Crown Paints earnings increase by 34 percent

Crown Paints #ticker:CRWN posted a 33.9 percent net profit growth to Sh339 million in the half year to June on higher sales.

The paints manufacturer had recorded net earnings of Sh253 million the year before. Its sales increased by a quarter to Sh4.9 billion from Sh3.9 billion.

Crown Paints did not disclose its expenses in the review period.

Chief executive Rakesh Rao has, however, warned of escalating cost of raw materials used in paints manufacturing due to Covid-19. He said the prices of the commodities such as pigments and solvents had risen by up to 60 percent. He said the price increase has been exacerbated by supply chain constraints.

Crown Paints says its sales could slow down due to continued restrictions aimed at curbing the spread of the pandemic in its key markets in the region.

“We remain cautious due to the continued lockdowns in the country. For instance, partial lockdown in Kisumu County, one of our strongest markets, has adversely affected our sales,” Mr Rao said at the firm’s recent annual general meeting.

The company changed its marketing strategy to target households as the pandemic saw an increase in work-from-home arrangements, reducing demand in the commercial office space.

Crown Paints recently raised Sh711.8 million through a rights issue to reduce its debt load and turn around the fortunes of regional loss-making subsidiaries that have been depending on the Kenyan parent company to finance their operations.

The company created an additional 71.1 million shares which were sold to existing shareholders at a price of Sh10 apiece.

Crown Paints’ majority shareholders are expected to have boosted their stakes in the cash call after they were allowed to go above their allotment to absorb shares left by other investors.

The company’s current liabilities in the review period stood at Sh4 billion, rising from Sh3.2 billion at the end of last year.

Long-term debt, meanwhile, dropped to Sh384 million from Sh504 million in December 2020.