Portland Paints gets nod to raise share fund by N500m

TO drive its business expansion plans, the board of Portland Paints and Products Nigeria Plc has received its shareholders’ nod to raise its share capital by N500 million by a way of rights issue.

Addressing the shareholders at the company’s yearly general meeting held in Lagos, yesterday, the company’s Chairman, Larry Ettah, explained that for strategic reasons, the board is not recommending the payment of dividend for the year ended 31st December 2014 but hoped that with the company’s improved performance, this may not be a challenge anymore.

Justifying the need to re-position the Company for improved performance into the future, Ettah said: “Consequently, we are realigning our portfolio and making strategic shifts where necessary. We will continue to focus on innovation and seek opportunities to introduce new offerings into our portfolio of brands as well as build capacity in our people.

“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.”

Indeed, the company’s profitability rose by 159 per cent, from a profit after tax of N57.3 million in 2013 to a profit after tax of N148.6 million in 2014, while operational profit also grew from N174.3 million in 2013 to N304.5 million.

Ettah noted that the outlook for the Nigerian economy in 2015 is expected to be significantly affected by low crude oil prices, increase in exchange rates of Naira against major currencies, national security issues and the political risk associated with the elections.

According to him, the International Monetary Funds (IMF) has projected 4.8per cent GDP growth for Nigeria, while both the Nigerian government and the World Bank assume a 5.5per cent growth rate; a decline from the range of 6.5per cent-7.0per cent that the Nigerian economy had been growing at for some years now.

He stated further: “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 (IFEM) trading platform.”

Ettah further stressed that Inflation is expected to rise from its current single digit to above 10per cent resulting from devaluation, increase in electricity tariff, 70per 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.

He said that the federal government, in a bid to shore up its revenue base, plans to implement structural reforms that will drive growth and assist the country in the transition to a less oil-dependent economy.