Jotun A/S

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Jotun A/S

PO Box 2021
Sandefjord,
Norway
Telephone: (47) 33 45 70 00
Fax: (47) 33 45 72 42
Web site: http://www.jotun.com

Private Company
Founded: 1926 as Jotun Kemiske Fabrik A/S
Incorporated: 1972 as Jotungruppen (The Jotun Group)
Employees: 5,009
Sales: NOK 6.07 billion ($1.04 billion) (2005)
NAIC: 325510 Paint and Coating Manufacturing

Jotun A/S is one of the world's top producers of paints and coatings; the company ranks number ten worldwide, and is also the leading supplier of paints and coatings to the Scandinavian market. Jotun is active through four primary divisions: Jotun Coatings, including marine coatings and other protective coatings; Jotun Dekorative, which focuses on the decorative paint market in Scandinavia; Jotun Paints, which oversees the group's worldwide production of decorative paints; and Jotun Powder Coatings, which produces thermosetting coatings.

Based in Norway, Jotun operates through nearly 70 subsidiaries, operating nearly 40 production units, in Europe, Asia, North and South America, Africa, and Australia. In 2005, the company generated turnover of more than NOK 6 billion ($1 billion). Jotun remains a private company controlled by the founding family. Odd Gleditsch d.y. ("the younger"), the founder's grandson, is company chairman. Knut Almestrand serves as managing director overseeing the company's day-today operations.

FOUNDING A NORWEGIAN PAINT PRODUCER IN 1926

Odd Gleditsch already had a varied career when he founded Jotun in 1926. As a youth, Gleditsch had served aboard a processor vessel serving whale hunters in Antartica, and later worked on the hunting vessels themselves. In 1916, however, Gleditsch came ashore to begin work for a stockbroker. When that business went under in 1920, Gleditsch set up in business for himself, opening a paint supply shop. Gleditsch's shop also carried supplies for the local whaling industry, including marine paints for whaling vessels. Gleditsch quickly became an important supplier of paints to whalers in Tonsberg, Larvik, and Sandefjord.

By 1926, Gleditsch had decided that the shop would begin manufacturing the paint they sold. The opportunity came when the oil mill in Gimle, near Sandefjord, which supplied Gleditsch's shop with marine paints and other oil-based products, ran into hard times. Gleditsch gathered a group of investors to buy the ailing mill, founding a new company, Jotun Kemiske Fabrik A/S. The company was named after Jotun, a giant from Norse mythology, and the Jotunheimen mountains of Norway. Gleditsch became the group's first general manager.

From the start, Jotun focused on the production of quality paints. In support of its operations, the company acquired its own vegetable oil refinery, Vera Fedtrafeneri, in 1930. The expanded operation allowed the company to develop new paint types, and Jotun soon became known for its record of innovation. One of the first of the company's new products came after it acquired the patent for oil-based Arcanol in 1931. The product was highly successful and enabled Jotun to grow despite the disastrous economic climate of the time.

Gleditsch also displayed a keen commercial sense. In 1935, for example, the company launched a new paint line, called Femkronerslakken, or "five-kroner varnish." The new premium quality floor varnish was much more expensive than competing varnishes, yet Gleditsch wagered that its customers would be attracted to the high-quality of the product, reinforced by including the higher price in its name. The new product enabled Jotun to expand from its focus on the whaling industry into the far-larger consumer market.

Jotun beefed up its focus on developing its own innovative products in the postwar period when the company opened a new factory in Gimle. The facility also featured the group's own laboratory, staffed with a team of design engineers. The investment quickly paid off: by 1953, the company had launched a new thixotropic interior paint, called Fenom, which was a major technological advancement in the paint industry at the time. A thixotropic substance exhibited the property of becoming more liquid when shaken or stirred, then returned to its original state when allowed to stand, presenting an obvious advantage for the mixing of paints. Fenom helped transform Jotun into a leader in the Norwegian paint market. Fenom featured a flat, matte finish; in 1954, the group launched Fenolux, a glossy thixotropic paint. By 1959, the company had added Fenomix, a semi-gloss variant which outsold its predecessors.

MERGING FOR SURVIVAL IN 1971

Odd Gleditsch was joined in the family business by son Odd Gleditsch, Jr. The younger Gleditsch quickly steered the company toward an expansion on the international market. The group's first target was Libya, then a poor kingdom that promised to see a change in its fortune following the discovery of oil there in 1959. The first international Jotun production facility, called Libyan Norwegian Industrial Company, or Linoco (not to be confused with the Libyan National Oil Corporation), opened for business in 1962, and remained an important part of the company's operations into the 1980s. The North African facility provided a springboard for Jotun's expansion into the Middle East.

Toward the end of the 1960s, Jotun had begun to seek out further expansion opportunities. The group entered the coatings business for the first time in 1968. This rapidly became one of Jotun's major operations. In that year the company also entered the Southeast Asia market, establishing a subsidiary in Thailand. The company eyed expansion in Europe, and especially the United Kingdom, where it acquired Henry Clark & Sons in 1970. This acquisition positioned the company as a major supplier to the British shipping industry.

Intensifying competition and the growing number of competitors in Norway's paint industry had begun to put limits on Jotun's domestic growth into the 1970s. Gleditsch, Jr., who was by then in charge of the company, recognized that the cost of a price war among the country's paint companies would be detrimental to all. Gleditsch's reasoning was that not only would the companies themselves suffer, but the resulting financial difficulties would make them all attractive takeover targets for foreign paint producers seeking entry into the Norwegian market. In an effort to head off this possibility, Gleditsch entered talks with the country's three other major paint producers: Alf Bjercke, Fleichers Kjemiske Fabrikker, and De-No-Fa Lilleborg Fabrikker. These talks resulted in the merger of the three companies with market leader Jotun, creating a new company, A/S Jotungruppen, in 1972. Gleditsch himself took up the position of group chairman.

COMPANY PERSPECTIVES

Jotun A/S will enhance long-term competitiveness and financial performance through a responsible approach, attitude, and actions regarding Health, Safety and Environment.

The newly enlarged company then set a course for further international expansion. Jotun entered the United States, for example, in 1974, through its acquisition of marine coatings producer Baltimore Copper Paint Co. The following year, Jotun extended its reach into the Middle East, establishing a production subsidiary in Dubai. The company added a second Dubai plant, for the production of fiberglass pipelines, in 1977. In the meantime, Jotun had boosted its Southeast Asian presence with the opening of a production facility in Singapore and the launch of a second Thai factory, completed in 1978. Back at home, Jotun was hit hard by a fire that destroyed its main Gimle production facility in 1976. Although the company rebuilt its factory by April of the following year, its profits were affected by the tragedy, resulting in several years of losses.

During the 1970s, the company maintained its record of innovation, launching a new wood protection product, Demidekk Dekkbeis in 1973. Some 30 million liters of this product were sold before it was withdrawn from the market amid negative publicity in 1984. Broader success came from the 1975 launch of the group's long-life antifoulings system, Seamaster, which gave the company a strong entry into the international shipping market.

Jotun maintained its growth pace during the 1980s, in large part through targeting its international development. The company entered a number of new markets, including Saudi Arabia, Egypt, Oman, and Malaysia, in 1983 alone. The company left the U.S. market the following year, shifting its focus back to Europe. In 1985, Jotun added a second subsidiary in the U.K., and built a new factory there as well. The company also entered Turkey, acquiring that country's powder coatings producer Toz Boya. Also that year, Jotun added to its presence back home, buying up Oslo-based Scandia Kjemiske.

INTERNATIONAL LEADER FOR THE TURN OF THE CENTURY

Acquisitions remained a strong part of Jotun's growth through the 1990s and into the 2000s. The company extended its presence in the Middle East through the creation of a new coatings subsidiary in Dubai in 1990. Jotun also acquired Spain's Torné and Australia's Denso Dimet that year. One year later, Jotun added its first facility in South Korea, producing marine coatings, and opened a new paint factory in Turkey. The company also entered the Italian market, launching subsidiary Jotun Brignola, before branching out into the eastern European market, setting up a subsidiary in the Czech Republic.

Jotun's strong presence in the Asian region led it to expand into the vast Chinese market as well. In 1993, the company set up a joint venture with state-owned shipping group COSCO. Elsewhere in Asia, the company entered Indonesia in 1996 and Vietnam in 1997. The group's Middle East operations remained a fast-growing part of the group, with new subsidiary acquired or launched in Saudi Arabia. The company also moved into South Africa, establishing its subsidiary there in 1997.

At the end of the decade, Jotun moved to return to the North American market after an absence of some 15 years, buying up Valspar's U.S. and Canada-based marine paints business in 1999. One year later, the company raised its profile in the United States still higher, buying up that country's marine coatings producer PRS Inc. That year also marked the debut of a new tin-free antifouling, SeaQuantum. Also in 2000, Odd Gleditsch, Jr., retired, ceding the chairmanship to son Odd Gleditsch d.y. (d.y. meaning "the younger").

Faced with a difficult market in the early 2000s, Jotun restructured its operations, creating four primary divisions: Jotun Coatings, Jotun Dekorative, Jotun Paints, and Jotun Powder Coatings. Despite difficult market conditions, the company maintained its policy of investment, opening new plants in Dubai and Vietnam in 2004, and in India and Indonesia in 2005. Jotun showed little sign of slowing up at mid-decade: in early 2006, the company opened two new factories in China and Yemen. By then Jotun ranged among the world's top ten producers of paints and coatings.

KEY DATES

1920:: Odd Gleditsch opens a retail paint store and begins selling paint to the local shipping industry.
1926:: Gleditsch buys an oil mill and establishes the paint production company, Jotun Kemiske Fabrik A/S.
1935:: The company markets Arcanol, its first consumer-oriented product.
1951:: In-house research and development operations are established.
1962:: International expansion begins in Libya.
1968:: The company enters Thailand.
1972:: The merger of Norway's four largest paint producers creates Jotungruppen.
1983:: International expansion efforts continue with new subsidiaries in Egypt, Malaysia, Oman, and Saudi Arabia.
1993:: The company enters China through a joint venture with COSCO.
1999:: Jotungruppen acquires Valspar's U.S. and Canadian marine operations.
2005:: The company enters Indonesia and India.
2006:: New factories are opened in China and Yemen.

PRINCIPAL SUBSIDIARIES

Demidekk Optimal UtendØrsmaling AS; Drygolin Værbestandig Oljemaling AS; El-Mohandes Jotun S.A.E. (Egypt); Jotun GmbH. (Germany); Jotun Ltd. (Ireland); Jotun Sdn. Bhd. (Malaysia); Jotun Pte. Ltd.(Singapore); Jotun Ltd. (United Kingdom); Jotun Abu Dhabi Ltd. (L.L.C.); Jotun Australia Pty. Ltd.; Jotun B.V.; Jotun Coatings Co. Ltd. (Zhangjiagang, China); Jotun COSCO Marine Coatings Ltd. (Hong Kong); Jotun Danmark A/S; Jotun Do Brasil Ltda.; Jotun France S.A.S.; Jotun Hellas Ltd. (Greece); Jotun Iberica S.A. (Spain); Jotun Italia S.p.A.; Jotun Paints Ltd. (Hong Kong); Jotun Paints Co. Ltd. (Vietnam); Jotun Paints Co. L.L.C.; Jotun Paints Inc. (United States); Jotun Paints O.O.O. (Russia); Jotun Paints South Africa (Pty.) Ltd.; Jotun Polska Sp.zo.o. (Poland); Jotun Portugal Tintas SA; Jotun Powder Coatings AS; Jotun Sverige AB; Jotun Thailand Ltd.; Lady InteriØrmaling AS; P.T. Jotun Indonesia Paints & Chemicals; Scanox AS.

PRINCIPAL COMPETITORS

Akzo Nobel nv; ICI Paints; PPG Industries Inc; The Valspar Corporation; SigmaKalon Group bv; DuPont Performance Coatings; BASF Coatings AG; RPM International Inc; Deutsche Amphibolin-Werke.