Nigeria exchange rate losses ravage PZ Cussons profits

Half-year profits for Manchester-based consumer products group PZ Cussons have taken a hit as a result of foreign exchange losses in Nigeria.

Pre-tax profits to November, 2015 are down 37.8% to £24.9m as a result of exception costs of £15.3m because of transactional losses  of £12m the African country in addition to group structure and systems project costs of £3.3m.

The Nigeria losses have arisen because of long outstanding brought forward trade payables denominated in US dollars that have been settled at higher exchange rates than originally recognised due to the introduction of the new flexible exchange rate regime on June 20, 2016 which resulted in a devaluation of the Naira of greater than 40%.
    
Meanwhile, revenue rose 2% to £378.2m.

Chairman Caroline Silver said: “In this first half of the 2017 financial year, the group has faced a backdrop full of challenges across most of the markets where we operate.

“This was by no means unexpected and so, despite this, the results presented today reflect a solid performance with revenue and profit only slightly lower than the previous period.

“The strength and breadth of the group’s product portfolio has allowed us to hold or grow the share of our brands in our main markets and product categories.

“We intend to reinforce this in the second half of the financial year with a number of major launches and relaunches taking place. Our ability to be agile and nimble is a core strength and a differentiator against our larger competitors.

“In Nigeria, consumers are faced with an almost doubling of costs for everything they have to buy and in this environment they turn strongly to brands that they know, love and trust.  Our diverse range of well established products across multiple categories are well price positioned with good availability across the country.

“The balance sheet remains strong, with net debt at 1.5 x EBITDA giving us the flexibility to take advantage of new investment opportunities as and when they arise.

“We remain on track to deliver our full year expectations. In this context, the Board has increased the interim dividend by 2.3% to 2.67p per share.”