Fakoyejo Olalekan
Chemical and Allied Products (CAP), Meyer and Berger Paints reported a revenue growth of 45.7% in H1 2022, as house owners and industrial companies spent over N12.43 billion to purchase their products – but their growth is affecting small paint producers in Nigeria.
What you need to know about Nigeria’s paint market?
- The country’s paint market is saturated by big brands and small producers, including, Biolux, Caplux, Eagle, President, Finecoat, amongst many others. Together, they are expected to generate $377 million by 2025.
- With local paints consumption projected to hit one billion litres by 2025, from 391.75 million litres in 2020, according to Bank of Industry (BOI) consultant, Chris Kiwanu, the beneficiaries of this growth are majorly the nationwide brands; CAP, Meyer and Berger Paints.
- These three producers are the only publicly listed paint companies, and according to their H1 2022 financials analysed by Prime Business Africa, they generated N12.43 billion revenue, surpassing the N8.52 billion turnover they grossed in H1 last year.
- However, while they are positioned to take the largest chunk of the projected revenue the industry has to offer, a market overview of CAP, Meyer and Berger Paints operation showed that they must first overcome the burden of expenses.
- The cost of sales had gulped 62.8% of their combined revenue, after spending N7.81 billion to produce their brands in H1 2022, in contrast to the N5.77 billion expended during same period in 2021.
How each companies performed in H1 2022
The best performing companies in Nigeria’s paint market for H1 2022 are ranked based on their net profit growth by Prime Business Africa, and are as followed;
Join our WhatsApp ChannelChemical and Allied Products (77.5% Net Profit)
CAP maintained its leadership in the paint market with a revenue growth of 52.6%, after Nigerians spent over N8.74 billion to purchase their products in H1 2022, surpassing the N5.72 billion the firm generated in first half last year.
- Just as its revenue grew, so did CAP’s cost of sales, as the management was unable to curb rising expenses, which hit N5.23 billion between January to June. This is 31.02% above the N3.99 billion spent to produce their brands last year.
- However, the rise in expenses had little or no impact on the firm’s net profit, as CAP closed the period in review with N903.95 million Profit after tax, which is 77.5% year-on-year growth when compared to the N509.11 million of H1 2021.
Berger Paints (49.1 Net Profit)
While Berger Paints recorded the lowest revenue growth amid the three listed companies, it was the second best performing firm in the first half of this year based on net profit growth.
- The company’s turnover for the period between January to June was N3 billion, rising 29.6% year-on-year (representing N687.76 million growth) when compared to the N2.31 billion generated in H1 2021.
- It was gathered that majority of the revenue was spent on cost of sales, as Berger Paints spent N2.07 billion to produce its brands. However, during the corresponding period, it gulped N1.45 billion.
- However, the management was able to squeeze our net profit of N126.4 million in the first six months of this year despite surging expenses, rising by 49.1%, having posted N84.74 million in first half 2021.
Meyer (-118.1% Net Profit)
Meyer reported that its revenue grew 41.5% year-on-year to N686.96 million in the first half of 2022, surpassing the N485,461,000 generated in the same period last year.
- Its revenue, however, was heavily weigh on by the cost of sales, which rose by 52.7% to N506.26 million, from N331.46 million that it cost Meyer to manufacture its products last year H1.
- This was felt by the company in its after tax earnings, as Meyer suffered N20,34 million loss between January to June, above the N9,32 million loss recorded in the first half of 2021, which is an increase of -118.1%.
Small producer losing to Meyers, CAP and Berger Paints?
According to the founder of Biolux, Abisola Odebode, the presence of the big three are affecting demands of small producers, as paint consumers will rather buy brand names, while he has to depend on referral to expand his market exposure.
“Presence of CAP, Meyer and Berger paints affected the business in different ways, firstly the aforementioned names are big player when if comes to paint industry in the country and that made many people believe in patronizing them than buying locally produced paints products.”
Although he said their presence also inspires them to produce quality product to better compet with the bigger brands, “it helps those that want to be relevant in the industry push good products into the market since you know that your competitors are big names.
Odebode added, “As a paint producer you need to keep improving on your products, because the more people buy and know that your products is good they will keep patronizing you and even recommend and refer your products.”
The producer suggested that the government make loan more accessible to small business owners to ease their operation, especially for people with disability, “Provision of more accessible loan will really help alot, alongside means of ease of doing business.
“Business financial inclusive assistance should be given priority to persons with disability that are into business.” He told Prime Business Africa.
Meanwhile, he explained that the hike in cost of production is felt across the market, and has drastically increased, “Seriously, that’s the major challenges that we are facing on a daily basis because price of chemicals keep increasing and this has direct impact on cost of production. Compare to last year, it has drastically increased.”
