Berger Paints Trinidad td (BPTL) is 70 per cent owned by Lewis Berger (Overseas Holdings) Ltd, which is a subsidiary of Asian Paints (India) Ltd. Lewis Berger also owns 51 per cent of Berger Jamaica and 100 per cent of Berger Barbados.
Changes in financial position
As at its March 31, 2013 year end, BPTL had total assets of $43.92 million. Of this sum, the equity portion was $29.42 million. With net debt of slightly less than $4 million, this portion of its total capital of $33.4 million represents less than 12 per cent. Having only 5,161, 444 shares outstanding, the book value of each share was $5.70. At its current price of $3.60, this represents a discount of almost 37 per cent.
With its current assets of $31.15 million being comfortably greater than current liabilities of $11.78 million, the company had working capital of $19.37 million. In the year-end to March 2012, working capital was only $17.55 million.
At that time, current assets were $27.37 million and current liabilities closed at $9.82 million. Thus, there was a year-on-year cash flow improvement of $1.82 million. One item that helped this was the increase in trade receivables by $3.8 million to $18.8 million from almost $15 million at the end of 2012. This represents slightly more than 80 per cent of the increase in revenues of $4.7 million.
Its trade and other receivables of $18.8 million were almost three times (2.86:1.00) the $6.6 million value of its trade and other payables.
In the previous year, the ratio of receivables to payables was very similar (2.83:1.00); for that period, receivables were $15 million and payables were $5.3 million.
As at year-end 2013, inventories stood at $12.25 million; this balance was 19.1 per cent of its total revenue of $64.15 million recorded. As at the 2012 year-end, inventories were $11.64 million and represented 19.6 per cent of that year's total revenue of $59.4 million. Thus, we can see that inventory management improved in the current period.
Changes in sales and profitability
In its first quarter report to June 2012 BPTL reported a decline in sales of three per cent in relation to the comparable period in 2011. Further, it incurred six per cent higher costs. In its efforts to maintain market share, selling prices were not increased.
For that period the company incurred a loss of $973k, which translated into a per share loss of $0.19.
The third quarter is usually the best period for Berger as it includes the very vibrant Christmas shopping period. For the nine-month period, which ended on December 31, 2012, BPTL delivered higher sales when compared to the 2011 period. This line item improved from $48.4 million to $51.6 million or by 6.7 per cent.
As it started the year on a very challenging note, the profit for the nine-month period was lower than for the comparative period in 2011. This measure came in at $1.24 million (representing EPS of $0.24) for the current period as against the $1.80 million (representing EPS of $0.35) recorded for the earlier period.
Now that the full year results have been released, we see that, in the last quarter (January to March 2013), the company recorded a loss of $0.09 per share; this is because its EPS moved from $0.24 as at the end of the third quarter to $0.15 for the full year.
Revenues for the year improved from $59.4 million for the year to March 2012 to $64.15 million in the current period or by almost 8.0 per cent.
Included in the 2013 sales figures were $662k in sales to its associated Berger companies with Barbados taking $416k and Jamaican buying $246k. During 2012, total sales to these companies were $1.20 million, with Barbados accounting for $1.07 million and Jamaican absorbing a modest $128k.
In 2013, exports were $6.14 million on which it recorded a segment pre-tax profit of $771.6k. Local sales accounted for $58 million but could only deliver a pre-tax profit of $870k. No doubt, this reflects the more competitive conditions locally. In the 2012 period, exports were $5.32 million and profit was $1.05 million. Also in 2012, local sales were $54.1 million and these sales contributed $1.81 million to pre-tax profits.
The gross profit margin, at 33.9 per cent, was almost identical for both periods. In line with changes in sales figures, this item improved from 2012's $20.16 million to last year's $21.78 million.
Reductions were observed in finance costs, which fell to $395k from the previous period's $540.4k and advertising and promotion, which declined from $1.11 million in 2012 to $906k in 2013.
On the other hand, huge increases were recorded for both administrative and selling expenses. Administration costs climbed to $10 million from the earlier period's $9 million. Much of this increase would have been under the "other expenses" heading. Selling expenses moved from $2.3 million in 2012 to $3.3 million in the current period.
The net effect of these changes resulted in a pre-tax figure for 2013 of $1.27 million; this is a $982k decline from the $2.26 million recorded for 2012.
Despite the lower 2013 profit, the tax take of $483k was almost $70k higher than the $413k paid for 2012. One of the contributing factors to this increased charge was the higher level of expenses that were not deductible for tax purposes; in 2012, this item was $311k, while in 2013 the figure increased to $660k. Of lesser consequence, was the decline in income that was not subject to income tax; this figure fell from the 2012 value of $18.5k to only $6.1k in 2013.
These changes resulted in an after-tax profit for 2013 of $791.4k. This figure was $1.05 million less than the $1.84 million recorded for 2012.
Consequently, EPS fell to 15.3 cents in 2013 from 35.7 cents recorded for last year.
With a good mix of local manufacturers and imported products, the local paint market is quite competitive.
As part of the broader construction and building industry, sales of paint and similar products can be a useful gauge as to the levels of economic activity. Fortunately, Berger, as part of a larger group of companies, can draw on extensive resources to help with its various challenges.
Support from Asian Paints
The Berger companies in the Caribbean accounted for almost 14 per cent of the total paint sales of 1,417 crores rupees (about US$235.8 million or TT$1.51 billion) for the Asian Paints Group.
For the 2013 fiscal period, sales for this region grew by 15 per cent to reach 197.2 crores rupees (INR) (approximately US$32.8 million or TT$210 million) from the 2012 base of 171.8 crores rupees (INR) (US$28.59 million or TT$183 million). More robustly, profit before interest and tax rose by 47.4 per cent to 11.2 crores rupees (US$1.86 million or TT$11.93 million) from the 2012 figure of 7.6 crores rupees (US$1.26 million or TT$8.09 million).
As a whole the Asian Paints Ltd Group had 2012/13 revenues from operations of 10,970.74 crores rupees (approximately US$1.825 billion or TT$11.68 billion).
This was up by 13.9 per cent from the 2012 figure of 9,632.24 crores rupees (U$1.6 billion or TT$10.26 billion). In addition, profit attributable to shareholders rose by 12.7 per cent from 988.73 crores rupees (US$164.5 million or TT$1.053 billion) in 2012 to 1,113.88 crores rupees (US$185.3 million or TT$1.186 billion) for the year ended March 2013.
With a strong partner to help guide it through the rough patches ahead, Berger Paints, in Trinidad and the wider Caribbean, is likely to continue making a useful contribution to the painting industry and grow from strength to strength.
(Note: the word "crores" is used in the Asian numbering system; it is equal to ten million under our system. Currency conversions are: US$1 = 60.1 Indian rupees (INR) and TT$6.4.)