By Peter Egwuatu
SHAREHOLDERS of Berger Paints Nigeria Plc, yesterday, charged its Board of Directors to consider the backward integration strategy as a means of addressing the high cost of importing raw materials. The shareholders at the company’s 57th Annual General Meeting, AGM, held in Lagos, also endorsed all the Board’s resolutions for the financial year ended December 31, 2016, including “the permission to allow the company enter into recurrent related party transactions of a value equal to or more than five per cent of the company’s latest audited net tangible assets when aggregated with other transactions entered into with the same interested person during the financial year; or issued capital.”
The shareholders at the meeting appreciated and approved the Board’s recommendation of dividend of 50 kobo per share in spite of the harsh operating environment the company faced during the year under review.
Addressing shareholders at the AGM, Chairman of Berger Paints Nigeria Plc, Dr. Oladimeji Alao, stated: “We thank you shareholders for the various advices and concerns expressed. Our operation was negatively impacted by the macroeconomic environment in 2016. Our backward integration strategy is on course and would be felt once our new plants commenced operation.
“The forex unavailability affected the company as the fall in forex earnings constrained the ability of the Central Bank of Nigeria, CBN to adequately fund the forex market. That development had implications for our finance costs, supply of raw materials and machinery.”
On the impact to the company’s performance in 2016, Alao stated: “Many state governments and private companies struggled to meet their basic obligations and had little left to embark on major infrastructure projects that could utilise our products. Consequently, for instance our sales revenue declined to N2.60 billion in 2016 from N3.022 billion in 2015, representing a 14 per cent decrease. Our profit before tax declined to N271.8 million in 2016 from N565.2 million achieved in 2015, representing a decrease of 52 per cent.
“The fall in sales revenue reflected the major contraction of the economy while the major decline in our profit before tax figure was a function of the high cost of production.”