Berger paints outperforms peers as profit spikes

Berger Paint Plc said first quarter profit surged 697.26 percent, an impressive results that means the Nigeria company that manufactures and markets paint, surface coatings and allied products outperforms its peer rivals.

Profit was N 70.02 million in the first quarter of 2015, compared with N 8.78 million the previous year, the Lagos-based company said in an e-mailed statement on the NSEA. Sales increased 20.08 percent to N705.93 million as the company continues to overcome tough environment.

All other quoted paint makers tracked by BusinessDay fell off a clip as revenues and profits falter.

The impressive growth of Berger Paints may have been driven by a number of construction and housing projects going on in places like Lagos and Abuja. Analysts say the construction of tank farms for the storage of petroleum products, which requires coating, and a number of furniture works also going on in the country, are key revenue   drivers.

Despite the stellar performance by Berger Paints, the sector is still bedeviled by over-reliance on imported products, poor finance access, and high production costs, thus making it difficult for the industry to have a much better outlook.

Companies also spent a lot on diesel oil to power generators at factory as power from the grid are unreliable. This swells the cost of production.

While the industry is groaning under tough operating environment, industry analysts say there is light at the end of the tunnel as growth in oil and gas will bolster both top and bottom line performance of firms.

The local content act as it pertains to the oil and gas sector is set to stimulate the slowing paint industry. Local operators are increasingly being engaged by oil and gas companies for painting and coating of oil platforms, pipelines and vessels, thanks to the local content act.

Berger Paints spent less in generating each unit of products as cost of sales reduced to 52.70 percent in 2015 as against 64.04 percent last year.

Cost of sales increased by 1.06 N372.0 million despite huge production denting bottom line of most firms in Africa largest oil producer. Operating expenses were up by 10.97 percent to N215.34 million in 2015 compared with N194.05 million the previous year.   

The company is efficient in managing direct costs attributable to projects as gross profit increased by 57.98 percent to N333.92 million in 2015 from N211.36 million in 2014. Gross profit margin moved to 47.30 percent in 2015 as against 35.95 percent as at March 2014.

Net margin, a measure of profitability and efficiency jumped to 10 percent in 2015 compared with 1.49 percent in 2013. Earnings per Share EPS increased to 24k in 2015  from 4k last year.

Berger Paints total assets jumped 1.61 percent N2.52 billion in the period under review as against N2.48 billion last year.

The rapid urbanization driving the demand for housing and accommodation is expected to spur paint makers in Africa most populous and largest oil producers. This means Berger Paint is in growth spurt.

Berger paints share price closed at N10.68while market capitalization was N3.09 billion.

BALA AUGIE