PZ Cussons cleans up with 7% profit hike
PZ Cussons, the consumer products company behind brands such as Original Source, Imperial Leather, Carex and St Tropez, has defied tough conditions in several markets to grow annual profits 7% to £108.9m.
The Manchester-based group, which trades in Africa and Asia as well as Europe said turnover in the year to the end of May was up 6.4% to £820.7m.
During the year the company splashed out £62.5m on the St Tropez self tanning brand, which is now part of its new Beauty division along with Sanctuary and Charles Worthington.
The creation of the Beauty division looks to have paid off as it was and continues to be one of the strongest performing segments of the business. PZ Cussons said the market for its upmarket brands is “less promotionally intense” than its personal wash brands, and that because margins are higher it was not affected by raw material cost hikes.
Despite tough trading in the shampoo, soap and shower gel segments – with margin pressures and massive amount of promotional selling by the major retailers – PZ Cussons managed to grow its market share in the second half as a result of new product launches in Imperial Leather and Original Source.
Even after the St Tropez deal, the company has net funds of nearly £52m – giving it the ability to pursue further opportunities.
Chairman Richard Harvey said the results had been delivered despite tough trading conditions in Europe and Africa and ‘significant increases’ in raw material costs.
He said: “Our balance sheet remains strong with a net funds position of £51.8m giving us the capacity to pursue further investment opportunities which fit our strategic aims.
“Initiatives are underway to counter the impact of higher raw material prices and, with the spending power of consumers under increasing pressure in a number of our markets, new product and pricing strategies are being tailored accordingly.
“The positive growth rates seen in the second half in a number of our key businesses have continued into the new financial year, giving cause for confidence as we look ahead.”
PZ Cussons, which has its group headquarters by Manchester Airport and a major manufacturing facility in Agecroft, Salford, raised its annual dividend 12% to 6.61p.
Looking forward it said the strongest performing territories – Indonesia, Nigeria – which has bounced back after disruption to trading after presidential elections there – and the UK Beauty division, are all continuing to perform well in the early weeks of the new financial year.
