Berger Paints: Growing Shareholders’ Value Amid Challenges

Kayode Tokede

With the growing competition in the paints manufacturing sector, Berger Paints Plc has consistently rewarded shareholders with robust return on investment on the backdrop of prevailing foreign and domestic challenges.

The company in its latest 2023 audited result and accounts paid shareholders a dividend of N0.80 and N0.20 interim dividend as against N0.70 final dividend paid in the 2022 financial year.

The management noted that the decision to pay an interim dividend was made in recognition of the difficult economic circumstances and the continuing value erosion that makes an annual dividend less impactful.

The company had also paid shareholders N0.40 final dividend in 2021 and 2020 financial year, respectively, in justification of sustained growth in revenue that translated into impressive profit generation.

The 2023 financial year results of Berger Paints showed an impressive performance on top line and bottom line results even amid hike in cost of production, rising inflation and foreign exchange devaluation. In 2023, the company reported N7.9 billion revenue, 25 per cent growth from N6.33billion reported in the 2022 financial year.

Berger Paints’s sale of paints and allied products stood at N7.6 billon in 2023, about 23 per cent growth from N6.2billiion in 2022, while contract services was N363.8million in 2023, representing about 172.9 per cent growth from N133.33 million in 2022. Nigeria is the Group’s primary geographical segment as all sales in the current and prior year were made in the country.

The group’s cost of sales stood at N5.26billion in 2023, an increase of 22 per cent from N4.33billion reported in 2022. Gross profit increased by 35 per cent from N2.01 billion to N2.71 billion in 2023, a gross margin of 34 per cent vs 31 per cent in 2022In the year under review, total operating expenses stood at N2.09 billion as against N1.7 billion in 2022, increase driven by higher selling and distribution expenses. Operating profit stood at N751.28 million, an increase of 95 per cent from N386.02 million in prior year. Finance income was at N53.46 million in 2023 financial year, an increase of 209 per  cent from N17.32 million in 2022.

Profit generation

From the statement of profit or loss, Berger Paints announced N776.32million profit before tax in 2023 financial year, a growth of 100 per cent from N387.79 million in 2022, while profit after tax was at N445.33 million in 2023, about 113.4per cent increase from N208.67 million reported in 2022.Findings revealed that the company’s profit after tax increased to its highest in 2023 and it reflected significant increase in dividend declared.

With N445.33million profit generated in 2023 financial year, the company’s declared dividend was at N260.84mlliion as against N115.93 million in 2022.Total assets emerged stronger  The group total assets stood at N6.6 billion in 2023 financial year, about 19 per cent increase from N5.53 billion in 2022.Working capital remained positive in the year, increased from N955 million to N1,638 million. Total equity increased to N3.51 billion in 2023, from N3.32billion reported in 2022 financial year.

What is sustaining Berger Paints performance ?

Berger Paints Nigeria has over the years sustained its growth momentum as the management has  always placed innovation, integrity, quality of products and services and the provision of a vast product range at the top of its priorities.

Berger Paints Nigeria is keen on research and development which has resulted in its being known for pioneering new products and setting the pace in the paints and allied coating sector. An example of such specialty products is Berger Fire Retardant Texcote, a textured finish which has been very successful and has been adopted as the generic term for textured paint in Nigeria.

Another first of its kind product in the Nigerian market is Berger Rufhide, a wall putty with superior adhesive strength and capability over other screeding materials. Another  well-known brands such as Luxol and Superstar continue to have their loyal clientele and enjoy extreme popularity across Nigeria today. The company has outlets (Colour World, Colour Mart) strategically positioned across the geo-political zones which have ample supply of BPN products for immediate purchase or supply. These outlets are managed by ‘business partners’ with well- trained staff, having capability to provide technical evaluation and professional consultation services to corporate and private clientele.

In order to improve customer experience, each Colour World is equipped with ultra-modern colour tinting machines, colour development software and skilled technical personnel with the capability to produce customized colours in sizeable quantities personalized to meet the unique needs of the customer.

Management’s View

The Chairman, Berger Paints, Mr. Abi Ayida stated that 2023 was characterised by an unprecedented shortage of foreign exchange from the Central Bank which persists to date.

He said, “This adversely affected our ability to conduct efficient supply chain management and led to the highest rise in input costs in any 12-month period in our Company’s history. I am pleased to report that we were up to the challenge and the investments we have made in our human capital enabled the strategic agility required to successfully navigate and adapt to the new structural landscape. Our results are testament that we are on the right track to emerge as a more nimble and efficient Company for the challenges ahead. To buttress and sustain our position in the market, improve efficiencies and performance of the business into the future, a number of initiatives are being implemented.”

He noted that the N1.00 dividend payout was the first in the company’s history and was intended to improve investor confidence and the value of holdings.

On market position, he said “In the face of market uncertainties, Berger Paints Nigeria maintained its position as a leading player in the paints and coatings industry. Our relentless commitment to innovation, product quality, and customer satisfaction has not only fortified our market presence but also empowered us to seize new opportunities for growth. Currently, Berger Paints operates within the premium and super-premium segments of the market.“To adapt to evolving consumer preferences and capture the attention of younger demographic groups aged 25 to 45, we have undertaken strategic rebranding initiatives. These efforts are aimed at making our offerings more appealing to this target audience. Despite prevailing market challenges, our latest revenue figures indicate that we have increased our market share. To ensure sustained growth and business resilience, we rely on these five key pillars: product innovation, market expansion, operational efficiency, customer experience and strategic partnerships “

The Group Managing Director, Bergar Paints,   Mrs. Alaba Fagun, stated that the performance was a testament to synergistic collaboration between the workers and the company’s strategic vision.

According to her, the management deployed a harmonious blend of financial acumen, operational resilience, and strategic foresight, “while looking forward to building upon these accomplishments, fostering sustainable growth, and delivering enduring value to our esteemed shareholders. “

“Beyond the quantitative achievements, our success story in 2023 was intricately woven with qualitative advancements, which is a testament to the synergistic collaboration between our adept workforce and the strategic vision set forth by the leadership,” Fagun explained.