The Queen’s paint supplier is back in the black less than two years after a takeover by private equity. Crown Paints Group, the UK’s largest independent decorative coatings manufacturer, posted a £2.8m operating profit in 2009, according to recently published accounts.
That compares with a £11.4m operating loss in the final quarter of 2008, after the Darwen, Lancashire-based group was bought by management backed by Endless, the private equity group, in September 2008.
Akzo Nobel, the Dutch chemicals giant, had to sell Crown to win approval for its acquisition of ICI, which included paintmaker Dulux.
Brian Davidson, chief executive, said the company was investing more than £6m in marketing and £2m in equipment over the next year as it sought to expand in a static paint market.
“It was the unloved child of a multinational. It was underinvested in the past. We are undergoing a cultural transformation in the business,” he said.
Crown has shed 300 staff since the management buy-out, but still employs 1,400 people at manufacturing plants in Darwen, Hull and at retail centres around the UK and Ireland. It is closing its Belfast distribution centre to save £1m a year.
It is also investing £2m in its 130 shops, which serve trade customers, including a system that will monitor stock levels so they can be automatically replenished. “We carry 3,000 varieties, so it is a complex forecasting task to know what we’ll need but we already have better availability, which keeps our clients happy.”
He admitted that Endless had taken over at a difficult time. The group had a £25m loan facility with Landsbanki, the Icelandic lender that was nationalised in October 2008. RBS replaced it last December.
Endless has provided £10m of loan notes at 10 per cent interest.
The recession caused a sharp fall in the volume of housebuilding.
“The construction industry is not out of the woods yet,” Mr Davidson cautioned. Trade sales were still muted, he said.
The group made an operating profit of £2.8m on sales of £179.2m in the year to December 31 2009. In the last three months of 2008 it made a £11.4m operating loss on turnover of £37.8m.
Accounting for a goodwill provision, pre-tax profit was £12m in 2009.
It paid £1.9m in interest in 2009 and £1m in 2008.
Sales were up 22 per cent in a flat market and it accounted for 15 per cent of the UK market, Mr Davidson said.
Crown owns the Sandtex, Macpherson, Sadolin and Berger brands, but Mr Davidson said it was looking at making paint for customers such as DIY retailers for the first time. “Crown has distanced itself from that in the past, partly because we were not competitive. Now we are. We are not ruling anything out.”
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