Nigeria casts shadow over PZ Cussons
PZ Cussons, the Manchester-based international consumer products company, has warned that uncertainty in Nigeria, its largest market, is clouding its full-year prospects.
The group, best known in this country for its Imperial Leather, Carex and St Tropez self tan range, has been hit by a range of difficulties in Nigeria, where the value of the currency has tumbled, Ebola has dented cross-border trade, the oil price has fallen, and militant Islamist group Boko Haram has made several raids in the north.
Revealing half year results, which showed resilience at an underlying level, the company said adverse currency movements had hit revenues by £26m and operating profits by £1.8m.
Before exceptional costs of £4m – relating to changes in its supply chain, systems and also acquisition costs – pre-tax profits were 8.2% down at £43.7m in the six months to November 30 on revenues of £386.7m, down 10.4% on the prior year.
The company, which has its headquarters next to Manchester AIrport and a manufacturing site in Agecroft, Salford, said after adjusting for acquisitions and disposals and the negative exchange impact from currency translation, operating profit was 3.5% ahead of the prior period on revenue growth of 1.5%.
Chairman Richard Harvey said: “These are good results in what have been difficult markets. The group has delivered underlying revenue and profit growth in the period having adjusted for acquisitions and disposals and the negative exchange impact from translation. This is despite continued challenging trading conditions, particularly in its largest market Nigeria, where a devaluation of the Naira just before the period end also impacted results.
“Underlying performance since the period end has been in line with expectations although the Naira has continued to weaken. The macro environment in Nigeria for the remainder of the financial year, which includes the February presidential elections and potential further currency volatility, will be a key contributing factor to the overall result for the full year.
“Looking through the short-term challenges we remain confident about the medium and long term opportunities in Africa. We have built a profitable and growing electricals division, are seeing excellent growth in food and nutrition, and have a leading position in personal care and home care, all of which are poised to benefit once stability is re-established and the economy grows.
“Our balance sheet is strong and we have the appetite to pursue further investment opportunities which fit our strategic aims,” he added.
The company raised its interim dividend by 3.2% to 2.61p per share.
