Crown Paints shares at the bourse remained resilient after it issued a profit warning, closing at Ksh80 on 24 January 2019.
The paint manufacturer has blamed its woes to challenging market conditions in Tanzania, Rwanda, and Uganda. In the first half of 2018, the company’s profits dropped 32.7 per cent in June to Ksh40.7 million from Ksh60.5 in the previous year.
The company’s poor returns are mainly attributed to poor performance in its subsidiaries, which have experienced prolonged poor performance.
In 2017, Regal paints Uganda registered a Ksh1.8 million loss, Crown Paints Tanzania registered ksh77 million loss, and Crown Paints Rwanda registered a Ks32 million loss.
In relation to the repeated loss making by subsidiary companies, the company auditors in the 2017 annual report noted “these conditions give rise to a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern…”
Despite the tough political environment in 2017, the paint manufacturer registered a 69 per cent increase in profits to post Ksh223.3 million. In the financial year 2018, Crown Paints expects profit after tax of less than Ksh167.5 million.
In a statement to the press, the company reassured investors that, “(it) is on track in executing its turn-around strategy and strengthening its balance sheet.”
Crown paints joins the long list of companies that have issued a profit warning in recent months.
