Higher revenue, yet Berger sees profit decline in Dec quarter

Infographic: TBS

Berger Paints Bangladesh Ltd succumbed to the economic crisis in the third quarter of its current fiscal year, after successfully dodging macroeconomic adversities and posting profit growth in the previous two quarters.

In the October to December quarter, the company's consolidated earnings per share (EPS) declined by 16% to Tk14.73, from Tk17.52 in the same quarter of 2021.

Because of its competitive edge as the leader of the paints market, Berger did earn a higher revenue in the quarter but ended up with lower profits due to the soaring costs of raw materials, fuelled by adverse foreign exchange rate.

In the first nine months of the company's accounting year that starts in April, Berger's EPS inched up to Tk44.16 thanks to the profit growths in April to June and July to September quarters.

Berger's Director and Chief Financial Officer Sazzad Rahim Chowdhury told The Business Standard that in terms of product demand, October to December was a better quarter for the paints industry as well as for Berger, compared to the previous two quarters.

"In the quarter, the first time painting of residential, commercial and office buildings went up."

On the other hand, repainting works in all segments, painting of new factories, and the industrial use of paints dropped in the quarter, he said.

Thanks to Berger's raising of the prices of its products, the multinational, grabbing more than 50% of the market share, registered a revenue of Tk656 crore in the October-December quarter, up from Tk629 crore a year ago.

But, the prices were not increased further in the later part of the year and that was enough to reduce the company's gross profits as the import of raw materials became costlier.

The company, in response, did reduce its selling and distribution costs, and other operating expenses. But this did not help offset the increased costs of production, and the quarterly operating income dropped to Tk87 crore from Tk115 crore a year ago.

After all the calculations of financial costs and income, and workers' welfare fund contribution and taxes, Berger's quarterly net profit came down to Tk68 crore from Tk81 crore in the last three months of 2021.  

Opening of letters of credit (LCs) has been a tough task for businesses and the problem still continues due to the government's dollar austerity.

Sazzad Rahim Chowdhury estimates Bangladesh used 5% less paints in 2022.

Berger's shares closed 0.5% lower at Tk1,723.6 apiece in the Dhaka Stock Exchange on Wednesday.

At the end of December, the company's net asset value stood at Tk258.91 against each share having a face value of Tk10.