Berger Paints Remains a Rewarding Stock
By Uche Obike
Berger Paints Nigeria Plc is one quoted company that has continued to demonstrate strong commitment to satisfy the yearnings of its very supportive shareholders.
Despite the tough operating environment that has been a major hindrance to profitability in the paint industry, Berger Paint has remained faithful to the shareholders by consistently rewarding them with good dividend payout on a yearly basis.
The company may have been able reward shareholders appropriate because of the fact that it continued record consistent profit growth that was uncommon within the paint industry.
Apart from rewarding shareholders with bonus issue of one for seven in 2001, the company's dividend profile in the last five years showed that it declared 30.00 kobo in 1999; 10.00 kobo in 2000; 30.00 kobo in 2001; 33 kobo in 2002 and 40.00 kobo in 2003.
There was no doubt that the company's commitment to bringing smiles on the faces of the shareholders had further raised the investors' confidence in the ability of the board and management to deliver satisfactory returns on their investments.
It could be recalled that the President of the Nigeria Shareholders' Solidarity Association (NSSA), Asiwaju Akintunde Asalu recently in Lagos at the 44th Annual General Meeting advised that the company should make an offer by way of Rights Issue to reduce the cost of funding from the banks.
He also said that the shareholders were optimistic that the paint firm would increase its payout to the investors to 50 kobo per share.
Asalu added that the company would also need to declare bonus shares for the shareholders in the nearest future.
He expressed satisfaction over the company's impressive performance in recent time.
Berger Paints' turnover grew by 30 per cent from N1.45 billion in 2002 to N1.89 billion in 2003, while profit before tax grew by 28 per cent from N130.8 million in 2002 to N168 million in 2003. Profit attributable to shareholders increased from N85.8 million to N108.5 million in 2003.
The revitalisation and repositioning of Robbialac Nigeria Limited, a subsidiary of Berger Paints yielded good results in 2003.
Robbialac recorded a turnover growth by 52 per cent from N46.8 million in 2002 to N73.7 million in 2003, while profit after tax also grew by 330 per cent from N3.5 million in 2002 to N15 million in 2003.
Analysis of the company's performance in the last five years showed that turnover grew from N1.065 billion in 1999 to N1.895 billion in 2003, profit before tax went up from N54.513 million in 1999 to N168,021 million in 2003.
Also, the company's profit after tax rose from N34.940 million in 1999 to N108.534 million in 2003, while dividend payout jumped from N56.629 million in 1999 to N86.947 million in 2003. Its shareholders' funds increased from N394.270 million in 1999 to N460.533 million in 2003.
The Chairman of Berger Paints Mr. Clement Adekunle Olowokande disclosed recently that the company had also been adequately positioned to withstand the activities of key rivals in the paints sector.
"We continued to dominate the paints and allied products with consistent superior performance," he said.
He added that in order to reposition the company for an assured future, the board had continued with its strategies, based on its in-house core competences, to optimise and modernise its production system.
"Following the installation of the State-of-the-art Machines, our company can now produce any needed colour within 30 minutes. This System ranks among the best in the World. As a result of this feat, your company has been specified to handle paint contracts for some World Class Institutions in the country. This used to be what was hitherto reserved exclusively for foreign paint companies. With this in place, we are able to create value-addition by satisfying our customers at fast response rate," said the Chairman.
He further announced that the board of directors of the company had added as part of its range of products, high quality networth paints called Luxol Gold, Luxol Diamond, Luxol Platinum and Luxol Velvet.
"These top-range of products are part of our new product innovations targeted at high-class users. We will continue to blaze the trail in the industry in terms of innovations," he said.
Despite the tough operating environment, the company has continued to put smiles on the faces of the investors through the consistent payout of cash dividend. With the current expansion programme of its market share, there is no doubt the shareholders are in for a brighter future.
Apart from improving on staff welfare by enhancing compensation package comparable to industry standard, the company has paid special attention to tightening of the internal control systems to prevent leakages of material and financial resources.
The company was incorporated in Nigeria as a private limited liability company in 1959 and was converted to a public limited liability company in 1973. Its shares are quoted on the Nigerian Stock Exchange (NSE) with effect from March 14, 1974. Berger Paints' subsidiary company, Robbialac Nigeria Limited, was incorporated in Nigeria as a private limited liability company in June 1997 and commenced business in October 1997.
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