The storm is over and the sun is begging to shine on Berger Paints Nigeria Plc as third-quarter profit surged and margins improved after a year of economic downturn undermined previous sales. The paint maker’s revenue suffered in the past as many state government and private companies struggled to meet obligations and had little to embark on an infrastructure project that could utilize its products.
This is on top of rising production caused by a severe dollar shortage that forced manufacturers to buy dollars from the inaccessible black market. However, Berger Paints has surmounted the aforementioned challenges, thanks to an uptick in constructions activities as the country exited its first recession in 25 years.
According to a recent report by the National Bureau of Statistics (NBS), the country’s GDP expanded by 0.55 per cent and 1.40 per cent in the first and second quarter, compared to a contraction of 1.60 per cent in the last quarter of 2016. The construction industry grew by 13 per cent in the second quarter, according to a recent report by the NBS.
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The above improved economic activities showed face in the numbers of Berger Paints as sales spiked by 25.48 per cent to N2.14 billion in September 2017 as against N1.70 billion as of September 2016. The paint makers’ net income surged by 477.30 per cent to N113.96 million in September 2017 as against N19.74 million the previous year.
However, Berger Paint’s continues to grapple with the rising cost of production brought on by scarcity/high cost of raw materials and high energy cost as the cost of sales increased by 22.94 per cent to N1.21 billion in the period under review. He continued rising cost of production is eroding profit margins as net profit margin, a measure of efficiency, fell to 5.73 per cent in the period under review from11.29 per cent as of September 2016.
Nigeria imports 60 per cent of paints dwindling local capacity while manufacturers of paints spent N600, 000 a month on diesel each year, according to Sulaimon Tella, former Chairman Paint Association of Nigeria (PMA). Berger Paints said that its backward integration programme could get a boost once the new plants commence operations.
The company is one of the leading manufacturer and distributor of paints and coatings in Nigeria. The company manufactures decorative, industrial, auto refinishes, wood preservers and finishes as well as marine and protective coatings to meet the need of its industrial, commercial and retail end users in the Nigerian market.
David Ibemere
