Berger navigates well amidst inflationary pressure

Berger Paints Bangladesh Limited has achieved better growth in both revenue and profit in the April-June quarter amidst surging raw material prices and the weakening taka.

In the three months through June this year, the multinational coating company's consolidated revenue jumped 30% to Tk685.64 crore and net profit grew 23% to Tk92.15 crore compared to the same period of last year.

At the end of June, its consolidated earnings per share (EPS) were Tk19.87, which was Tk16.09 at the same time a year ago, according to its financial statement.

But its net operating cash flow per share remained negative because the suppliers' payout and tax burden increased compared to the cash received.

An analyst of a well-known brokerage firm said in the second quarter, consumer spending increased alongside the depreciation of the local currency. Due to this, the profits of other manufacturers have decreased. But Berger was not much affected.

He said Berger could navigate the crisis as it had already overhauled its product delivery system even before the coronavirus outbreak. For example, the company has developed colour banks across the country. Besides, it has increased the stock of raw materials to keep the production system smooth. And it is getting the benefit now.

However, as per the new rules, the company will have to pay 25% corporate tax instead of 22.5% as its share offload in the stock market is less than 10%.

Although the new rule will take effect in July, the company made a provision of 25% for the April-June quarter too. It has driven up the cost.

On Tuesday, Berger's share closed 0.96% higher at Tk1,731.30 each on the Dhaka Stock Exchange (DSE).

Currently, Berger is the market leader in the coating industry, with over 60% share.

Earlier, the company paid a 400% cash dividend to its shareholders for the 2021-22 financial year that ended in March. It was also the highest payout in the last five years.

Back in the 2016-17 financial year, the company had paid a total of 600% cash dividends.

In the last financial year, the consolidated net profit of Berger Paints increased 9% to Tk290 crore compared to the 2020-21 financial year. Its EPS stood at Tk62.68.

A senior official at Berger Paints said earlier about last year's performance, that the company could not achieve double-digit profit growth because of an increase in the prices of raw materials and freight charges. But the board was however satisfied with the turnover growth.