We have extracted below the Chairman’s Statement from the 2018 Annual report Crown Paints Kenya (BERG.ke), listed on the Nairobi Securities Stock Exchange:
The year 2018, has been a year with mixed results in which we recorded a growth in sales and gross profit but a decrease in profit before tax.
During the year Kenya showed a return to economic growth as its GDP grew an estimated 5.9% in 2018, from 4.9% in 2017 as the economy recovered from the effects of the prolonged electioneering period of 2017. The business environment improved as political stability and business confidence returned thus leading to a better output from the real estate and manufacturing sectors. The exchange rate during 2018 showed better stability than in 2017 which was of benefit to our company, taking into consideration that up to 65% of our raw materials are imported. However, despite the reduction in the interest rate to 9% in July 2018, the private sector especially small and medium enterprises faced a reduction in access to credit hence funding for their businesses.
Overall the company performance for the subsidiaries Crown Paints Tanzania Ltd, Regal Paints Uganda Ltd and Crown Paints Rwanda Ltd remained depressed while the Kenyan performance though remaining profitable declined marginally due to changes in accounting for impairment losses in its financial assets. (new IFRS 9).
Our revenue grew by 13% to KShs 8.3 billion during 2018 up from KShs. 7.3 billion in 2017. At the gross profit level, the business remained positive but, due to an increase in operating costs the Company profit before tax decreased by 1% to KShs. 395 Million down from KShs. 398 in the previous year. Despite the drop-in profit before tax, the Company generated positive cash inflows of KShs. 332 Million as compared to a cash outflow of KShs. 114 Million in 2017.
Our Company is banking on the long-term business as we position our brand in the market to meet our customers changing needs. Our strategy for the region was well carried out by our dedicated team of management and s