Paint company’s profits plummet after big retailer delists its products
Lancashire-based Crown Paints is putting a brave face on profits, which have tumbled by 32% to £15.85m in a year that saw some of its ranges delisted by a “major UK retailer”.
Revenue for the manufacturer of paints, varnishes, similar coatings and sealants, which is based in Darwen, near Blackburn also tumbled nearly 7% from £187.75m last year to £173.82m this year to December 31, 2016.
Directors of the company, part of Hempel Group, also blamed the economic uncertainty caused by last year’s Brexit vote for the dip in its fortunes.
The company said that as a result of the loss of business it had undertaken some restructuring activity during 2016 “facilitated through back-office efficiencies”.
The directors’ report mentioned the intensification of risks, including changes in the UK retail landscape, the impact of Government policy on big infrastructure projects, foreign exchange and credit risks.
“The decision by the UK to exit the European Union served to intensify these risks,” it said.
The company has sought to diversify its product portfolio, enabling it to maximise sales to as broad a market as possible and “implemented flexible operating practices allowing the company to vary its cost base”.
Foreign exchange risks arise from the purchase of raw materials from the eurozone.
Crown Paints also said the effects of credit risks were controlled as the company has strictly applied policies that require “appropriate credit checks” on potential customers before sales are made.
“Both retail and trade paint markets in the UK remain highly competitive trading environments,” the report said.
And it went on: “Business performance during the year has again been mixed, with growth coming from some customer segments, but overall declined due to the delisting of certain ranges within a major UK retail customer.
“The loss of sales has resulted in the short-term shrinkage of the business, from both a revenue and a cost perspective, but has also allowed, and will continue to allow, the business to take this available capacity forward into new business opportunities in both retail and trade.
“The company has secured a number of significant new business wins during 2016 which should allow it to return to growth in 2017.”
During the period, staff numbers fell from 1,018 in 2015 to 974 in 2016. Staff wages amounted to £38.548m, up from £37.38m.
Total salaries paid to Crown’s four directors amounted to £978,000 (down from £1.012m), with the highest paid director receiving £404,610 (2015: £477,711).
TheBusinessDesk.com has contacted Crown Paints for comment.
