African uncertainty still weighing on consumer products group
Tough trading conditions in its Nigerian market continue to affect Manchester-based consumer products group PZ Cussons, which said today that it now expects adjusted pre-tax profits for the year to come in at around £70m, including an estimated £5.5m impact as a result of significant port disruption.
Announcing half year figures today, the firm revealed a 10.4% reduction in revenues of £335.1m, while pre-tax profits, after exceptional items, were £26.7m, a fall of 20.3% compared with the same period last year.
Adjusted pre-tax profits of £32.8m showed a decline of 1.5%.
The group said this was due to a good performance in Europe and Asia, offset by extremely challenging economic conditions in Nigeria, where the focus is on maintaining market shares and minimising downside risk until growth returns to the country.
The balance sheet remains strong, with good cash flow management and net debt lower than the prior period. Directors have maintained the interim dividend at 2.67p per share.
Directors said the group enjoyed good growth in profitability in Australia across all categories of personal care, home care and food and nutrition
In Indonesia the group improved profitability driven by new product launches across Cussons Baby, Cussons Kids and Imperial Leather.
Europe produced a good overall performance, despite macro uncertainty in the UK.
There was a significant step up in new product launches driving good revenue growth in the UK washing and bathing division, while strong revenue growth was achieved in the beauty division, driven by both innovation and distribution expansion.
Group chair, Caroline Silver, said: “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.
“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 £70m.”
She added: “Balance sheet strength will remain a priority for the business. The group’s balance sheet remains strong, with net debt lower than the prior period. The board has maintained the interim dividend at 2.67p per share.
“We anticipate that consumer demand in all our key markets will remain subdued.
“Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market.
“In personal care and beauty across Europe and Asia, identified as sources of growth for the group, we will continue to prioritise higher investment levels behind carefully targeted key brand and market opportunities.
“Furthermore, the board has approved specific strategic initiatives which will streamline our portfolio of activities and limit exposure to volatility in Nigeria, with more information to be provided in due course.”
