Premier Paints is technically insolvent or bankrupt as its liabilities far outweigh assets, casting doubt over the company’s ability to meet obligations, particuarly to creditors.

In the company’s first half (H1) 2025 financial statement seen by Economy Post, it was observed that liabilities were 2.3 times total assets – a red flag that the company’s financial crisis was deepening. Its total assets stood at N165.198 million, while total liabilities were put at N386.353 million. Its working capital ratio is negative, meaning that the paint maker isn’t generating enough cash through its operations to pay for current liabilities. And that is where its challenges lie.

Based on whatEconomy Post observed, there is no cause for comparison to industry standards as most of the company’s ratios and margins are either extremely too low or negative.

Its company’s current ratio is very low. The current ratio measures a company’s capacity to pay its short-term liabilities due in one year, according to the Corporate Finance Institute. A good current ratio is typically considered to be anywhere between 1.5 and 3. Premier Paints’ curent ratio is 0.44 percent, suggesting liquidity problems.

This raises concerns about the business’s ability to meet its short-term obligations, and could lead to financial distress if the situation persists, says Stripe.

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“A healthy balance sheet will mean that you’re going to have a healthy company,” said Senior Business Advisor, BDC Advisory Services,Mr Nicolas Fontaine. “Not managing your balance sheet, or not managing your working capital, will catch up with you. Not having access to working capital will impact your ability to grow your company.”

“Ideally, you want your working capital ratio to be over 1.5, and closer to 2, to give you some room. A higher working capital ratio usually demonstrates a healthier financial position and a better capacity to repay short-term liabilities with short-term assets. Working capital is always about the same principle: how you will service your current liabilities with your current assets,” said Fontaine.

The company’s profitability ratio known as return on assets (ROA) is far less than 1 percent.

“A company with a ROA of 15% or higher is doing very well, while one with 1% or lower is likely in trouble. If the return on assets is less than one, you lose money,” said a financial platform FIIX. This consolidates the fact that the company is technically bankrupt. The 43-year-old company’s profit stood at merely N1.144 million in the second quarter (Q2) of 2025, with a revenue of N34.514 million, but it made a loss of N956 million in H1. Mr Adedoyin Adeyinka is the Chairman of Premier Paints. He was appointed in June 2025.

Acquisition Story

In 2008, Shoreline Energy International acquired 40 percent equity stake in Premier Paints plc. The takeover, the company said, was in line with its plan to consolidate its activities in the construction and allied products sector. 

Shoreline, a leading infrastructure and energy group, is a player in Sub-Saharan Africa, while Premier Paint is a visible operator in the paint industry.

According to a statement from the company, the acquisition would deliver top-line synergies for Shorelines portfolio of companies in the construction sector in the short term. In the medium term, synergies would be delivered through investment in capacity building to service Shorelines portfolio companies in various infrastructure sub-sectors.

“The Premier Paints transaction marks another important milestone in our Groups drive to expand and enhance our strategy of infrastructure and energy leadership in Sub-Saharan Africa. Premier Paints brings immediate benefit to our portfolio companies such as Costain West Africa and our growing furniture and joinery businesses. It also positions us well as we expand our capability in servicing key infrastructure sub sectors a fantastic addition to our portfolio,” said then Chairman and CEO of Shoreline Energy International, Mr Kola Karim.

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Nigeria’s paint industry is hard hit by the influx of imported paints, mostly from China. Low local patronage is also a major problems, with federal and state governments failing to patronise local manufacturers. Paint makers say smuggling is bringing the industry to its knees, with high cost of production making competitiveness nearly impossible.