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Portland Paints to expand operations for growth

By on May 27, 2015

Portland Paints and Products Nigeria Plc has unveiled plans to expand its operations for better returns.

The Chairman, Portland Paints and Products, Mr. Larry Ettah, spoke about the plans at the company’s Annual General Meeting in Lagos on Tuesday.

The expansion plans follows an impressive performance by the company in the 2014 financial year.

In the year ended December 2014, the company had grown its profit after tax by 159 per cent to N148.6m from N57.3m the previous year, while its operational profit jumped by 74.9 per cent to N304.5m from N174.3m.

Ettah, however, told shareholders at the yearly meeting that, “For strategic reasons, the board is not recommending the payment of dividend for the year ended December 31, 2014, but hoped that with the company’s improved performance, this may not be a challenge anymore.”

On the plans to reposition the company for better performance, Ettah said its portfolio would be realigned with strategic changes made where necessary.

According to him, the company will also continue to focus on innovation and seek opportunities to introduce new offerings into its portfolio of brands as well as develop the capacity of its employees.

He added, “In pursuit of plans to improve returns and address the high leverage position of the company and our other business expansion plans, the Board has recommended for your approval a capital raise by way of rights issue. The Board will therefore be glad to have your kind approval.”

Ettah, however, stressed that in 2015 the Nigerian economy was expected to be significantly affected by low crude oil prices, increase in exchange rates, national security issues and the political risk.

Commenting further on the economy, he said, “Oil prices that closed below $60 in December 2014 fell as low as $46.00 in January 2015, leading to the review of the Federal Government’s 2015 Budget benchmark from an initial $65 to $53 per barrel.

“The decline in oil prices and the resultant fall in the country’s foreign exchange earnings led to a widening of the margin between the foreign exchange rates in the interbank and the RDAS window.

“To forestall further widening of the gap and allow the naira to trade around its fair value, the CBN closed the foreign exchange auction system window in February 2015 and introduced the interbank forex trading platform.”

Ettah added that inflation was expected to rise from its current single digit to above 10 per cent resulting from naira devaluation, increase in electricity tariff, 70 per cent import duty on cars and general increase in the cost of imported materials, which points to the fact that consumer demand and purchasing power may experience slow down.

The Portland Paints and Products chairman, however, remained optimistic about the future of the company and the country.