ANNUAL REPORT 2020 Our 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 Contents INTRODUCTION Group key figures 02 RESPECT Jotun at a glance 04 Four segments 05 Value differences in people Regional highlights 06 Be honest and fair Build diverse teams across culture and gender BOARD OF DIRECTORS Follow laws and regulations Chairman of the Board 08 Treat others the way they expect to be treated Directors’ report 09 JOTUN GROUP Consolidated income statement 16 Consolidated statement of comprehensive income 16 Consolidated statement of financial position 17 Consolidated statement of changes in equity 18 Consolidated statement of cash flows 18 Notes for the Group 19 JOTUN A/S Income statement 52 Statement of comprehensive income 52 BOLDNESS Statement of financial position 52 Statement of changes in equity 53 Take initiatives to create the future Statement of cash flows 53 Initiate and nurture change Notes for the Parent Company 55 Communicate openly, honestly and with integrity Be proactive AUDITOR’S REPORT 68 Address difficulties constructively BOARD OF DIRECTORS AND CORPORATE ASSEMBLY 70 Introduction Group key Profitability figures (NOK MILLION) 2020 2019 2018 2017 2016 2015 2014 2013 27.2 % Return on capital employed Profit/loss Operating revenue 21 070 19 652 17 660 16 401 15 785 16 282 13 171 12 034 Sales revenue outside Norway, in % 89 89 88 88 88 88 85 83 Operating profit 3 489 2 320 1 361 1 354 1 763 2 064 1 314 1 258 Profit before tax 3 158 2 079 1 115 1 236 1 594 1 918 1 301 1 191 23.0 % Net cash flow from operating activities 3 272 2 448 1 018 1 097 2 027 1 500 919 819 Return on equity Year-end financial positions Total assets 20 574 19 136 16 715 15 708 15 158 15 187 13 300 10 799 Investments in intangible and fixed assets 1 407 1 464 1 089 967 1 133 922 911 733 Equity (including non-controlling interests) 11 128 9 584 8 469 8 254 8 035 7 932 6 739 5 515 16.6 % Equity / assets ratio, in % 54.1 50.1 50.7 52.5 53.0 52.2 50.7 51.1 Operating margin Number of employees in the Group. including 100 % in associates and joint ventures 9 855 10 007 9 872 9 789 9 819 9 842 9 676 8 991 Profitability Return on capital employed, in % 27.2 18.7 12.2 12.8 17.9 20.9 15.1 17.9 Return on equity, in % 23.0 17.2 8.1 9.8 14.1 17.9 14.0 15.5 Operating margin, in % 16.6 11.8 7.7 8.3 11.2 12.7 10.0 10.5 2 I Jotun Annual Report 2020 3 I 3 600 3 000 2 400 1 800 1 200 600 0 EBITA (NOK MILLION) 24 000 20 000 16 000 12 000 8 000 4 000 0 Sales Jotun Annual Report 2020 2020 2019 2018 2017 2016 2015 2014 2013 2012 Sales and EBITA development 2011 2010 2009 Introduction 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 Operating margin 1989 1988 16.6 % 1987 1986 1985 1984 1983 1982 Return on equity 1981 1980 23.0 % 1979 1978 1977 1976 1975 1974 1973 1972 Return on capital employed 27.2 % Introduction Jotun at a glance SCA Scandinavia The Jotun Group is a matrix organisation EECA East Europe and Central Asia with sales of Decorative Paints and WE West Europe Marine, Protective and Powder Coatings organised into seven regions. NEA North East Asia The company has 38 production facilities MEIA Middle East, India and Africa in 23 countries, with 67 companies in 47 countries, and represented in more than AM Americas 100 countries overall around the world. SEAP South East Asia and Pacific Pese CEO 100 + ortn on Countries CFO Gu us idr tr Deae Pas Peae Cas 38 rd onnin rtin Factories Pe Mae Pee tin ttr und Tunç Kazancıoğlu SCA SEAP MEIA NEA WE EECA AM 9 855 r rnn orut uu n r rrn uno rd i ru rn rn ntin Employees 4 I Jotun Annual Report 2020 Introduction MARINE COATINGS 39 % Jotun is the market leader in high Four Newbuilding performance hull coatings for 33 % segments the maritime industry, delivering Sales DryDock high quality coatings for seastock, 22 % newbuilding, tanks, cargo holds and SeaStock drydocking projects, as well as for 6 % megayachts and leisure yachts. Other PROTECTIVE COATINGS 29 % Infrastructure Jotun delivers high quality protective * 25 % Total sales coatings for on- and offshore oil and per segment HPI gas, energy and infrastructure projects Sales 17 % including passive fire protection, metallic Energy finishes, high temperature coatings and 12 % state-of-the-art anticorrosive protection. Offshore 17 % Other 26 % Marine Coatings POWDER COATINGS 42 % 26 % Jotun Powder Coatings is a leading General Industries Protective Coatings supplier to companies active in industries 30 % related to building components, general Building Components 8 % Sales industries, pipeline and appliances and 7 % Powder Coatings furniture. Pipeline 40 % 21 % Decorative Paints Other * Incl. 100 % of sales in associ- DECORATIVE PAINTS ates and joint ventures Jotun Decorative is a leading paint 49 % supplier to commercial buildings, public Interior buildings and homes, serving both 47 % Sales professionals and consumers, directly Exterior and through a substantial network of 4 % Jotun Multicolor centres. Other Jotun Annual Report 2020 I 5 Introduction SCANDINAVIA Regional • Jotun completed the installation of high speed, 1974 fully automated filling lines at its factory in Norway. 1969 highlights Year of establishment Further upgrade of the production facilities will Year of establishment continue in 2021. 202 • Jotun posted record high sales and profitability 794 Employees in the Decorative Paints segment in Scandinavia, Employees with all companies exceeding 20 per cent growth. AM Jotun increased its market share, won the loyalty of WE 1 professional customers and secured more contracts 3 Factory in the project market than ever before. Factories • Marine Coatings secured frame agreements for SeaStock solutions covering 150 vessels, supplied products for 22 DryDock projects for Grieg Star AMERICAS and GearBulk and secured six Hull Performance WEST EUROPE • Jotun Mexico supplied products to the Siervo de Solutions (HPS) contracts with Höegh Autoliners • Jotun approved seven powder coatings application la Nacion bridge project, a 14.5 km urban viaduct • Jotun Protective Coatings secured two major companies, which are now certified to use Jotun over Mexico City’s Gran Canal boulevard to link the Floating Production, Storage and Offloading Facade products through the Jotun Approved northern side of the capital with the Naucalpan- (FPSO) refurbishment projects at the Aibel yard Applicator programme (JAA). Ecatepec highway. in Haugesund and Rosenberg Worley yard in • In Italy, Jotun secured its first Hull Skating Solutions • Jotun Brazil supplied protective coatings for 216 Stavanger. newbuilding contract with MSC, one of Europe’s wind towers in 2020 and secured a record-breaking • Jotun Powder Coatings found success with the largest shipping companies. 256 contracts for wind towers, scheduled for Velvet Collection, supplying products to Hay, a • Jotun strengthened its Hull Performance Solutions delivery in 2021. leading Danish furniture manufacturer, for their (HPS) and SeaQuantum X200 customer portfolio by • In the US, Jotun has taken a sizable market newly launched Hay Hee furniture collection. adding high profile shipping companies in the UK, share supplying high-performance antifouling Ireland, France and Cyprus. systems and has joined the rest of the Jotun • Jotun supplied products, including Steel Master Marine Coatings network in offering high-quality 1200WF and Hardtop XP, to a fuel cell battery underwater hull inspections for analysis and factory expansion project in Wroclaw, Poland. valuable decision support services. 1926 • In Spain, Jotun Iberica secured the Saint Brieuc • Jotun increased sales in the Americas for Passive Year of establishment Offshore Wind Farm project. Fire Protection solutions (Jotachar and Steelmaster) for both hydrocarbon and cellulosic protection. 1 144 Employees SCA 2 Factories 6 I Jotun Annual Report 2020 Introduction EAST EUROPE AND CENTRAL ASIA NORTH EAST ASIA • All segments ended the year with profitable • Positive development in North East Asia was growth, increasing sales by 25 per cent. 1962 supported by sales growth, good cost control and 1968 • Jotun secured many prestigious Single Source Year of establishment favourable raw material prices. Year of establishment Solution projects, including the Istanbul • In Marine Coatings, Jotun maintained its leading International Financial Centre and the Haliç Port 2 707 market position due to the strong performance 2 205 project. Employees in China and South Korea. In South Korea, Jotun Employees • Jotun Powder Coatings achieved record sales signed a Memorandum of Understanding with and profitability due to the increased number of MEIA Hyundai Heavy Industries shipyard and HMM (a SEAP customers and high market penetration through 13 leading containership company) to implement Hull 11 Jotun’s dealer network. Factories Skating Solutions. In China, Jotun increased activity Factories • Jotun Turkey completed the digital launch of a in the drydocking market by 14 per cent. Corporate Responsibility (CR) programme to create • Jotun delivered a record year in Protective Coatings a forest of 15 000 native plants and raise awareness thanks to developments in the Energy concept. about climate change. MIDDLE EAST, INDIA AND AFRICA Jotun also secured its first-ever megaproject SOUTH EAST ASIA AND PACIFIC • Jotun Romania secured a contract to supply • Launched Jotashield Carbo, a product with unique from Sinopec, a leading Chinese petrochemicals • Jotun celebrated the successful launch of Essence protective coatings to the “Braila”, the longest anti-carbonation properties, developed and tested company.