Market News

Paint manufacturers eye rebound in 2021

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Crown Paints Group CEO Rakesh Rao. FILE PHOTO | NMG

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Summary

  • Investors who have been skeptical about the economic recovery and hoarded cash are now more confident about a post-Covid-19 outlook.

Paint manufacturers are expecting a strong rebound in sales from the first half of next year on rising construction activities.

The bright outlook is hinged on the recovery in the pace of construction activities as well as renovations on the gradual reopening of the economy that set in last July.

Data from the Kenya Bureau of Statistics (KNBS) shows cement consumption increased by 13,355 metric tonnes between July and August when movement restrictions were lifted.

Crown Paints #ticker:CRWN chief executive Rakesh Rao said the gradual easing of coronavirus restrictions has seen investors pumping in cash to complete stalled projects.

“This will create a lot of demand for paint, especially given that our supply to commercial entities had declined at the height of the pandemic compared to the residential segment,” he said.

In the second quarter of 2020, residential units gobbled up about 90 per cent of all the paints sold in Kenya against just over 10 per cent that went toward commercial application.

The KNBS data shows consumption of cement rose from 594,028 tonnes in July to 607,383 tonnes in August 2020, reflecting an increase of 13,355 tonnes.

Consumption of cement at a similar period last year dropped by 17,705 tonnes, from 527,771 tonnes in July to 510,066 tonnes in August.

Mr Rao said investor confidence in the construction industry has also been boosted by prospects of a Covid-19 vaccine in the country next year.

US drug firm Pfizer revealed that early data from phase three trials showed its vaccine was more than 90 per cent effective against Covid-19, sending joy in the stocks market.

Investors who have been skeptical about the economic recovery and hoarded cash are now more confident about a post-Covid-19 outlook.