Berger profit falls 11pc on higher tax expenses

Berger Paints endured an 11 per cent year-on-year decline in profit to Tk 857 million in its first quarter (Q1) through June of the year 2025.

Despite nominal revenue growth, the company's bottom-line growth was squeezed by increased tax expenses and foreign exchange losses.

Berger's revenue grew 2 per cent year-on-year to Tk 7.08 billion in the quarter to June.

"A company fails to see bottom-line growth unless the top-line growth, growth in revenue, is significant," said Rupali Haque Chowdhury, managing director of Berger.

Berger could not ensure much growth in revenue in the first quarter of 2025 as sales remained shut for almost a month due to public holidays to celebrate two Eid festivals.

Ms. Chowdhury said the company also could not adjust the prices of products amid a rise in manufacturing costs.

The cost of raw material imports escalated too during the quarter due to the depreciation of the local currency against the dollar. Berger purchased dollars at Tk 122 in the quarter while the exchange rate was Tk 115 in the same quarter of the previous year, Ms. Chowdhury said.

Besides, the effective rate of tax for the company increased by 2.25 percentage points to 25 per cent in Q1, 2025.

The company's tax payment was Tk 325.7 million in Q1, 2025, down from Tk 341.55 million in the same quarter of the previous year.

Although the absolute amount of tax payment declined, the company made a provision for the tax that will have to be paid at the end of the year in line with the new effective rate.

This provision also ate up profit in Q1, 2025.

Ms Chowdhury said the country's manufacturing industries had been passing through a hard time because of increased costs of raw materials and the overall economic situation.

Meanwhile, the company's cash flow crisis deepened in the quarter to June.

During the quarter, net operating cash flow per share stood at Tk 35.30 in the negative, worsened from Tk 18.44 in the negative in the same quarter last year.

Annual Performance

Berger Paints earned an annual profit of Tk 3.24 billion in the year ended in March 2025, highest since listing, driven by higher sales amid the cooling of raw material prices in the global market.

Bolstered by the record profit, the company declared a 525 per cent cash dividend for the year, the highest in seven years.

Berger is one of the well-performing stocks with a proven track record and a stable growth in profit and sales even in adverse business environments.

Berger issuing rights shares

Berger is in the process of issuing more than 2.73 million rights shares, aiming to increase its free float shares to at least 10 per cent of the outstanding shares to meet the regulatory requirement from the existing 5 per cent.

Rights shares subscription already started on July 15 to raise Tk 3.03 billion by August 3 this year.

Berger Paints said the capital would be used to partially fund the construction of its third production facility, marking another step in its ongoing expansion drive.

The company has planned to construct its third factory at Bangladesh Economic Zones Authority (BEZA) at an estimated cost of Tk 8.13 billion. The third factory, which is expected to start production in April 2026, will be partially funded by the rights proceeds.

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