Crown Paints posts Sh0.9b profit before taxes
Lewis Njoka @LewisNjoka
Paints manufacturer, Crown Paints, has announced Sh862.9 million profit before tax for the year ended December 31 2020.
This is a Sh334.9 million increase (63 per cent) compared to the previous year when company made 528 million profit before tax.
Crown paints attributed the good performance to increased activity in the third and fourth quarter of 2020.
“Unlike many other sectors of our economy where performance decreased due to adverse effects of the lockdown, the painting sector of the construction industry saw the third and fourth quarters as being favourable as business activity picked up mainly due to heightened activity of residential repairs and improvements, hence, our business delivering a growth of 63 per cent to the bottom line,” said the company in a statement.
Rising costs
It said while performance was adversely affected by the onset of the Covid-19 pandemic, which saw a rise in the cost of raw materials, business improved as countries across the world put in place measures to improve trade.
During the period, revenue from contracts with customers rose to Sh9.2 billion up from 8.6 billion in 2019.
Cash flows generated from operations rose to Sh1.6 billion from Sh1.2 billion in 2019.
Basic and diluted earnings per share almost doubled jumping to Sh8.42 up from Sh4.54 in 2019.
Crown paints growth in earnings last year follows a similar trend in 2019 where profit before tax rose 33 per cent (Sh132 million) compared to 2018.
Recently, the company announced it is seeking to raise Sh711.8 million through a rights issue to boost its operations in Tanzania, Rwanda, and Uganda were it is performing poorly.
Already, the company has received approval from its board, shareholders and the Capital Markets Authority to allot and issue 71,181,000 ordinary shares and is only awaiting an approval from the Nairobi Securities Exchange.
“The purpose of the rights issue is to bring the company and its subsidiaries’ indebtedness to a more sustainable level and to position it to take advantage of its long-term growth opportunities and gain market share in the East African region,” said the company in a statement.
