Crown paints issues profit warning

Companies

Crown paints issues profit warning

Thursday, January 24, 2019 17:12

By PATRICK ALUSHULA

Crown Paints #ticker:BERG expects its 2018 profits to dip by more than 25 per cent on continued poor performance from its regional subsidiaries, mostly the Tanzanian one.

The profit warning puts it in the growing list of companies whose 2018 earnings suffered a dent, even as the board tries a turnaround strategy in the subsidiaries to strengthen the balance sheet.

“The board projects that based on the preliminary assessment on the unaudited consolidated accounts, the 2018 full year earnings of the group are expected to decrease by more than 25 per cent compared with the year ended December 2017,” said the board.

“The group’s performance has been adversely affected by difficult market conditions in all the subsidiaries in Tanzania, Uganda and Rwanda and especially Tanzania.”

Having posted a profit of Sh223.29 million in 2017, the profit warning means that Crown Paint’s 2018 profit will not exceed Sh167.47 million.

Negative equity
In 2017, the firm incurred losses in all the three subsidiaries, with Ugandan and Tanzanian units being in negative equity.

Regal Paints Uganda Limited incurred a loss of Sh1.8 million while Crown Paints Tanzania Limited booked a loss of Sh77 million. Crown Paints Rwanda Limited posted a loss of Sh32 million.

Other firms that have issued profit warnings include, Britam, UAP, Bamburi Cement, HF Group, Sameer Africa and Sanlam Kenya in a trend that is likely to result in dividend cuts besides risk of further paper losses.