a share in the wake of strong first half profits.

The owner of the Bermuda Paint Company Ltd. said yesterday that net income for the first six months of the fiscal year rose 34.1 percent as a result of higher sales, improved investment return and lower operating costs.

Revenues for the six month period rose 7.8 percent to $1,583,405, while net income was $296,925. Earnings per share were 68 cents, as opposed to 51 cents in the same period last year.

Shareholders are this month being cautioned about the interim results, though, because operating expenses for the second half of the year may be higher and the success of the first half of the year does not ensure that the rest of the year will be the same.

And president Miles Outerbridge also admitted concern about the future of the economy.

He said in a letter to shareholders: "We are concerned by the poor financial returns of our major hotels and with the state of the retail segment of the community. These problems, coupled with the continuing unsettled political environment, give us considerable concern.

"Your company is dependent on the state of the local economy and on investor confidence for the demand levels of our products.'' But the local producer and retailer of painting products is also on the list of Bermuda companies which feel they are being disadvantaged by current Government policies on Customs duties.

Mr. Outerbridge commented: "A recent decision, under the harmonised Customs Tariff, has classified certain of our raw materials as `chemicals', which attract a duty rate of 22.25 percent.

"Our competitors, who import finished products, pay 15 percent duty on their imports, which contain these so called `chemical' components.

"We have brought this matter to the attention of the Finance Ministry since this decision has an adverse effect on our locally manufactured costs. We hope that a satisfactory resolution may be reached.'' Managing director of Bermuda Paint, John Carrey, confirmed that the costs would have to be passed on to the base sticker price, unless Government resolved the issue.

Finance Minister Grant Gibbons said yesterday that the increase in the cost to the local company was not intentional.

He said: "The company has written to us, bringing the matter to our attention. We have agreed to look at the situation.'' Mr. Outerbridge gave credit to hard working staff and noted the high level of service they provide to customers and the "unsurpassed in-house technical capability''.