Chemical and Allied Products Plc (CAP) is emerging as a standout performer in Nigeria’s paint manufacturing industry, delivering profit margin growth that has consistently outpaced its peers.
Industry analysts say CAP’s improving margins are not accidental. Rather, they reflect a combination of disciplined cost management, product mix optimisation, and strategic pricing advantages that have helped the company weather macroeconomic headwinds better than many competitors.
According to BusinessDay’s analysis of the trio’s financial statements, CAP reported the highest profit margin of 17.8 percent in the nine months ended September 30, 2025, compared to 16.5 percent reported in the same period of last year.
Meyer Plc followed with 12.2 percent, and Berger Paints with 10.5 percent, which grew significantly from the 2.7 percent reported in the same period of last year.
Bolarin Okunowo, the company’s managing director, said the company’s growth was driven by the successful execution of our strategic growth initiatives and a continued focus on operational efficiency
“As we enter the final quarter of the year, our commitment remains to sustaining profitable growth and further enhancing our customer experience,” he said.
Premium product strategy pays off
Unlike some rivals that compete heavily on price in the mass market, CAP has continued to strengthen its presence in higher-margin premium and decorative paint segments. This strategic focus has enabled the company to pass through cost increases more successfully without significantly eroding demand.
By prioritising value-added products and trusted brands, CAP has been able to defend pricing power in a market where consumers are increasingly cost-conscious. The result has been steadier gross margins at a time when many paint makers are experiencing compression.
Read also: CAP Plc grows profit by 39% as strategic execution boosts operations
What the numbers are saying
CEP’s unaudited results showed that revenue rose by 28 per cent to N30.27 billion in 9M’25 from N23.65 billion in the same period of 2024, reflecting robust demand for its paint products and improved pricing efficiency. This stronger top-line performance was reflected in higher gross profit, which increased to N13.06 billion from N9.02 billion the previous year.
Operating profit surged 68 percent to N4.78 billion, aided by efficient cost management and increased production volumes despite inflationary pressures on raw materials and logistics. The company’s profit before tax rose to N5.49 billion, while after-tax profit advanced by 39 percent to N5.4 billion.
A key highlight was CAP Plc’s return to positive cash generation from operations. Net cash from operating activities stood at N3.56 billion, a reversal from the net outflow of N1.46 billion in the same period last year. The turnaround was driven by stronger profit performance and improved working capital efficiency, particularly lower inventory levels and better receivables management.
Changes in inventories released N1.18 billion into cash flow, reversing a N3.59 billion drag in the prior year. Although tax payments of N1.73 billion moderated total inflows, the company’s cash position remained strong, ending the period with N7.7 billion in cash and cash equivalents, a 217 percent increase year-on-year.
The company’s balance sheet reflected a 17 percent growth in total assets to N20.73 billion from N17.79 billion in 2024. This was mainly supported by the buildup in cash holdings and prepayments, which rose to N2.07 billion. Inventories, however, declined to N5.52 billion from N6.65 billion, underscoring better stock management in a high-cost environment.
On the liabilities side, the Lagos-based manufacturer reduced its total obligations to N8.37 billion from N9.04 billion, with dividend payables dropping significantly following payment of N1.96 billion to shareholders. The firm’s equity position strengthened by 16 per cent to N12.36 billion, supported by profit retention and a stable capital structure.
The 2025 financial year to date has seen CAP Plc extract better value from its operations despite cost pressures. Cost of sales increased by 18 percent to N17.21 billion, slower than revenue growth, which helped lift gross margin to about 43 percent. Administrative and marketing expenses rose moderately, reflecting higher staff and promotional costs tied to the firm’s market expansion initiatives.
Finance income, which dropped 33 percent to N746 million due to lower interest yields, was offset by reduced finance costs of ₦39 million. The company’s earnings per share improved to N4.51, up from N3.24 in 2024, while net asset per share rose by 32 percent to N15.17, indicating improved shareholder value creation.