NAIROBI, Kenya, Aug 27 – Crown Berger on Thursday reported an 11.5 percent decline in after tax profitability for the half year ended June 30, compared to a similar period in 2008.
Crown Berger Vice President Hussein Ramji said the drop is mainly attributed to capital investment in the company which he says attracts higher taxation which affected their profitability.
“I don’t see it as a drop in profits. Last year we did 90 percent of our profits in six months and 10 in the second half, we are definitely going to see a change this year,” he said.
During a similar period in 2008 profits stood at Sh46.9 million while this year they were at Sh41.5 million. Cash flow turned positive to Sh20 million from negative Sh101 million during the first half of 2009.
In a statement Finance Director Patrick Mwati also cited high costs of fuel, weakening of the shilling against the US dollar and high cost of raw materials.
At the same time, the paint maker saw turnover increase by 13.7 percent compared to last year. The vice chairman believes with increased sales in the first half, profits could increase by 15 percent.
“Our sales have increased by 14 percent in the first six months and we expect it to carry through to year end. As our sales increase we should be up 10 to 15 percent above,” said Mr Ramji.
While the company is not affected by the current power rationing, the cost still remains high which Mr Ramji said made them pass on the cost to the consumer.
He however says it is a temporary phase and with the projected El Niño set to start in September, it is expected that power generation will be back and lead to a decrease in energy costs.
“I see it lasting another six months and with the rains set to start soon hopefully that will see a reduction in the fuel surcharge cost which would mean a reduction in manufacturing costs,” he said.
Going forward the company will look to explore growth opportunities in the regional markets especially Ethiopia. It already has a distribution network in South Sudan.
The Board of Directors does not recommend paying dividends until end of year results are released to know how to reflect it on the earnings per share.
Crown Berger is East Africa’s largest paint manufacture.