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Informist, Friday, Aug 9, 2024

--Berger Paints Apr-Jun consol revenue 30.91 bln rupees vs 30.30 bln

--Berger Paints Apr-Jun consol net profit 3.54 bln rupees, unch on yr

--Analysts saw Berger Paints Apr-Jun consol net profit 3.39 bln rupees

--Berger Paints Apr-Jun consol net profit 3.54 bln rupees

By Avishek Rakshit

KOLKATA - Muted demand for paints due to macroeconomic pressures, inclement weather, and General Election, which led to a sharp decline in construction activities, saw Berger Paints India Ltd report a flat consolidated net profit of 3.5 bln rupees for Apr-Jun. The company's consolidated revenue grew 2% year-on-year to 30.9 bln rupees.

Although the revenue came in below the Street's estimate of 31.1 bn rupees, the net profit was slightly higher than the sector analysts' estimates of 3.4 bln rupees. Berger Paints reported a net profit of 3.5 bln rupees on revenues of 30.3 bln rupees in the year-ago period.

The rise in revenue, however, was primarily on account of higher sales of low-value products like waterproofing and construction chemicals products that led to volume growth. Besides, prior price cuts taken in the previous quarters in the paints category also impacted the revenue growth.

Its earnings before interest, tax, depreciation, and amortisation for the quarter ended June fell by 6.2% year-on-year to 5.2 bln rupees as against 5.6 bln rupees in the year-ago period. The Street had estimated the EBITDA at 5.4 bln rupees.

"Though we did well on the volume growth front, the value sales were lower due to the impact of the price drop taken in the prior quarters and stronger sales seen in the high volume, low value products in the waterproofing and construction chemicals category," Abhijit Roy, managing director and chief executive officer of Berger Paints said in a statement.

Paints products like emulsions and distempers, that are priced higher, account for 70% of the company's sales, followed by the industrial coatings business at 15-18% depending on the quarter, and the rest of the revenue comes from waterproofing and other chemicals businesses. It was on the paints business that Berger Paints took a hit, leading to an overall muted business performance.

"We continue to register robust growth in waterproofing, construction chemicals and wood coating segments," Roy said. "The industrial segment had a muted performance in April and May, but saw revival from June, which bodes well for us in the months ahead."

In terms of global sales, its Polish operations continued to do well, but Nepal remained a challenging market for the company although it said that some signs of improvement have started showing there.

The income from its joint ventures helped the company's profit. Discounting the profit from its joint ventures, Berger Paint's pre-tax profit for Apr-Jun fell by 3.4% to 4.6 bln rupees. Higher income from the joint ventures, and a 7.7% reduction in tax outgo at 1.1 bln rupees, however, helped India's second largest paints company to arrest the fall in net profit and maintain it at the year-ago period.

LEADERSHIP TRANSITION

As part of its succession plan to ensure seamless transition of top management to the next generation of leaders, Rishma Kaur was appointed as the company's chairperson today by the board with effect from Aug 13. Kanwardip Singh Dhingra was appointed as vice chairman. Currently, Kaur is the executive director, and Dhingra is a director at the company.

Kuldip Singh Dhingra and Gurbachan Singh Dhingra – the promoter brothers and chairman and vice chairman of Berger Paints respectively, will continue on the board as non-executive directors designated as chairman emeritus and vice chairman emeritus, respectively. 

Shares of Berger Paints closed 2.6% higher at 531.65 rupees on the National Stock Exchange.  End

Edited by Vandana Hingorani

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