Portland Paints, CAP, others drop 52% in profit

Four big brands in Nigeria’s coating and allied industry have reported 52 per cent drop in revenue, according to their half-year 2020 financial statements.

The companies are Chemical Allied Products, Meyer, Berger Paints, as well as Portland Paints and Products.

The companies’ H1 2020 results showed that cumulative revenues declined by 12.8 per cent from N7.4bn to N6.5bn in the review period, a fall largely attributed to the disruption to the trade segment and operations of the companies.

Individual analysis of the companies’ financial reports showed that Portland Paints recorded the biggest loss in revenue by 43.27 per cent from N1.36bn reported in H1 2019 to N771m in H1 2020.

CAP followed, slipping down by 10.71 per cent in revenue from N3.91bn reported in H1 2019 to N3.5bn in H1 2020.

Meyer dropped 34.82 per cent of its revenue from N604m reported in H1 2019 to N393m in H1 2020.

On the contrast, Berger paints’ revenue grew by 16.77 per cent to be the only company among the four with growth margin in the review period.

Given the current business reality of the paints and coatings industry in the country, marked by foreign exchange illiquidity as well as logistics and regulatory rigidities in importing raw materials, the profit margins of the companies were affected directly by the hike in input prices.

Berger, though reported 16.77 per cent growth in revenue, suffered a cost impact of raw materials on its operation along with increase in administrative expenses, which led to the fall in Profit After Tax by 72 per cent. The company had in the review period spent N812m on raw materials compared to N664m expended last year.

With revenue constrained, it is noteworthy that in the quest to make more sales, CAP and Berger relaxed their credit policies, which impacted on their trade and other receivables.

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