Berger comes back stronger in Q3’20 to offset shutdown impacts

Berger Paints Bangladesh Ltd registered double-digit sales growth in two consecutive quarters, after its sales halved in the April-June quarter of 2020, owing to the nationwide shutdown. 

The multinational paints giant had turnover of Tk519 crore in the October-December (third) quarter, which is 11% higher compared to the same period a year ago. 

As most of the days in the April-June quarter were lost to the shutdown, Berger's quarterly sales came down to Tk232 crore in the period and the company merely averted losses through cost control.    

However, as soon as the shutdown was over, Berger came back on track and posted 11% sales growth alongside a 50% net profit growth in the July-September quarter if compared to those over the same period of 2019. 

Now – after posting 11% sales and 34% profit growth year on year for the October-December quarter – the company said in its regulatory filing that its profit increased due to strong sales growth, favorable raw material prices and controlled expenses. 

However, the stronger two quarters have yet to offset the lost sales in the first quarter and Berger posted a revenue of Tk1,133 crore for the nine-month (April-December) period – which is still 7% lower than that a year ago. 

Better recovery of profitability helped the company register Tk167 crore in profit after taxes for the first nine months of its fiscal year— which is 3% higher than the profit over the first three quarters in 2019. 

Berger also said in its regulatory filing that its income from investments reduced significantly because of a lower interest rate compared to that of a year ago. 

Further, the low sales over the April-June quarter resulted in low collection from customers and that reduced the company's net operating cash flow, according to the company statement. 

The paint market and Berger 

As the economy grows, resulting in rapid urbanisation and a surge in spending capacity, individual investment in building infrastructure has also gone up.   

The size of the local paint market has nearly doubled over the last decade. 

In an August 2020 interview with The Business Standard, Berger's Director and Chief Financial Officer Sazzad Chowdhury anticipated that the 2020 fiscal year would remain an almost flat year for the company while the sector might grow in line with the GDP over the next five years. 

Going through industry data for the October-December period he is more optimistic now. 

"So far, the industry witnessed double-digit year on year growth in the last quarter and the fiscal year may end with moderate growth," he said on Wednesday. 

The growth observed in the last quarter indicates a better-than-expected economic recovery, said the Berger CFO. 

The average growth of the Bangladeshi paint market was around 6% in the last decade, while Berger grew at a double-digit rate. 

According to data by the Bangladesh Paint Manufacturers Association, Berger holds around half of the market, leaving the remaining portion for around 45 local and foreign brands to compete for. 

Berger began its journey in Bangladesh in 1970 and was listed with the stock market in 2006. 

The company is also investing into new projects to strengthen its presence in diversified product categories like marine paint.