Why PZ Cussons May Exit Nigeria

Global consumer goods manufacturer, PZ Cussons PLC has said it will look to limit its exposure to Nigeria, with “extremely challenging” trading there continuing to hinder the Imperial Leather soap maker’s overall growth.



PZ Cussons shares were down 11% in early trade in London on Tuesday at a price of 187.58 pence each.

The consumer products firm, which also makes St Tropex tanning lotion among many other personal care and home care brands, registered a 23% fall in revenue to GBP111.3 million in Africa for the six months to November. At constant currency, revenue slipped 13% and the like-for-like decline was also 13%.

Adjusted operating profit in Africa slumped 71%, or 68% at constant currency, to just GBP1.2 million.

Asia followed Africa in reporting a revenue decline, by 6.8%, or 0.7% at constant currency, to GBP95.6 million. Like-for-like revenue fell by 0.7%.

However, in Europe PZ Cussons increased revenue by 1.2%, or 1.4% at constant currency, to GBP128.2 million. Like-for-like growth was 1.4%.

Group revenue fell by 10%, or 4.6% constant currency, to GBP335.1 million. Like-for-like revenue also slid 4.6%. On a group level, adjusted operating profit fell 3.8%, or 1.1% constant currency, to GBP35.4 million, while statutory pretax profit sank 20% to GBP26.7 million.

PZ Cussons posted a rise in Asian adjusted operating profit of 13%, and Europe 1.7%, at reported rates to GBP9.6 million and GBP24.6 million respectively. The company declared an interim dividend of 2.67 pence per share, flat year-on-year.

“The group continues to make pleasing progress in Europe and Asia, with new product development and increased support across our key brands delivering positive momentum,” said Chair Caroline Silver.

“Disappointingly, however, the macroeconomic conditions in Nigeria remain extremely challenging and continue to have a significant negative impact on overall group performance. Reflecting this, we now expect group adjusted profit before tax for the year to be towards GBP70 million.”

PZ Cussons posted adjusted pretax profit of GBP80.1 million in its year ended May 2018.

“We anticipate consumer demand in all our key markets will remain subdued,” Silver continued. “Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market.”

To help streamline its activities and focus on Personal Care and Beauty operations in Europe and Asia, the company has begun some strategic initiatives, it said, which include “limiting exposure to Nigerian volatility”.

Further information will be provided to the market in due course, PZ Cussons said.