Pre-tax profits climb 12 per cent to Kshs.224 million on improves sales and efficiencies
Thursday, May 2, 2013: Crown Paints has announced a 15 per cent increase in turnover for the year ended 31 December 2012, buoyed by rising demand for new products especially in the premium category, as well as enhanced efficiency in operations.
Increased domestic demand for paint products as well as sustained expansion into the regional market saw the company’s turnover cross the Kshs.4 billion mark, in line with its strategy of growing revenue to over Kshs.5 billion.
The paint manufacturing firm, which is listed at the Nairobi Securities Exchange, also registered a 12 per cent growth in pre-tax profits. Turnover increased from Kshs.3.8 billion in 2011 to Kshs.4.4. billion last year. Profit before tax rose from Kshs. 200,539,000 to Kshs.224,170,000.
Crown Paints CEO Rakesh Rao attributed the impressive results to aggressive sales and improved efficiencies that saw the company’s cash flows improve significantly from Kshs. 301 million to Ksh 405million during the same period.
“We managed to grow our sales by about 10 per cent last year despite the high-interest rate environment. In addition, year-on-year growth has ranged between 40-50 per cent hence the rise in turnover,” said Rao.
Rao said the paint industry had become very competitive as evidenced by increased pressure on margins. “The industry is very competitive from a price perspective. Last year, we reduced prices by 5 per cent. However, our focus on introducing new, innovative products into the market is paying off. We are optimistic about the future,” he said.
In April, Crown Paints introduced Medicryl Silk Emulsion, a unique coating solution with anti-bacterial properties and is suitable for hospitals, schools, kitchens and restaurants. The firm has also seen sales of its flagship brand, an easy-to-clean coating solution grow rapidly.
With the growth of the construction sector averaging 15 per cent over the last six years, Crown Paints has positioned itself to reap from the increased demand for its products, especially in the premium category. “The high-end product market has been growing. The premium category now accounts for 40 per cent of our sales compared to 20 per cent two years ago,” explained Rao.
On regional expansion, Rao said his company was firmly on track to entrench its presence in the region using a unique model of setting up mini-plants that feed demand for specific regions.
“We have aggressive plans to entrench our regional presence. We are putting up satellite factories in Arusha, Mwanza and Dar es Salaam at an estimated cost of USD3 million.”
The company’s sales in Uganda grew 40 per cent and other export sales by 60 per cent with quality being the main factor driving sales. Crown Paints also has distributors in Rwanda, South Sudan and even Somalia.
The company’s total assets grew marginally from Ksh2.215 billion to Ksh2.25 billion. Earnings-per-share in 2012 was Ksh5.63.
The directors have recommended a Ksh1.25 dividend per share. The company holds its 56th Annual General Meeting on 27th June 2013. Crown Paints was previously known as Crown Berger.