Berger Paints secured a 21 per cent year-on-year growth in profit to Tk 566 million in the second quarter (Q2) through September this year, driven by higher sales.
The consolidated earnings per share (EPS) of the multinational company, which follows the April-March financial year, was Tk 12.20 for the second quarter this year, up from Tk 10.12 for the same quarter a year ago.
The market leader in the paints industry in Bangladesh posted a 12 per cent year-on-year growth in sales to Tk 5.90 billion in Q2 this year, while the cost of sales grew nearly 15 per cent year-on-year to Tk 4.06 billion.
Higher sales and significantly low finance costs, largely due to less impact of the currency's devaluation against foreign currencies, helped Berger maintain a healthy profit growth, said an official of the company, requesting not to be named.
The paint maker's foreign exchange loss fell to Tk 128 million in Q2 this year from Tk 207 million in the same quarter the year before, according to its financial statements.
On the other hand, its investment income more than doubled year-on-year to Tk 173 million in the July-September quarter due to interest rate hikes.
The cost of sales, which represents all associated costs to produce paints, stood at Tk 4.06 billion in July-September this year, which was nearly 69 per cent of total sales revenue in the quarter, up from 67 per cent in the same quarter a year ago.
Berger managed to offset costs partially by increasing sales prices, which resulted in a comparatively higher profit, the official said.
Its half-yearly profit grew 6.25 per cent year-on-year to Tk 1.53 billion in April-September this year while net sales rose 5.66 per cent year-on-year to Tk 12.88 billion during the period.
Despite the profit growth, the company's stock slid 0.91 per cent to Tk 1,734.8 per share on the Dhaka Stock Exchange on Thursday.
Annual performance
The paint maker reported a consolidated profit of Tk 3.24 billion for the financial year through March this year, up 7.64 per cent from the year before.
Bolstered by the high profit, the board of directors declared 500 per cent cash dividends for shareholders for the year, the highest in six years.
Berger distributed nearly 72 per cent of the profits earned as shareholders received Tk 50 for each share of their holdings.
Berger to issue rights issues
Berger is in the process of issuing more than 2.72 million rights shares, aiming to increase its free float to at least 10 per cent of the outstanding shares, to meet the regulatory requirement.
Currently, the company's publicly tradable shares constitute only 5 per cent of its total shares.
Berger had offered one rights share against 17 existing shares to all shareholders at Tk 1,376 each. Ideally, the owning company J&N Investments (Asia) should be getting 95 per cent of about 2.72 million rights shares to be issued. But the owning company said it was in favour of distribution of the rights issues to Berger employees and general investors so that Berger could meet the regulatory requirement of at least 10 per cent free float.
So, now investors will ultimately be receiving 1 rights issue against each existing share.
In September 2021, the securities regulator asked Berger Paints to ensure the minimum free float within three years.
Berger to set up third factory
Berger has been investing for capacity expansion as well as the diversification of products and businesses, particularly those with a low environmental impact.
It announced in January this year that it will construct a third factory at Bangabandhu Sheikh Mujib Shilpa Nagar at an estimated cost of Tk 8.13 billion.
The construction of the plant, which is expected to start production in April 2026, will be partially funded by the rights proceeds, the company secretary said earlier. The money coming from rights shares will reduce the cost of investment, which in turn will boost profit.
Once the third factory goes into production, it will have a positive impact on both revenue and profit, the company official said.
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