Berger Paints Nigeria Plc (NSE: BERGER) reported 16.77% growth in revenue for the half year ended 30 June, 2020 and followed this up with a 71.79% decline in profit after tax. This is according to the unaudited second quarter report released to the Nigerian Stock Exchange and the investing public.
With increases in both the company’s revenue stream; Sales of paints and allied products up from N1.525 billion to N1.693 billion, and contract services revenue up from N39.984 million to N134.995 million, BERGER reported a total revenue of N1.828 billion up 16.77% from N1.565 billion reported in H1 2019.
A 31.82% increase in the cost of sales, brought about a reduction of the company’s gross profit and ultimately a reduction in the gross profit margin to 39.10% down from 46.05% reported for the same period in 2019.
Administrative expenses (N523.512 million), other selling and distribution expenses (N117.322 million), and finance cost (N40.044 million) all increased over the 6 months period, thus erasing the revenue increase, with the resultant effect being a decline in the profit after tax.
Profit After Tax of N41.092 million was reported by the company, 71.79% lower than the N145.648 million reported in H1 2019. This represents a net profit margin of 2.25% (H1 2019: 9.30%).
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A review of the balance sheet shows that the company still possess a solid financial position, with 58.25% of its asset being financed by Shareholders equity. The changes in total assets, total liabilities and total equity were all in single digits.
The statement of cash flow further enhances the company’s finances, as the net cash generated from operating activities increased from minus N56.330 million in H1 2019 to N99.657 million in H1 2020.
With lesser investment in the purchase of property, plant and equipment, the net cash used in investing activities decreased from N71.359 million in H1 2019 to N61.362 million in H1 2020. Reduced dividend payout in 2020 caused a reduction in the net cash used in financing activities, from N207.457 million in H1 2019 to N97.796 million in H1 2020.
The second period, April to June was particularly hard on the company’s finances, as it reported a loss of minus N37.364 million. This is a 161.04% decline from the N61.214 million profit reported in the second quarter of 2019.
Commenting on the impact of Covid-19 pandemic on the company, the company stated below in the financial report;
“For the Company’s 30 June 2020 interim financial statements, the impact of the Coronavirus outbreak and the related impacts have not been fully considered. Consequently, there is no impact on the recognition and measurement of assets and liabilities. Due to the uncertainty of the outcome of the current events, the Company cannot reasonably estimate the impact these events will have on the Company’s financial position, results of operations or cash flows in the future.
“Except as disclosed above, there are no other significant events after the reporting period which could have a material effect on the financial position of the Company as at 30 June 2020, and its financial performance for the period then ended, that have not been adequately provided for or disclosed in these financial statements.”
Berger Paints Nigeria Plc (“the Company”) was incorporated in Nigeria as a private limited liability company in 1959 and was converted to a public liability company in 1973. Its registered office address is at 102, Oba Akran Avenue, Ikeja Industrial Estate, Ikeja, Lagos. The Company is listed on the Nigerian Stock Exchange.
The principal activities of the Company continues to be the manufacturing, sale and distribution of paints and allied products throughout the country and rent of investment property.
Analysts at Investogist have a BUY rating on BERGER within or below a fair value range of N4.70 – N5.65.
