiencefor equipment, itisperhapsbetterunderstoodasthecentrepiece While theJotunMulticolormachineisitselfapieceof A UNIQUECONCEPT friendliness, reliability andcolouraccuracy. and mostreliable in-shoptintingsystems,recognised foruser growth. Today, JotunMulticolorisoneoftheindustry’s best Jotun, thedealerandconsumer, helpingtodriverapid time, JotunMulticolorbecameacriticalinterfacebetween an almostinfinitearrayofcoloursfrom theirlocalshop.Over in-shop tintingsystemofitskind,allowingconsumerstoselect Launched in1976,JotunMulticolorwasthefirstmass-produced decorative paintsbusinessformorethanfortyyears. By continuingtoinvestinnewtechnologies, JotunMulticolorhasservedasthebackboneofcompany’s CONNECTING JOTUN MULTICOLOR Jotun experience forconsumersandprofessionals alike. by web-basedservices,Jotundeliversatrulyuniqueshopping to providing dealerswithuserfriendlyequipmentsupported process, from makingcolourselectioneasierforconsumers screen solutioninScandinavia.Byoptimisingeverystepofthe data. Forexample,thecompanyhasrecently launchedatouch strengthen theconcept,supportedbyinputfrom usersurvey Looking ahead,Jotunwillcontinuetoaddfeatures to CONTINUOUS DEVELOPMENT connected via Internet. connected viaInternet. end of2017,more than6000Multicolor machineshavebeen Jotun canmore effectively trackglobalcolourtrends. Bythe collecting statisticsviaweb-connectedMulticolormachines, such asautomatedbackupofcustomiseddata.Andby and colours,onlinetechnicalsupportJotunwebsolutions, Network allowsdealerstogetinstantaccessnewproducts Multicolor machinestoaglobalnetwork.TheJotunGlobal project toleverageweb-basedservicesconnect all Over thepastfiveyears,Jotunhasembarkedonanambitious ot
CUSTOMERS AND INNOVATION 35 SALES ACCELERATOR
Jotun achieved significant growth in the decorative paints retail market in the Middle East, India and Africa by focusing on shop sales staff.
Jotun distributes paints to about 2 000 shops in the Middle The two-day training course has four components: Train, East, India and Africa. To generate sales, the company relies on Engage, Motivate and Reward. Shop sales personnel were dealers, or shop owners, and their staff to recommend Jotun trained to “Start every day the Jotun Way” (Mind, Body, Store) products. This business model has helped the company achieve and learned sales methodology. At the end of the course, remarkable success; the retail sale of decorative paints represents shop sales staff received a Jotun Sales Specialist diploma, a about 80 per cent of Jotun’s business in the region. Over the Jotun name badge, a carry bag containing training manuals past five years, Jotun has worked closely with dealers to improve (translated into eight different languages), a Jotun branded the condition of their shops to attract more business. At the end polo shirt and hygiene products. To keep Jotun Sales Specialist of 2016, the company identified an opportunity to accelerate graduates engaged, Jotun organises various activities to ensure growth, particularly for premium products, by focusing on shop they remain motivated. sales staff. PROVEN SUCCESS LISTEN, LEARN AND MOTIVATE Since its launch, more than 1 700 shop sales people working While shop owners remain critical partners for Jotun, it is the in about 900 shops across 15 markets in the Middle East, India shop sales staff, often minimum wage workers, who deal and Africa have graduated from the programme. To date, 36 directly with consumers. In 2017, the company launched a around 300 sales specialists have been rewarded for their change programme known as the ‘Jotun Way’ to train and achievements at work. Dealers with shop sales people who have motivate shop sales staff. The project was divided into three graduated from the course have achieved significant growth, phases: compared to shops that haven’t yet participated, making the • Phase one of the project was to bring shop sales staff ‘Jotun Way’ programme one of the most successful change together for workshops, where Jotun personnel could learn initiatives for the region. more about their goals and ambitions • Phase two was to develop a training programme and motivational tools to engage them • Phase three was implementation, a roll out of the training
CUSTOMERS AND INNOVATION programme to every Jotun branded shop in the region CUSTOMERS AND INNOVATION 37 38 CORPORATE RESPONSIBILITY AND GOVERNANCE RESPONSIBILITY AND GOVERNANCE CORPORATE RESPONSIBILITY GOVERNANCE CORPORATE It’s allabout attitude…40 AND
CORPORATE RESPONSIBILITY AND GOVERNANCE 39 40
“Jotun is defined by its approach to corporate responsibility and governance. We are committed to investing in the development and implementation of long-term programmes that deliver the very highest standards, while building our global reputation, business results and trusted stakeholder relationships.
CORPORATE RESPONSIBILITY AND GOVERNANCE RESPONSIBILITY AND GOVERNANCE CORPORATE Jotun’s Board fully supports our CR activities, which are defined by our values and clearly aligned with the 10 United Nations Global Compact principles.”
Morten Fon, President and CEO Loyalty Care Respect Boldness into ourbusinessprocesses. building onoursuccessfulapproach andembeddingitfurther Every yearwetakestepstorefine andimprove ourprogrammes, steer soundjudgment. organisation tohelpdecisionmaking,supportstrategyand throughout everyoperationalelementoftheglobal CR isnotastandaloneelementwithinJotun.Itintegrated INTEGRATED APPROACH Global Compactprinciples. (OECD) guidelinesformultinationalcompanies,andtheUN’s Organisation forEconomicCo-operationandDevelopment Labour Organization(ILO)convention, (UN), theInternational based upontheHumanRightsconventionofUnitedNations All ofourCorporateResponsibilitypoliciesandstandards are always betrustedtoupholdhighstandards. Jotun, intermsofbothitsproducts anditsbehaviour, can operate in. a brandthatcommunicatesstrong values ineveryarea we in general.Itbuildsanorganisationwecanbeproud ofand key businessstakeholdersandfortheenvironment andsociety the ‘right’choices;foroneanother, foroursuppliers,customers, It’s thisattitudethatdictatesourbehaviourandhelpsusmake BUILDING TRUST attitude throughout everyregion, segment,companyandteam. while ourpracticesmouldwhoweare, buildingaresponsible Ourpoliciesadhere standards,and Governance. tointernational and carefully tailored approach toCorporateResponsibility(CR) anchored inourvaluesandmaintainedbyastructured, clear Jotun workshard tobuildaninclusive andrespectful culture, conducting business. not recognise. However, weallshare thesameapproach to advantage ofinsightsandopportunitiesthatotherssimplymay differences helpusgainavarietyofperspectives,taking employees sellingproducts inover100countries,ourindividual Jotun isdiverse,butunified.Asacompanyofalmost10000 reputation asaresponsiblecorporate citizen. culture. Onewhereourvalues ofLoyalty, Care, RespectandBoldnessdictateourbehaviourcement Jotun pridesitselfnotonlyonproducinghighqualityproducts, butalsoonbuildingauniquecorporate IT’S ALLABOUTATTITUDE but alsothesamehighstandards. ensuring thatallcompaniesnotonlyshare thesameattitudes, The policiesare developedcentrallyandimplementedlocally, • • • • • using amulti-facetedapproach thatincludes: standardsCorporate Governance are evaluatedandsupported activities. comprehensive andexternal rangeofinternal guidelines, reviews, audits,supplier audits,CRreporting anda implemented throughout theglobal organisationviapolicies, to thepromotion andsupportoftheCRstrategy, whichis Jotun’s Board ofDirectors andGroup Managementare integral strong ethicalfocus. pursue ourstrategicgoalswithtransparency, integrityanda effective policies,auditsandreviews, corporategovernance we business. Bymaintainingandcontinuallyimproving clearand ofsuccessful isacornerstone Jotun believesgoodgovernance GOOD GOVERNANCE • • • In 2017Jotun: Supplier audits HR reviews Financial audits Business reviews HSEQ audits protection human rights,tradingstandards, and environmental requirements, investinginareas includingdataprotection, Renewed efforts tomeetlegal,corporateandethical stance decision making,andenforce Jotun’s stringentanti-corruption helping delegatesretain knowledge,embedtoolsforcorrect Launched anewportfolioofanti-corruptionnano-learnings, new team,focusingonkeynon-financialcomplianceareas Strengthened itscompliancefunctionwiththe creation ofa
CORPORATE RESPONSIBILITY AND GOVERNANCE 41 42 EMPLOYEES AND THE WORKPLACE Growth throughsustainableworkforcedevelopment …44 THE WORKPLACE EMPLOYEES AND Creating acultureofopportunity…46 Reducing risk, stepby…51 Safety alwayscomes first …50 Changing forthebetter…47 A cultureofteamwork …48 Raising thebar…49
EMPLOYEES AND THE WORKPLACE 43 GROWTH THROUGH SUSTAINABLE WORKFORCE DEVELOPMENT
Jotun is focused on driving growth through a sustainable, organic and strategic development of its global workforce. This provides opportunities for our employees, while delivering lasting value for our business stakeholders.
Jotun’s continued success depends on its ability to recruit, CONCEPTS THAT WORK develop and retain qualified personnel. The Group tailors its HR activity to provide a dynamic and attractive work place, HR responds to Jotun’s business strategy by developing, one where individuals thrive and successful teams are created, advocating and implementing six interlinked concepts: helping Jotun fulfil its strategic ambitions. Recruitment, Leadership, Competence Development, Reward, Organisational Design, and Global Mobility. Each one feeds As a Group, we are guided by our values, but defined by our into the other to create a ‘wheel’ of sustainable development, people. It is imperative that we recognise, nurture enabling Jotun to meet its employees’, shareholders’ and develop their abilities, allowing them to and customers’ needs and expectations. build their individual careers while we build strong market position. Our concepts, policies and standards are devised centrally, Organisational but implemented locally, A PATHWAY FOR Design empowering our regional 44 POTENTIAL and local HR professionals Every new Jotun and local management Global Leadership employee starts a Mobility to make decisions that journey. Their present support overall Group role is not the Global HR strategy. destination, but a platform for further Concepts Organisational surveys, development. By conducted every two creating a dynamic years, reveal a high level work environment, the Competence of employee engagement Recruitment Group encourages them Development and commitment to Jotun,
EMPLOYEES AND THE WORKPLACE to gain experience across while also delivering valuable functions, departments, feedback on priority areas for
regions and segment borders, Reward improvement. This kind of insight motivating them to maximise their helps us continually refine the HR career potential and deliver optimal function and activities to ensure on- value to the business. going added value.
This is of particular value to so-called ‘millennials’, who 2017 HIGHLIGHTS join Jotun early in their careers seeking quick personal and professional progression, and form the next generation of The Group’s growth is steady and prudent, with employee leaders. It is essential Jotun understands and responds to their numbers increasing slightly in 2017, despite challenging market desires, allowing us to retain talented young people and build conditions for numerous business segments. on-going competitive advantage. The past year has also seen: Jotun invests heavily in creating a structure where leaders are • The continued roll-out of Jotun’s revamped Leadership nurtured and opportunities delivered (see page 46) while all Expectations programme employees enjoy tailored initiatives to build individual and • The initiation of a survey looking into the success and collective competence (see page 47). sustainability of Jotun’s Mobility programme Americas Middle East,IndiaandAfrica South EastAsiaandPacific North EastAsia East Europe andCentralAsia West Scandinavia Jotun total Europe Number ofemployees 2 735 2 181 1 933 1 9 789 243 46 762 793 190603 142 350792 Female 1 806 175 540 341 164 2 560 1 641 1 592 7 983 Male 197 16 598 Nationalities 51 23 12 33 36 88 8
EMPLOYEES AND THE WORKPLACE 45 CREATING A CULTURE OF OPPORTUNITY
Jotun’s most important asset is its people. To retain talented team members, and ensure they fulfil their potential while supporting the Group’s strategic business goals, Jotun invests in creating a dynamic internal labour market, rich in opportunities.
Jotun is committed to a culture of organic growth. The Group directly benefiting operations and individuals, while appealing to aims to fill key positions internally, wherever possible, while a new generation of employees who appreciate such a flexible ensuring that existing and prospective employees see Jotun as and progressive work environment. a desirable workplace, one where career advancement isn’t just possible, it is encouraged. LEADING THE WAY
We want employees that expect and target personal and Jotun recognises that effective leadership is essential in professional development, growing in engagement and achieving the Group’s global business objectives. In an commitment to Jotun as we deliver opportunities that help international organisation with over 1 700 managers, it them, and the Group, prosper in the global marketplace. is critical that we create the structure, programmes and Jotun’s focus on Mobility and Leadership are cornerstones of processes to support a leadership pipeline that develops our efforts. people and drives sustainable success.
In 2017 Jotun worked to ensure that its newly revamped 46 DYNAMIC DEVELOPMENT Leadership Expectations initiative was rolled out effectively Global Mobility is key to sharing expertise, developing new across the organisation, communicating not just what we perspectives and building a stronger, healthier and increasingly expect from our leaders, but how they can achieve it. Local HR competitive international enterprise. managers were tasked with ensuring leadership is now firmly on the agenda at management meetings, creating a regular forum In 2017 Jotun has continued to strengthen its programme, for discussion and development, while a tailor-made leadership boosting the number of employees on short-term assignments, assessment tool has been launched to select management mobile workforce placements and international assignments. candidates and further develop skills. The Group’s processes have been standardised to enhance efficiency, while increased diversity has been encouraged. Leadership is a priority for managers, with dedicated workshops, Academy initiatives, Leadership development reports and
EMPLOYEES AND THE WORKPLACE Job mobility has also been in focus, with regional mobility organisational surveys ensuring concept integration throughout resources introduced in each region to ensure local managers Jotun. In addition, the Group has worked to encourage broader can offer employees opportunities across new roles, companies diversity with the leadership pipeline, with greater gender, and functions. This facilitates and supports greater movement, nationality and cross-functional representation.
GLOBAL MOBILITY CONTRACTS Number of employees 2011–2017
moving ontorevitalise theSalesprogrammes in2018. Academy overhaul,withtheCompetenceDevelopmentteam Jotun willnowconcentrateoncontinuingthissuccessful career paths. focus onsupportingJotun’s growth strategyandindividual whole. Programme withaclearer contentwasalsomodernised, resulted insignificantcostefficienciesfortheorganisationasa in factoryenvironments. Lessofareliance trainers onexternal fromoperations managerslearning fellowoperationsmanagers and peer-based wasutilised,with,forexample, learning Jotun’s newonlinecollaborationsites.More practicalexercises assessments, andmovingcommunicationwithtrainersinto andself- incorporating toolssuchasnano-lessons,e-learnings preparatory activity. andpost-learning Projects included streamlined andenhanced,withlesstrainingdaysmore underwent acompleterevitalisation in2017.Bothwere Two ofitskeyareas, Operations&HSEQandManagement, between 3000and4delegateseveryyear. 38 programmes, witharound 360trainersinteractingwith global culture andsupportingitsgrowth. Itencompassessome employees. ”TheAcademyisavitalresource forbuildingJotun’s often referred toas“themostimportanttoolPenguinise 2017 markedawatershedyearfortheJotunAcademy, REVITALISING LEARNING and anon-goingcompetitiveadvantageforJotun. their skillsweinvestinourownfuture, creating talentedteams A businessisonlyeverasgooditspeople.Byinvestingin business strategyissupportedandempowered. tools are utilised,and,throughout allactivities,theGroup’s Best practicesare shared, structured programmes learning and personal andcollectivecompetencewithaunifiedapproach. Jotun worksacross allsegmentsandregions todevelop Development function. This allowsindividualstofulfiltheirpotential, sotheGroupcanfulfilits. Jotun investsinthecontinualdevelopmentofitspeople, building theirskillsthroughtheCompetence CHANGING FOR THE BETTER impact andqualityacross theentire globalorganisation. In thisway, allactivitiesare coordinated anduniform,maximising programme canbestored andaccessedhere. programmes worldwide,everythingatrainerneedstorun documents, templates,ideasandallresources foralllearning sites provide acommonandsecure area forJotuntoshare Similarly, newcollaborationsitesare nowused.These and effectiveness ofthisservicehasbeentransformative. facilitating courses,anddetailingdevelopments.Theefficiency interact inthesameplace,sharingrelevant information, individual emails,alldelegatesandtrainersnowgather onto asingleplatform.Ratherthansendingandreceiving communication relating todevelopment andtrainingtomove as acommunicationhubforemployees.Thisallowedall socialnetworkingservicewasintroducedA newinternal global competencedevelopmentin2017. 2016 enabledJotuntoexploitnewonlinetoolssupport The introduction oftheWorking Together digitalplatformin DIGITAL PLATFORM throughout thecompany –DigitalWorkplace trainingtoraisethelevelofdigitalskills Academy –PlanningtrainingaspartoftheOperationsandHSEQ –Level2trainingformanagerswithoutdirect reports • • • competence developmentoffering, including: In 2018Jotunwillcontinueinvestinginimproving its BUILDING COMPETENCE The launchof training The useofmore audiovisualelementsanddigitaltoolswithin modules targetedatallJotunmanagers The introduction of‘LeadershipBoosters’,half-toone-day
EMPLOYEES AND THE WORKPLACE 47 A CULTURE OF TEAMWORK
As a rapidly expanding global organisation, strengthening a culture of teamwork, respect and efficiency is critical to Jotun’s long-term growth strategy.
Over the past decade, Jotun’s workforce has increased To facilitate cross border cooperation, Jotun has invested in significantly, creating a truly multinational company with tools and systems specifically designed to bring the organisation employees representing different ethnic backgrounds, religions together. After the launch in 2005 the company has continued and business cultures. While Jotun views this diversity as a core to improve its ERP system. In 2016, Jotun launched the strength, the company recognises that to operate as an effective “Working Together” platform, a cloud-based collaboration and unified organisation across borders and time zones, it must tool that allows users to share information, network and continue to invest in tools and systems to strengthen a culture communicate seamlessly across borders. The company also of teamwork, respect and efficiency. offers a broad range of web-based competence development modules to ensure that employees in different countries all receive the same level and scope of training. OPERATING IN A GLOBALISED ECONOMY
In today’s globalised economy, where large projects often BUILDING A DYNAMIC WORKFORCE involve multiple stakeholders, Jotun has developed cross- border teams to manage specifications and work with project While IT tools are useful, Jotun also understands the role that stakeholders in different countries to tender for big contracts. face-to-face interaction plays in uniting the organisation. International teams within Performance Coatings segment In addition to organising both international and regional 48 track and manage global key accounts, while in the Decorative conferences, seminars and more informal work groups, Paints segment, global teams work with international architects employees are encouraged to apply for short-term assignments, and interior designers to generate interest in Jotun products. either intra-regionally or internationally. By developing global Likewise, the company’s network of regional R&D centres often teams to meet the demands of a globalised economy, investing work together (and in close cooperation with the Group R&D in IT tools to ensure the organisation operates on one platform, function in Norway), to share expertise, develop new products and circulating skilled personnel throughout the network, Jotun and evaluate raw materials. is in a stronger position to grow efficiently and create a highly skilled and unified workforce. EMPLOYEES AND THE WORKPLACE upon implementation. and bestpracticesthatare easytounderstandandeffective central tothisaim,providing well-defined requirements, tools both safetyandefficiency. TheHSEQManagementSystemis and spills,creating aworkenvironment withoptimumlevelsof The ultimatefocusofHSEQistoeliminateallincidents,fires course ofthelasttwoyears. noting thatthere hadbeencontinuous improvements overthe strategically importantbusinesselement,with71percent managers inoperationsconfirmedthatHSEQwasthemost A globalsurveyconductedinOctober2017among365 of ouralmost10000employees. training andawareness campaigns, HSEQistopofmindforall market where weare active.Through aprogramme ofon-going HSEQ ishighontheagendaofeveryJotuncompanyin STRATEGIC IMPORTANCE responsibilities, across 14different elements. level, whileensuringimplementationbydelegatingclear been tailored todeliveruniformlyhighstandards ataGroup all existingcompanysitesby1June2017.Thesystemhas rolled outacross 2016andfullyimplementedthroughout Jotun’s HSEQManagementSystemwasintroduced in2015, delivering tangiblebusinessbenefits. maintenance ofastrongsafetyculturethatprotectspeople, property andtheenvironment, while Jotun followsaglobal, mandatoryandfullyintegrated HSEQstrategy toensurethecreationand BAR RAISING THE competence andenhancesafety. high engagementwiththesystemandacommitmenttobuild self-assessment across theglobalnetwork ofsites,demonstrate results. Nevertheless,theaudits,andanon-going process of to continuallyimprove, meaningitisharder toachievethebest standards are higherthaneverbefore, matchingourambition reviews atJotun’s sitesinOmanandIndonesia.Theexpected 2017 sawthefirstauditsofsystem,withcomprehensive AUDITING EXCELLENCE Korea). Walkways (Indonesia)andTank (South FarmSafety Harnesses Examples ofbestpracticesinclude Fall Arrest System (UAE), diverse globalteamsimpactpositively ontheGroup asawhole. taps intopractical,grassroots operationalexpertise,whilethe detailing theirinitiativesandsharingknowledge.AssuchJotun can beaccessedthrough ashared platform,withcompanies sites androll themoutonagroup levelwasinitiated.Templates In 2017,aglobaldrivetoidentifybestpracticesfrom individual LEARNING FROMTHEBEST day-to-day operationsandbusinessperformance. ensures thatHSEQisn’t seenasan‘addon’,butisintegralto to support,measure andcontinually enhancestandards, Jotun By embeddingthecorrect attitude, and providing thestructure safety walksandthe5S/housekeepinginitiative. (promoting mandatoryandlocalinitiatives),toolboxtalks, surveys, localsafetycommitteemeetings,ICare campaigns Academy programmes, HSEdays,employee engagement initiatives, framework ofactivitiesthatincludese-learning understanding, participationandresults, Jotuncreates a to individualoperatorsworldwide.To ensure thecorrect mindset ofeveryJotunemployee,from Group Management HSEQ isfullyintegratedorganisationallyandcentraltothe WORLDWIDE ENGAGEMENT
EMPLOYEES AND THE WORKPLACE 49 SAFETY ALWAYS COMES FIRST
Different countries, different challenges, but the same stringent systems, procedures and standards. Jotun’s diverse operational facilities are united by a carefully maintained culture of safety.
Safety is a cornerstone of all Jotun operations. The Group BUILDING SAFETY IN MYANMAR continually develops and improves the management system that sets uniform global standards, while supporting individual Jotun refuses to compromise on safety. While constructing the operations in their efforts to address issues and improve new factory in Myanmar, the project team had to work hard to performance on a local level. communicate the benefits of our practices and convince local workers to comply with Jotun’s stringent safety standards. In 2017, safety at new Jotun facilities was a key focus, with factory projects entering the production phase in Russia, A multi-faceted approach was used, with the project team Myanmar, Malaysia and in the Philippines. on site every day to set a positive safety example and address challenge areas. Daily toolbox meetings with contractors highlighted required safety practices, while visual aids (such GETTING A HEAD START ON SAFETY as posters) on site used positive, simple messages to reinforce Jotun works hand in hand with local teams to ensure that understanding of expected standards. All staff conducted operational facilities can maintain optimal safety standards from induction safety training and were encouraged to maintain day one. New sites are constructed with safety at their hearts, standards, with dedicated awards schemes for ‘HSE employees built to the highest engineering standards, with 5S requirements of the month’. 50 now integrated within factory layouts, while facilities undergo a pre-operations assessment and HSEQ audit before start-up. The end result of this consistent, clear and structured approach to safety was a project completed on schedule, with zero lost A Jotun support team joins the local organisation to ensure time injury (LTI) recorded across almost 800 000 working hours. that all safety equipment, systems and procedures are fit for purpose, while identifying risk areas, such as hazardous areas, The Myanmar production facility was officially opened in fire-fighting capabilities and the control of static electricity. November 2017.
Once all criteria have been satisfied, the team stays in place for an initial production phase to oversee operations and verify safety standards. A further HSEQ audit is conducted one year
EMPLOYEES AND THE WORKPLACE after startup to ensure the maintenance of required standards.
LOST TIME INJURY RATE ABSENCE DUE TO SICKNESS Number of injuries resulting in more than one day absence Days of absence in per cent of number of days worked per million working hours – (H-value) for Jotun Group
2017 2016 2015 2014 2013
0 0.3 0.6 0.9 1.2 1.5 1.8 actions. Byaddressing unwantedoccurrence inthismanner ensure theincidentdoesn’t happenagain,andrequired corrective actionsthatwere taken,preventative actionsto study iscompiled.Thisdetailstheincident,itsroot cause, case For incidentswithhigh-riskpotentiala‘lessonslearned’ ensure thatallincidentsare reported, analysedandfollowedup. the riskforincidentsincreases. However, Jotunendeavoursto agrowing numberofpeople,productsWith andfacilities, OPPORTUNITIES TOLEARN improvement. needs ofourgrowing businesstoensure aprocess ofcontinual in nature, Jotun’s approach isalsoflexible,evolvingwiththe owned, administered andimplementedlocally. Althoughrobust procedures andrequirements ataGroup level,whichare then throughout ourglobalorganisation,communicating clear At Jotun,weworkhard tomanageandminimiserisk global workforce. improve standards, acknowledgeincidents andcreatethesafestpossibleworkingenvironmentforour Jotun iscommittedtoconstantlyrefiningitsprogramme ofinitiatives, proceduresandrequirementsto REDUCING RISK, STEPBY the riskofincidentsrelated tothe‘person-machine’ interface. In addition,theglobal‘ICare’ campaignwillfocusonreducing while furtherreducing operationalrisk. machine operations.Thisaimstofosterprideandresponsibility, they candothemselvestoensure reliable, efficientandsafe implementing thiswewillensure operatorsare aware ofwhat minor preventive maintenanceactions ontheirmachines.By a mindsetwhereby operatorsare responsible forconducting promote ‘operatordrivenmaintenance’.Thisaimstocreate will alsobeputonmaintenance,withanewinitiativeto implementation, andthe5Sinitiative.More emphasis to addressing risk,focusonHSEQManagementSystem In 2018,Jotunwillcontinuetofine-tuneitsapproach THE PATHAHEAD implement globally. Jotun mitigatestheriskofareoccurrence. We locallyand learn
EMPLOYEES AND THE WORKPLACE 51 52 ENVIRONMENTAL COMMITMENT ENVIRONMENTAL ENVIRONMENTAL COMMITMENT Ensuring environmental performance…56 Investing inprocessimprovements …58 GreenSteps forward… 54 Going green …59
ENVIRONMENTAL COMMITMENT 53 GREENSTEPS FORWARD
Global results require local focus. By ensuring that each one of our facilities maintains strict standards and reporting mechanisms, Jotun as a Group reduces waste, energy consumption and the impact of its activities on the environment.
Jotun GreenSteps is the platform upon which all our towards certification, which constitutes 10 per cent of the total environmental initiatives are built. With five key pillars, the points they need for the highest LEED award. Considering that programme gives a structure that defines our activities, guiding coatings typically represent only 0.5 to 2 per cent of overall what we do, who we do business with, and which high quality project cost, this is a highly efficient way to take a significant products we offer to our global customer base. step towards certification.
As a guiding principle, Jotun is focused on achieving more, yet At Jotun, we see it as our role to not only provide more consuming less. This means improving products and stakeholder environmentally responsible products, but also to educate our results, while reducing waste, energy use, emissions, our carbon customer base on the best way to utilise them to meet the most footprint, and the use of hazardous materials. stringent standards, creating buildings that are green, efficient and economical, today and tomorrow. This impacts positively on the business, with greater efficiency and reduced energy costs, while our increasingly STEPS IN 2017 environmentally aware customer base enjoy high quality products that help them meet regulatory requirements and Further GreenSteps activity in 2017 included 54 address their own carbon footprints. • reducing waste by 10 per cent per tonne of produced product over the last three years. This was achieved through Jotun’s focus on assisting customers achieve Leadership in a systematic approach including encouraging suppliers to Energy and Environmental Design (LEED) building certification re-use materials, cleaning and re-using water and solvents for demonstrates the company’s commitment to supporting more cleaning production equipment, and bulk-delivery of more environmentally sustainable building construction. raw materials. • reducing Jotun’s carbon footprint by five per cent over the past year, contributing to a total reduction of 20 per cent LEEDING FROM THE FRONT since 2013. This has been made possible through more Jotun satisfies a growing global demand for more efficient production facilities and processes. environmentally responsible building projects with the Green • implementing Jotun’s HSEQ management system, helping ENVIRONMENTAL COMMITMENT ENVIRONMENTAL Building Solutions offer. Created to provide global specifiers ensure increased focus and standardisation of sustainable and building owners with approved systems to meet local and best practices; making Jotun safer and greener. international environmental requirements, this green product range covers decorative, protective and powder coatings. STEPS AHEAD
As a globally respected certification programme, LEED is a In 2018 Jotun will focus on natural focus for green building projects. The scheme is growing • continuing to develop sustainable new products and solutions in popularity with around 80 000 projects currently either with less use of solvents and hazardous materials. certified or registered, from over 160 countries. Of these, major • the reduction of energy consumption through modern developing economies, such as China, UAE, Brazil and India are production facilities and equipment. recording the fastest growth in LEED certifications. • cooperating with environmental organisation Bellona to define areas that help Jotun and its customers to develop and Jotun caters for this market with products that assist building implement sustainable solutions. owners and developers achieve LEED certification. The right coatings can play a key role in helping them gain up to 11 points off theislandofRunde,Norway. Thegrid-connectedunitiscapableofsupplying10-15normalhouseholdswithcleanpowerforayear. energy company. InMay2017,Waves4Power celebratedthesuccessfulinstallationofabuoy, equippedwithawaveenergyconverter, Wave energyproject:Overthelastfewyears,Jotun(togetherwithotherpartners)hassupportedWaves4Power, aSwedish-basedclean 11 EMISSION SOURCE INTERNAL TRANSPORT 11 % ELECTRICITY 81 % ENERGY GENERATION 4 % EMISSIONS CHEMICAL PROCESS 4 % +481M (Kg CO EMISSIONS PERTONNEPRODUCED 2015 2016 2017 2 02 pertonne)forJotunGroup 04 06 08 0 100
ENVIRONMENTAL COMMITMENT 55 ENSURING ENVIRONMENTAL PERFORMANCE
Green is Jotun’s favourite colour. We are committed to utilising greener materials, production methods and product offerings, helping our customers improve their own environmental performance, and safeguarding the world around us.
Jotun is committed to continually improving its environmental energy kWh per tonne produced for liquid paints, and energy performance. The Group follows a long-term strategy that kWh per tonne produced for powder coatings. focuses on reducing waste while optimising energy efficiency. We identify best practices locally, such as installing light tunnels, The management and employees on each site are expected to solar panels and treating waste water on-site, and introduce own and participate in this environmental commitment, taking them internationally, while setting stringent standards on a part in activities such as site environmental risk assessments, Group level for all sites to follow. training and environmental compliance.
THE STRUCTURE TO SUCCEED WORKING TOGETHER
in 2015, the goal to reduce waste was formalised with the Achieving optimal environmental performance is an integrated roll out of Jotun’s HSEQ Management System, concerning part of Jotun’s daily operational objectives. This clear, simple environmental expectations, systems, reporting and support tools. and structured approach ensures that every facility, team and individual understands and positively contributes to achieving 56 This describes requirements to ensure the correct measures are our overall Group objectives. implemented to protect the environment locally, prevent spills and accidental emissions, handle waste effectively, and promote In 2018, Jotun will continue its drive to reduce waste, targeting energy efficiency and awareness. the use of less packaging, with, for example, increased raw material deliveries from tankers rather than in bags, and a push A central focus concerns the structure to support Jotun’s overall through the purchasing department to consider every purchase HSEQ targets, with clear key performance indicators (KPIs) in the context of product Life Cycle Analyses and, where reporting required from each site, namely, waste in kg/tonne relevant, Environmental Product Declarations. produced (%), total waste (hazardous and non-hazardous), ENVIRONMENTAL COMMITMENT ENVIRONMENTAL
HAZARDOUS AND NON-HAZARDOUS WASTE (Kg waste per tonne produced) for Jotun Group Non-hazardous waste Hazardous waste Objective/year
2017 2016 2015 2014 2013
0510 15 20 25 the opportunitytodisposeofrecyclablewasteinaresponsiblemanner. In 2017,JotunBrazilbegantoacceptrecyclabletrashatdesignatedbinsthefactory, providingJotunemployeesandlocalcitizens (Per tonneproduced) forJotunGroup ELECTRICITY CONSUMPTION 2013 2014 2015 2016 2017 03 06 09 0 120 150
ENVIRONMENTAL COMMITMENT 57 INVESTING IN PROCESS IMPROVEMENTS
Jotun has invested in equipment and systems to streamline the development, testing and production of solvent free paints and coatings.
Jotun has a long history of producing alkyd binders, which, Jotun also replaced an old pilot reactor with a new unit near the dependent on the product, can make up between 25-60 per company’s headquarters in Sandefjord to support more efficient cent of a paint’s total volume. While Jotun also has experience development of both wood protection products and antifouling with the binder emulsification process, capacity issues with marine coatings. The unit helps to streamline the development some external suppliers created the need to bring this process process by bridging the gap between bench-scale reactors in fully in-house. the laboratory and the high capacity 30-tonne capacity reactors used in the factory. The new reactor is more precise, flexible and reliable, helping Jotun chemists to get better results, faster. COST EFFECTIVE CONTROL
In 2017, Jotun opened an alkyd binder emulsion facility in its EMPOWERING PERSONNEL existing factory in Sandefjord. The new facility plays an important role in the production of exterior and some interior waterborne Jotun relies on skilled workers in both the factory and the wood protection products. As a leader in this specialised market laboratory to ensure it retains its edge in innovation. By making in Scandinavia, having full control of the binder production and significant investments in equipment and systems, Jotun emulsification process is critical for the continued success of empowers workers by giving them the tools they need to products like Trebitt, Optimal, Drygolin and Demidekk. At the succeed. These investments also support Jotun’s development 58 same time, the new facility enables Jotun to reduce costs related of solvent free waterborne paints, consistent with Jotun to certain raw materials and ensures a predictable supply. The GreenSteps policy. automated facility requires only one operator per shift and can process up to 30 tonnes of alkyd binders per day. Payback on the investment costs are expected within five years. ENVIRONMENTAL COMMITMENT ENVIRONMENTAL compounds. powerforpartsofitsjourney,have fullbattery forwhichitwill notgiveemissionsofharmfulgreenhouse gasesornitrogenandsulphur Jotun hasbeenselected toprovidecoatingstheworld’s largest plug-inhybridferry, builtforColorLineatUlstein Verft. can The ferry emits around 1000milliontonnes of CO most recent GHG(greenhouse gas)Study, maritimetransport According MaritimeOrganization’s totheInternational (IMO) PROTECTING THEENVIRONMENT underwater noiseandinvasivespecies. local andglobalregulations, coveringemissionstoair, water, to protect theenvironment hassupportedincreasingly strict manage theirfleets.Atthesametime,growing publicdemand the industrytorethink existingbusinessmodelsandhowthey ofunusualdepthandduration,forcinga cyclicaldownturn Over thepasteightyears,shippingindustryhasexperienced stricter regulationshavesparked agreenrevolutioninshipping. Increased focusonfuelefficiency, combinedwithgrowingpublicconcernsabouttheenvironmentand GOING GREEN consumption canbeattributedtopoorhullandpropeller reduce emissions,aboutonetenthoftheworldfleet’s fuel While theindustryisexploringabroad rangeofsolutionsto performance. significant stepstoimprove efficiency andenvironmental 60 millionperyear, apowerfulincentiveforownerstotake estimates, globalbunkerfuelcostscouldincrease byUSD cut from theexisting3.5percentnow inforce. Bysome sulphur limitof0.5percentbyJanuary1,2020,asignificant In 2016,theIMOannouncedimplementationofaglobal responsible forabout2.5percentofglobalGHGemissions. 2 annuallyandis help theindustryimprove environmental performance. technologies andworkinpartnershipwithkeystakeholdersto invasive species.Lookingahead,Jotunwillcontinuetoleverage coatings reduce bio-fouling,which prevents thespread of owners tomakemore informeddecisions. Inaddition,Jotun changes inship-specifichullandpropeller performance,helping 19030, whichprescribes practicalmethods formeasuring work group of53expertindustrystakeholderstocreate ISO and corresponding emissions.Jotun alsohelpedorganisea than 600vesselsworldwide,helpingownersreduce fuelcosts Performance Solutions(HPS)concepthasbeenappliedtomore performance. Andsinceitslaunchin2011,Jotun’s Hull the SeaQuantumrange),helpownerstoimprove environmental pioneering workwithsilyl-basedbinders(thetechnologybehind Jotun’s rangeofmarinecoatings,supportedbythecompany’s PART OFTHESOLUTION and incompliancewithexisting(andemerging)regulations. approach tosupportingownersseekingremain profitable supplier ofmarinecoatings,Jotunhastakenaproactive human generatedcarbonemissions.Astheworld’s leading performance, whichcontributestoaround 0.3percentofall
ENVIRONMENTAL COMMITMENT 59 60 JOTUN AND SOCIETY JOTUN AND SOCIETY JOTUN AND Setting therightexample …65 Sailing through time…63 On handtohelp…62 Playing our part …66
JOTUN AND SOCIETY 61 ON HAND TO HELP
We believe Jotun can be a force for global good, providing not just employment, high standards and tax revenue to the local communities where we operate, but also contributing to worthy causes and funding emergency aid where it’s most needed.
Jotun prides itself on operating as a responsible, global make the border crossing, were in dire need of humanitarian aid, corporate citizen. As such we believe we have a duty to help with the ICRC assuming a vital role as a first responder. the local communities where we operate, especially in times of acute difficulty. To assist the organisation in its efforts, Jotun donated funds to enable the building of a field hospital to treat members of this To ensure Jotun directs its resources to the people and causes vulnerable group. where it’s most needed, we work to establish long-term relationships with key charitable partners. This is done on SAVING LIVES AT SEA a local scale, with each company in the Group contributing a set percentage of turnover to external CR initiatives, and The Red Cross has been driving to raise funds for a new Search globally, by coordinating centrally with organisations such as the and Rescue (SAR) boat in the Sandefjord area since its former International Committee of the Red Cross (ICRC). vessel was decommissioned in 2014. Jotun’s gift of NOK 2.5 million enabled the organisation to finally reach its target, with a new vessel, christened RC Jotun. REFUGEE AID IN BANGLADESH 62 Hundreds of thousands of Rohingya Muslims fled from The advanced 40 foot long ‘Flying Fish’ vessel boasts a top Myanmar’s Rakhine State to Bangladesh in 2017 to escape violent speed of 38 knots and a range of specialist equipment to locate, unrest. This influx of refugees, many of whom walked for days to treat and provide assistance to those facing difficulties at sea.
“Jotun has, over a number of years, enabled the Norwegian Red Cross to respond in emergencies. Jotun´s long-term commitment, which is highly appreciated, makes a real difference to vulnerable people.”
JOTUN AND SOCIETY Bernt G. Apeland, Secretary General of the Norwegian Red Cross
RC Jotun will operate throughout the year, when the water is ice-free, from its base in Sandefjord. Christian Radich,oneofthe threeNorwegian tallshipssponsored byJotun. generations. Jotuntreats eachasan individualcustomer, quality products toensure theycontinuesailingthrough the The shipsrequire acombinationofcare, attentionand INDIVIDUAL ATTENTION expertise andconnectwithcommunitiesworldwide. toteachpupilsmaritime journeys also undertakeinternational Bergen (StatsraadLehmkuhl)andKristiansand(Sørlandet),but purpose. Today theyare basedinOslo(ChristianRadich), conceived astrainingvesselsandhavestayedtruetothat The ships,builtbetween1914and1937,were originally 1970s. Christian Radich,StatsraadLehmkuhlandSørlandetsincethe Jotun hasbeendonatinghighqualitymarineproducts tothe QUALITY CARE with theskillsandsensationsassociatedlifeatsea. supporters likeJotun,are connecting21stcenturyyoungsters built atthebeginningof20thcenturythat,thanksto Norway hasauniquetriooffloatingtreasures: Three tallships Three beautifulsailingships, onevitalmission; toeducateandinspirethenextgeneration ofseafarers. SAILING THROUGHTIME ONBOARD FORTHEFUTURE many more yearstocome. Lehmkuhl andSørlandet,everyonethatsailsuponthem,for We lookforward tosupportingChristianRadich,Statsraad performance. Itisamutuallybeneficial relationship. paint schoolsprovide valuableinsights intoourproducts and that helpsthemcutthrough thewaves, whileouron-board stakeholders. EverypupilonthevesselknowsitisJotun The supportJotunprovides alsodelivers benefitsforour for thesehistoricships. proud ofourinvolvementandthebenefits our products deliver tomorrow’s seafarers uniquetrainingopportunities.We are safeguarding giving thesespectacularvesselsand,in turn, is ourdutytopreserve thepastwhileenablingfuture, As agloballyleadingsupplierofmarineproducts wefeelit Jotun seesthisasbotharesponsibility andasource ofpride. solutions fortheirspecificneeds. ensuring theyhavethelatestandbestperformingcoating
JOTUN AND SOCIETY 63 64 JOTUN AND SOCIETY principles oftheUnitedNationsGlobal Compact;following high standards bychoosingsuppliersthatadhere tothe To support thiswehaveestablishedtoolswhereby wemaintain for ourselves,suppliersandallotherstakeholders. supply, achievingcompetitiveterms,and ensuringvaluecreation Our strategicpurchasing goalsare focusedoncontinuityof environment. suppliers andourcollectiveresponsibility tosocietyandthe approach topurchasing, settinghighstandards foritself, Jotun pridesitselfonastringent,structured andtransparent RESPONSIBLE PURCHASING rigorous standards, auditingtheirperformanceswhennecessary. on-going process ofevaluationtoensure suppliersmeetour of respect forhumanrightsasJotunitself.We engageinan Suppliers andcontractorsshouldmaintainthesamelevels exploitation ofchildren. good example,butalsovigorously oppose activitiessuchasthe human rightsonalocallevel,asweendeavourtonotonlyset Societies are strengthened bythecompany’s championingof collective bargainingare recognised andrespected. discrimination isprevented, andfreedom ofassociationand ensuring thatchildlabourandforced labourisprohibited, Declaration onFundamentalPrinciplesandRightsatWork, Employees are protected inaccordance withtheILO’s contractors. key groups: employees,localsocieties, andsuppliers Jotun’s structured approach toHumanRightsfocusesonthree POSITIVE ACTION Group’s expectationsregarding theirownconduct. Jotun are protected, whilealsobeingmadefullyaware ofthe (UNGP), thepolicyensures thatthoseworkingfor, andwith, with theUnitedNationsGuidingPrinciplesonHumanRights to adhere standards. tothemoststringentinternational Aligned Jotun hasaclearandembeddedhumanrightspolicydesigned is central totheseefforts. the localsocietieswhereweoperate. Maintainingandstrengtheningaresponsible purchasingfunction Jotun actstosupportandsafeguardtheHumanRightsofallitsstakeholders, fromouremployeesto SETTING THE RIGHTEXAMPLE BENEFITTING THEBUSINESS aids. 140employeespassedthrough theAcademyin2017. and usinganincreased numberof‘real life’scenariosastraining its Purchasing Academy, implementingnew strategicelements established asix-yearrolling forecast foraudits,andrefreshed In addition,in2017Jotunconducted102supplieraudits, • • • • stakeholders, including: There willbeamultitudeofbusinessbenefitsforJotunandits improving thestandardisation ofprocesses androutines. centralising datamanagement,optimisingspend,and a single,integratedandstrategicpurchasing platform, will roll outacross theorganisationin2018.Thiswillcreate for anupgradedEnterpriseResource Planningsystemthat purchasing function.In2017efforts centred onpreparations Jotun isconstantlyworkingtomaintainandimprove its practices. standards andsetnewbenchmarksforresponsible purchasing It isanapproach thatallowstheGroup toestablishuniform processes, principlesandourbehaviourtowards suppliers. guidelines withrespect topurchasing roles andresponsibilities, conforming totheJotunPurchasing Policy. Thissetsclear a long-termprogramme ofsupplierauditsandre-audits; and through proactive spendandcompliancemanagement Enhanced credibility andintegritytowards suppliers management andreliable transactionalreporting Better spendandcostcontrol through masterdata terms management, andtheautomateddistributionofcommercial process support,increased transparency, enhancedcontract Efficiency andcapabilityimprovement through better documentation ofsupplierandrawmaterialapprovals knowledge sharing,andsophisticatedprocessing and centralised datamanagement,process transparency, Improved riskmanagementandcompliancethrough
JOTUN AND SOCIETY 65 PLAYING OUR PART
Corruption is the scourge of industrial development and a key contributor to global poverty. Jotun is committed to combatting it at every level, in every region we undertake business activity.
A growing global business demands increased focus on ethical In 2017 Jotun has strengthened its approach, certifying trainers and compliant practices to maintain high standards. At Jotun in every region to lead and conduct classroom activities, rather we are dedicated to doing business in the right way, with the than delivering training from central resources. This greatly right people, delivering the right results and value for all our expands our reach, effectiveness and efficiency. Each trainer is global stakeholders. Enforcing a stringent and transparent provided with the same resources to deliver the same messages, approach to anti-corruption is central to this objective. thus ensuring global consistency and standards. Our aim is that dilemmas are replaced with a clarity of conduct, protecting Jotun sells its products in over 100 countries worldwide. This Jotun and everyone our business impacts upon. means some of our activities occur in cultures where corrupt practices are present. Regardless of local norms, we adhere OPERATING WITH OPENNESS to one uniform approach across the organisation, educating our employees on our clear expectations and uncompromising Jotun is committed to building a compliance programme that standards. both encourages and facilitates the reporting of corrupt, or potentially corrupt/high risk business practices. Our employees and stakeholders are our ‘eyes and ears’ on the ground and it is ACTING AS ONE essential they are empowered to highlight potential violations of 66 To enforce Jotun policy, we have created a strong anti- our policies, and/or laws and regulations. corruption platform, one that we build upon with new investments, programmes and activities every year. In 2017 we worked on stronger whistleblowing routines, refining our guidelines to enhance clarity and embedding them From day one, every Jotun employee is informed of our throughout the global organisation. Regional compliance teams expectations, with anti-corruption modules included in their have also been established to ensure each case receives the induction training. This is consolidated through e-learning attention it deserves, while safeguarding whistle-blowers.
JOTUN AND SOCIETY focused on enabling greater understanding and preparedness, access to established reporting channels, on-going classroom On a Group level, Jotun’s new compliance function has overall training, and business reviews whereby all companies regularly responsibility for our anti-corruption activities. report on anti-corruption activities. The Group consolidates this information into yearly reports, which are delivered to the Board TOGETHER WE’RE STRONGER of Directors. Jotun will continue to invest in and develop its anti-corruption From an individual employee perspective, dilemma training activities in 2018 and beyond. However, we recognise that forms a key part of their anti-corruption arsenal. This has been a corruption is an issue that demands a collaborative approach, focus area in 2017. rather than solely individual effort, and will work with our suppliers and stakeholders to help raise awareness and standards worldwide. UNDERSTANDING DILEMMAS
Classroom-based dilemma training is one of our most effective In addition, Jotun works alongside Transparency International to tools for building a culture of understanding and awareness support its campaign against corruption, while adhering to the relating to potentially corrupt business practices. Discussing United Nations Global Compact (UNGC) and contributing to a real-life and market adjusted scenarios with peers and certified sustainable and inclusive global economy. trainers ensures that participants gain a collective and informed understanding, allowing them to approach individual dilemmas with the confidence to do ‘the right thing’. individual principlesandnotingthepagesofthisreport where theyappear. This tabledetailshowJotunalignsitselfwiththeUNGCframework,listing business inaresponsible, ethicalandsustainablemanner. anti-corruption, providing companieswith10principlesthathelpthemconduct The UNGCfocusesonfourkeyareas -humanrights,labour, theenvironment and Principle 2: Principle 1: Principle 10: ANTI-CORRUPTION Principle 9: Principle 8: Principle 7: ENVIRONMENT Principle 6: Principle 5: Principle 4: Principle 3: LABOUR HUMAN RIGHTS make sure thattheyare notcomplicitinhumanrightsabuses. Businesses shouldsupportandrespect theprotection proclaimed ofinternationally humanrights;and For more informationontheGlobal Compactseewww.globalcompact.org Businesses shouldworkagainstcorruptionin all itsforms,includingextortionandbribery. encourage thedevelopmentanddiffusion ofenvironmentally friendlytechnologies. undertake initiativestopromote greater environmental responsibility; and Businesses shouldsupportaprecautionary approach toenvironmental challenges; the eliminationofdiscriminationinrespect ofemploymentandoccupation. the effective abolitionofchildlabour;and the eliminationofallformsforced andcompulsorylabour; collective bargaining; Businesses shouldupholdthefreedom ofassociationandtheeffective recognition oftherightto organization. of values,codesconductandanti-corruptionprogrammes coveringallofthe tolerance towards allformsofcorruptionandtoworkfortheimplementation As amemberofTransparency NorwayJotuniscommittedtozero International 40-41, 60-66 40-41, 60-66 PAGES 38-41, 66-67 14-25, 30-35,38-39,49,52-59 14-25, 30-35,38-39,49,52-59 38-39, 49,52-59 10-11, 40-49 10-11, 40-49 10-11, 40-49 10-11, 40-49
JOTUN AND SOCIETY 67 68 FINANCIAL INFO FINANCIAL INFO Executive summary ofthefinancial statement…76 Consolidated financial statements…71 Chairman oftheBoard …70
FINANCIAL INFO 69 CHAIRMAN OF THE BOARD, ODD GLEDITSCH D.Y.
A CHALLENGING YEAR
Jotun’s growing size and complexity has exposed the company to new risks, resulting in an increased focus on worker safety, environmental performance, organisational efficiency and a more rigorous approach to corporate governance.
70
Board of Directors, from left: Per Kristian Aagaard, Nicolai A. Eger, Richard Arnesen, Birger Amundsen, Odd Gleditsch d.y. (Chairman), Terje Andersen, Einar Abrahamsen and Karl Otto Tveter. FINANCIAL INFO In 2017, Jotun’s growth was slowed by weak markets for new The health and safety of Jotun’s workers remains a top priority construction of vessels and offshore installations. In addition, for the company. The Board continues to support all initiatives Jotun’s gross margins were impacted by increased prices of that safeguard the welfare of our employees; a level of care that critical raw materials. The Board is satisfied with how the extends to contractors hired by Jotun. For example, the Board company responded to these conditions, but sees room for was pleased that during the construction of Jotun’s new factory improvement in other areas. For example, Jotun’s 2017 profits in Myanmar, there were zero Lost Time Injury (LTIs) recorded have been impacted by a number of claims, first registered in across about 800 000 man hours of labour. The Board also 2016. The Board is confident that systems put in place will help actively encourages initiatives to reduce the company’s impact the company reduce risk for claims in the future. on the environment.
PRIORITY AREAS CONTINUED VALUE CREATION
Jotun’s growth strategy relies on effective project execution. Jotun’s remarkable growth over the past decade owes much The Board notes that three new factories built in 2017 to the skill and dedication of the company’s workforce, timely (Malaysia, Myanmar and the Philippines) were completed on investments in key markets, and an ability to adapt quickly to or below budget. The Board is satisfied with a more structured market conditions. In years with unfavourable circumstances, approach to corporate governance and compliance, consistent Jotun’s presence in different markets, segments and low debt with directives issued by the European Commission. The Board have helped mitigate financial risk, allowing the company is encouraged by management’s attention to governance to pursue a long-term approach to growth. While the Board issues, notably its efforts to implement a strong anti-corruption will welcome increased profitability in the years ahead, the programme that has been shared throughout the network. company’s financial position remains strong. Operating profit Depreciation, amortisationandimpairment Other operatingexpenses Payroll expenses Cost ofgoodssold Share ofprofit from associatedcompaniesandjointventures Operating revenue Total Non-controlling interests Equity holdersoftheparent company Profit fortheyearattributableto: Profit fortheyear Income tax Profit before tax Net financialitems Total Non-controlling interests Equity holdersoftheparent company Total comprehensive incomeattributable to: Total comprehensive incomefortheyear Other comprehensive incomefortheyear, netoftax Currency translationdifferences onnetinvestment inforeign operations Gain /loss(–)onhedgeofnetinvestmentsinforeign operations to profit orlossinsubsequentperiods: Other comprehensive incometobereclassified Actuarial gain/loss(–)ondefinedbenefitpensionplans to profit orlossinsubsequent periods: Other comprehensive incomenot tobereclassified Profit fortheyear (NOK THOUSAND) CONSOLIDATED STATEMENT OFCOMPREHENSIVEINCOME (NOK THOUSAND) CONSOLIDATED INCOMESTATEMENT FINANCIAL INFO
16 400998 –3 297110 –2 719204 –9 078415 1 354264 1 236179 –488 802 –438 609 –118 085 536 797 797 570 721 200 797 570 776 953 703 254 776 953 797 570 –20 618 –71 363 76 370 73 698 36 910 13 836 2017 2016 2017 2016
15 784604 –3 421406 –2 601717 –8 141537 1 762724 1 132221 1 107985 1 132221 1 593739 1 132221 –546 817 –461 518 –168 985 –478 911 –472 324 689 598 653 310 676 244 653 310 –22 934 –22 638 24 236 16 051
FINANCIAL INFO 71 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(NOK THOUSAND) 31.12.2017 31.12.2016
ASSETS Non-current assets Deferred tax assets 247 560 219 768 Other intangible assets 430 368 364 028 Property, plant and equipment 4 892 394 4 542 575 Investments in associated companies and joint ventures 1 615 654 1 766 487 Other investments 17 596 8 248 Other interest-bearing receivables 97 313 125 419 Total non-current assets 7 300 886 7 026 525
Current assets Inventories 2 575 763 2 041 432 Trade and other receivables 4 804 382 4 504 319 Cash and cash equivalents 1 027 165 1 586 034 Total current assets 8 407 310 8 131 786
Total assets 15 708 196 15 158 311
EQUITY AND LIABILITIES Equity Share capital 102 600 102 600 Other equity 7 973 640 7 783 384 Non-controlling interests 178 117 148 573 Total equity 8 254 357 8 034 557
72 Non-current liabilities Pension liabilities 214 721 225 461 Deferred tax liabilities 51 707 27 828 Provisions 35 711 33 980 Interest-bearing debt 2 044 291 2 357 102 Other non-current liabilities 35 465 34 465 FINANCIAL INFO Total non-current liabilities 2 381 895 2 678 837
Current liabilities Interest-bearing debt 1 109 173 877 352 Trade and other payables 1 913 476 1 693 379 Current tax payable 145 962 159 554 Other current liabilities 1 903 333 1 714 634 Total current liabilities 5 071 943 4 444 918 Total liabilities 7 453 838 7 123 754
Total equity and liabilities 15 708 196 15 158 311
Sandefjord, Norway, 6 February 2018 The Board of Directors Jotun A/S
Odd Gleditsch d.y. Einar Abrahamsen Birger Amundsen Terje Andersen Chairman
Richard Arnesen Nicolai A. Eger Karl Otto Tveter Per Kristian Aagaard Morten Fon President and CEO Cash andcashequivalentsasof31December Cash andcashequivalentsasof1January Net currency translationeffect Net increase /decrease (–)incashandequivalents Net cashflowfrom financingactivities Share capitalincrease inassociatedcompaniesandjointventures Dividend paidtonon-controlling interests Dividend paidtoequityholdersoftheparent Repayment ofborrowings Proceeds from borrowings Cash flowsfrom financingactivities Net cashflowusedininvestingactivities Purchase ofintangibleassets Purchase ofproperty, plantandequipment Proceeds from saleofproperty, plantandequipment Cash flowsfrom investingactivities Net cashflowfrom operatingactivities Tax payments Working capitalchanges: Adjustments toreconcile profit before taxtonetcashflows: Profit before tax Cash flowfrom operatingactivities (NOK THOUSAND) CONSOLIDATED STATEMENT OFCASHFLOWS Change ininventories Change intradepayables Change intradeandotherreceivables Change inaccruals,provisions andother Depreciation, amortisationandimpairment Dividend paidfrom associatedcompaniesandjointventures Share ofprofit ofassociatedcompaniesandjointventures
1 027165 1 586034 1 097172 1 236179 –553 896 –686 428 –513 000 –571 503 –964 640 –128 245 –839 011 –358 536 –534 331 –300 062 –536 797 491 512 220 098 182 267 488 802 699 553 –49 284 –44 153 –4 973 2 616 2017 2016
–1 126252 –1 029562 1 586034 1 520840 2 026933 1 593739 –591 320 –513 000 –299 413 –103 538 –244 166 –437 072 –100 153 –689 598 309 361 259 344 157 052 252 740 546 817 712 571 –38 250 –9 163 6 848 –
FINANCIAL INFO 73 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
ATTRIBUTABLE TO PARENT COMPANY EQUITY HOLDERS Non– Share Other Translation controlling (NOK THOUSAND) capital equity differences Total interests Total equity Equity as of 1 January 2016 102 600 6 306 009 1 314 133 7 722 741 209 757 7 932 497 Dividends –513 000 –513 000 –38 250 –551 250 Profit of the period 1 107 985 1 107 985 24 236 1 132 221 Other comprehensive income –41 176 –390 566 –431 742 –47 170 –478 911 Equity as of 31 December 2016 102 600 6 859 818 923 567 7 885 984 148 573 8 034 557 Dividends –513 000 –513 000 –44 153 –557 153 Profit of the year 721 200 721 200 76 370 797 570 Other comprehensive income 15 539 –33 485 –17 946 –2 672 –20 618 Equity as of 31 December 2017 102 600 7 083 558 890 082 8 076 240 178 117 8 254 357
74 FINANCIAL INFO FINANCIAL INFO 75 EXECUTIVE SUMMARY OF THE FINANCIAL STATEMENT FOR 2017
GENERAL mainly attributable to the increase in raw material prices. Jotun The consolidated financial statement consists of Jotun A/S and Group’s share of net result after tax in associates and joint 54 subsidiaries, three joint ventures in China and Korea and six ventures totalled NOK 537 million compared to NOK 690 million associated companies in U.A.E. and Saudi Arabia. Subsidiaries in 2016. The reduction is mainly attributable to higher raw are fully consolidated independent of shareholding, while joint material costs and continued weak shipbuilding and offshore ventures and associates are accounted for based on the equity markets in China and Korea. method and share of profit reported in the income statement based on actual shareholding. PROFIT FOR THE YEAR
The Jotun Group’s consolidated financial statement has been The profit for the year amounted to NOK 798 million, a prepared in accordance with International Financial Reporting reduction of NOK 334 million from 2016. Net financing charges Standards (IFRS) and interpretations as adopted by the decreased from 2016 mainly due to currency losses in Egypt last International Accounting Standards Board (IASB) and approved year, and net financial costs ended at NOK 118 million (2016: by the European Union (EU). NOK 169 million).
REVENUE INVESTMENTS
Operating revenue for the Group was NOK 16 401 million, up Total purchase of property, plant and equipment (PP&E) and four per cent compared to 2016. While the Decorative Paints intangible assets amounted to NOK 967 million for 2017 (2016: 76 and Powder Coatings segments continued to grow, revenues NOK 1 133 million), representing six per cent of operating in the Marine and Protective segments were impacted by lower revenue (2016: 7 per cent). Including investment activity in activity in the shipping and offshore newbuilding markets. associates and joint ventures, total investment in PP&E for In addition, sales were negatively impacted by a stronger production of Jotun-branded products was NOK 950 million. Norwegian krone. The largest investments relate to new production facilities in Malaysia, Myanmar and the Philippines, in addition to a new FINANCIAL INFO R&D centre and office buildings in Sandefjord, Norway. OPERATING PROFIT
Operating profit in 2017 decreased by 23 per cent to NOK Jotun Group’s share of total equity in associates and joint ventures 1 354 million compared to 2016, yielding an operating margin amounts to NOK 1 616 million (2016: NOK 1 766 million), and is of 8 per cent (2016: 11 per cent). The reduction in profit is reported as non-current assets in the balance sheet. equity isduetotheneteffect ofprofit fortheyearofNOK798 8 254million(2016:NOK035million).Theincrease intotal Total equityincludingnon-controlling interests amountedtoNOK SHAREHOLDER EQUITY line ofNOK100million,were allunused. At yearendthesecredit lines,inaddition toashort-termcredit well asastrategicreserve forshort-term financingoftheGroup. committed fundingservesasabackstopforcertificateloans Jotun A/ShasNOK800millionoflong-termcredit lines.This short-term andthrough localbanks. borrowingoutstanding. External inthesubsidiariesisprimarily in USDbankdebt,ofwhichNOK152millionwasshort-term, NOK 1000millioninlong-termbondsand987 Group’s relationship banks.Atyear-end 2017,JotunA/Shad are loansintheNorwegianbondmarketandfrom the was 1.1(2016:0.7).TheGroup’s mainsources offinancing operating profit before amortisationanddepreciation (EBITDA) 31 December2016,andnetinterest bearingdebtrelative tothe million atyear-end 2017compared toNOK1523millionasof The netinterest bearingdebtfortheGroup wasNOK2029 NET INTERESTBEARINGDEBT increase ismainlytiedtothesharpincrease inrawmaterialprices. December 2017from NOK4852milliontheprevious year. The Working capitalincreased toNOK5467millionasof31 WORKING CAPITAL profit. 2016 ismainlyduetoanincrease in workingcapitalandlower 1 097million(2016:NOK2027million).Thereduction from Operating activitiesin2017resulted inanetcashflowofNOK CASH FLOW employees atyearend2017(2016:9819employees). in jointventures andassociates,Jotunhadintotal9789 (2016: 6909averagefull-timeequivalents).Includingemployees related toitson-goingbusinessinJotunA/Sandsubsidiaries In 2017,JotunGroup hadonaverage6976full-timeequivalents WORKFORCE declared in2018. NOK 428millionwillnotberecognised inequityuntilfinally The proposed dividendforJotunA/S2017 amountingto of theyear, andremained unchangedcompared to2016. NOK 557million.Theequityratiowasat53percenttheend to currency translationeffects, anddividendpaymentsofintotal million, othercomprehensive incomeofNOK–21millionrelating
FINANCIAL INFO 77 Sales office Production and sales
COUNTRY COMPANY SHARE HOLDING %
ALGERIA Jotun Algerie SARL, Algiers 70 S
AUSTRALIA Jotun Australia Pty. Ltd., Victoria 100 P
BANGLADESH Jotun Bangladesh Ltd., Dhaka 100 S
BRAZIL Jotun Brasil Imp. Exp. & Industria de Tintas Ltda., Rio de Janeiro 100 P
78 BULGARIA Jotun Bulgaria EOOD, Sofia 100 S
CAMBODIA Jotun (Cambodia) Ltd., Phnom Penh 100 S
CHINA Jotun Coatings (Zhangjiagang) Co. Ltd., Zhangjiagang 100 P
Jotun COSCO Marine Coatings (HK) Co. Ltd., Hong Kong 50 S
Jotun COSCO Marine Coatings (Qingdao) Co. Ltd., Qingdao 50 P
COMPANY OVERVIEW COMPANY Jotun Paints (H.K.) Ltd., Hong Kong 100 S
Jotun (Shanghai) Management Co. Ltd., Shanghai 100 S
Jotun Coatings (Taiwan) Ltd. Company 100 S
CYPRUS Jotun Cyprus Ltd, Limassol 100 S
CZECH REPUBLIC Jotun CZECH a.s., Usti nad Labem 100 P
DENMARK Jotun Danmark A/S, Kolding 100 S
EGYPT El-Mohandes Jotun S.A.E., Cairo 70 P
FRANCE Jotun France S.A.S., Paris 100 S
GERMANY Jotun (Deutschland) GmbH, Hamburg 100 S
GREECE Jotun Hellas Ltd. Piraeus 100 S
INDIA Jotun India Pvt. Ltd., Pune 100 P
INDONESIA P.T. Jotun Indonesia, Jakarta 99 P
P.T. Jotun Powder Coatings Indonesia, Jakarta 100 P
IRELAND Jotun (Ireland) Ltd., Cork 100 S
ITALY Jotun Italia S.p.A., Trieste 100 S Uganda, Ukraine, Uruguay, Islands and Zambia. Virgin Qatar, Rwanda,Serbia, Seychelles,Slovakia, Slovenia,Solomon Islands,SriLanka, Sudan,Suriname, Switzerland,Syria, Tanzania, Trinidad &Tobago, Tunisia, Monaco, Montenegro, Mozambique, Namibia,Nepal,NetherlandAntilles, New Caledonia,Zealand,Nigeria, Panama,Peru,Portugal,PuertoRico, Iraq, Iran,IvoryCoast, Jamaica,Japan,Jordan, Kuwait,Latvia,Lebanon,Liberia,Lithuania, Luxembourg,Maldives,Malta,Marshall Islands,Mauritius, Congo, Croatia, Cuba,Domenican Republic, Ecuador, Estonia, Ethiopia,Faroe Islands,Fiji,Finland,Ghana,Guadeloupe, Guinea,Haiti,Hungary, Iceland, Bahrain, Barbados,Belarus, Belgium,Belize,Bosnia&Herzegovina, Botswana,BritishIndianOcean Territory, Brunei,Cameroon, Canada, Chile,Colombia, In additiontolegalcompaniesJotunhas branchoffices,agents,distributorsandlicenseesinAndorra,Angola,Argentina, Austria,Azerbaijan,Bahamas, In additiontothecompanieslistedabove, theJotunGroup alsoownsanumberofholdingandinactivecompanies.
P Production andsales Decorative Paints UNITED ARABEMIRATES RUSSIAN FEDERATION UNITED KINGDOM SOUTH AFRICA SOUTH KOREA NETHERLANDS SAUDI ARABIA KAZAKHSTAN SINGAPORE MOROCCO PHILIPPINES MYANMAR MALAYSIA THAILAND ROMANIA PAKISTAN NORWAY VIETNAM SWEDEN POLAND MEXICO TURKEY KENYA OMAN SPAIN LIBYA USA
S Sales office Marine Coatings Jotun KazakhstanL.L.P. Almaty Jotun KenyaLtd.,Nairobi Jotun LibyaJ.S.Co.,Tripoli Jotun (Malaysia)Sdn.Bhd.,ShahAlam Jotun PowderCoatings(M)Sdn.Bhd.,ShahAlam Jotun Paints(Malaysia)Sdn.Bdh.,Nilai Jotun Mexico,S.A.deC.V. Veracruz Jotun Maroc SARL/AU,Casablanca Jotun MyanmarCompanyLtd.,Yangon Jotun MyanmarServicesCo.Ltd.,Yangon Jotun B.V., Spijkenisse Jotun A/S,Sandefjord Scanox AS,Drammen Jotun PaintsCo.L.L.C.,Muscat Jotun Pakistan(Pvt)Ltd.,Lahore Jotun PowderCoatingsPakistan(Pvt)Ltd.,Lahore Jotun (Philippines)Inc.,Manila Jotun PolskaSp.zo.o.,Gdynia Jotun RomaniaS.R.L.,Otopeni Jotun PaintsOOO,St.Petersburg Jotun PowderCoatingsSaudiArabiaCo.Ltd.,Dammam Jotun SaudiaCo.Ltd.,Jeddah Red SeaPaintsCo.Ltd.,Jeddah Jotun (Singapore) Pte.Ltd.,Singapore Jotun PaintSouthAfrica(Pty)Ltd.,CapeTown Chokwang JotunLtd.,Kyungnam Jotun IbéricaS.A.,Barcelona Jotun SverigeAB,Gothenburg Jotun ThailandLtd.,Samutprakarn Jotun Boya San. ve Tic. A.S.,Istanbul Jotun BoyaSan.veTic. Jotun AbuDhabiLtd.(L.L.C.), Jotun PowderCoatingsU.A.E.Ltd.(L.L.C.),Dubai Jotun U.A.E.Ltd.(L.L.C.),Dubai Jotun Paints(Europe) Ltd.,Flixborough Jotun PaintsInc.,BelleChasse,LA Jotun Paints (Vietnam) Co.Ltd.,HoChiMinh City Jotun Paints(Vietnam) Protective Coatings Powder Coatings 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 80 62 98 49 40 40 50 95 52 47 42 S S S P P P S S P S S P S P P P P S S P P P P S P P P S P P P P P P P P
COMPANY OVERVIEW 79 March 2018
President and CEO Morten Fon
Group functions CFO Vidar Nysæther
Decorative Paints Performance Coatings Bård K. Tonning Geir Bøe
Powder Marine Protective Ram Ramnath Alfie Ong Tunc Kazancioglu
Middle East, India and Africa North East Asia Esben Hersve Biren Arora
South East Asia and Pacific West Europe Martin Chew Harald Hvalvik
Scandinavia East Europe and Central Asia 80 Stein Petter Lunde Sükru Ergün
Americas Bjørn Wallentin ORGANISATION
BOARD OF DIRECTORS CORPORATE ASSEMBLY
Odd Gleditsch d.y., Chairman Anders A. Jahre, Chairman Einar Abrahamsen Richard Arnesen d.y. Birger Amundsen Terje V. Arnesen Terje Andersen Kornelia Eger Foyn-Bruun Richard Arnesen Anne Cecilie Gleditsch Nicolai A. Eger Bjørn Ole Gleditsch Karl Otto Tveter Thomas Hammer Per Kristian Aagaard Truls Hvitstein Thomas Ljungqvist Ingrid Luberth Jens Bjørn Staff Espen Wiik
CREDITS
Copywriting: Alexander Wardwell and Alan Johnstone / Blue-C AS The paper used to print this report Design: Charlotte Jørgensen / Charlotte.no has the Nordic Eco-labeling - the Swan - Print: BK.no and is also approved by the PEFC Photo: Kevin Schafer (front cover), cover inside (Getty Images, Luth and Council (Programme for the Endorsement Scanpix), Morten Rakke Photography (p. 3, 24, 30-31, 32, 36, 38–39, 40 of Forest Certifications schemes). 42–43, 45, 48, 49, 58), Fredrik Solstad (p. 16, 51, 53, 57, 60-61, 64, 67), Jotun (p. 15, 20, 23, 27, 33, 55), Stephanie Pabico © Marky Images (p. 1, 13, 70), Line Klein (p. 2, 28–29), Fotolia (p. 68–69, 75), Jon Fjelstad (p. 3), iStockphoto (p. 8–9), Mango Loke (p. 11), Shutterstock (p. 19), Jon Erik Andersen (p. 34), Ibrahim Said Photography (p. 37), Ulstein Verft (p. 59), Stian Larsen (p. 62), Martin Lindholm (p. 63)
Jotun A/S P.O. Box 2021 3202 Sandefjord Norway jotun.com