Orkla ASA — Earnings Release 2021

Feb 10, 2022

Jotun is one of the world's leading manufacturers of decorative paints, marine, protective and powder coatings. The Group has 67 companies and 39 production facilities on all continents, and 9 900 employees. Jotun products are available in more than 100 countries through own subsidiaries, joint ventures, associates, branch offices, dealers and distributors. The Jotun Group's sales in 2020 was NOK 21.1 billion. The Jotun Group is organised into four segments and seven geographical regions, and has its head office in Sandefjord, Norway

Quarterly Update – Q4 2021 Solid sales growth, while profitability eased for Jotun 10 February 2022

In advance of Orkla's quarterly report for Q4 2021 and the announcement of the Jotun Group's annual results for 2021 on 15 February 2022, Jotun reports the following developments in Q4 2021:

• ✓ Solid sales growth driven by increased sales prices and positive development in all segments
• ✓ Lower profitability due to significant increase in raw material costs
• ✓ Continued uncertainty in outlook

Operating income

The positive sales development continued in the fourth quarter of 2021 with reported sales growth of 10 per cent compared to the same period last year. Adjusted for negative currency translation effects due to a stronger Norwegian krone, the underlying sales growth was 15 per cent.

The strong underlying growth is primarily driven by increased sales prices to compensate for the sharp rise in raw material costs over the past 18 months. This contributed to sales growth in all segments compared to the same period last year.

Sales growth was strongest in Protective Coatings and Powder Coatings due to positive development in all regions. Decorative Paints also delivered good growth, mainly driven by a significant increase in sales in Southeast Asia and Turkey. Marine Coatings is still affected by the cyclical downturn in newbuilding activity, but increased sales in maintenance markets contributed to growth also in this segment.

Operating profit

Operating profit fell in the fourth quarter as a result of reduced gross margins. Raw material prices increased nearly 60% through 2021, which negatively impacted profitability.

To counter the extraordinary increase in raw material prices, all segments have implemented price increases as well as cost control initiatives. This has contributed to reducing the decline in operating profit, but further price increases are required moving forward.

Outlook

Despite lower operating profit in the fourth quarter, Jotun expects to achieve the second-highest results ever in 2021. Furthermore, Jotun has entered the new year with positive sales momentum and expects to deliver continued growth in 2022.

The corona-situation and imbalances in supply chains for raw materials continue to pose challenges. While raw material prices are expected to be more stable in the coming period, continued pressure on gross margins is anticipated due to the sharp increase in raw material prices in 2021.

Jotun maintains its growth strategy and is well-positioned for continued profitable growth despite the pandemic.

Financial key figures (NOK million)	Oct. – Dec. 2021	Oct. – Dec. 2020	Change
Operating profit	370	626	-40.8%

For further information:

Morten Fon, CEO. Mobile +47 909 19 822 Christian Espolin Johnson, Group Communications Director. Mobile +47 976 45 494