Consumer products giant boosted by demand for hygiene products

Consumer products firm PZ Cussons saw its first quarter sales jump 23% driven by strong demand for hygiene products during the Covid-19 pandemic.

With the Manchester-based company’s Carex hand wash and sanitizer brands performing strongly, sales for the three months through August rose to £158.1m, up 19% or 23% on a constant currency basis.

Jonathan Myers, chief executive, said: “The first quarter results have given us a good start to the year with growth in all three regions and an improvement in profitability. The majority of our Focus Brands are now in growth, led by Carex in the UK.

“In the second quarter we plan to increase investment further in building our brands and capabilities. We are currently in a process to examine and evolve our strategy to deliver sustainable top line growth and improved operating margin.”

Myers warned of a volatile outlook for the year ahead.

“The operating landscape remains highly volatile with many of the economies we operate in moving into recession, the continuing uncertainty of the COVID-19 pandemic and categories remaining highly competitive with pressure on discounting and cost. While it remains very difficult to forecast and give guidance we expect some adverse headwinds for the rest of the year following this good start.”

Meanwhile, also publishing its results for the year to May 31, PZ Cussons reported revenue of £587.2m, down 2.6% which it attributed to a challenging Nigerian economy and the impact of coronavirus.

Adjusted profit before tax fell 14.5% to £62m reflecting the reduced adjusted operating profit partially offset by a lower interest charge, while reported profit before tax declined to £29.3m or 32.8%, largely due to the non-cash impairment of five:am and Rafferty’s Garden offsetting profits on disposal of its operations in Greece and brand in Poland.

A full year dividend of 5.80p was declared, down from 8.28p a year ago, to “enable a more sustainable level and provide the capacity for investment in key brands and in new opportunities such as hygiene amid COVID-19 related uncertainty”.

Caroline Silver, chair, said: ”There is no doubt that this was one of the most challenging periods that the company has faced across its long history.  Having reviewed our strategy last year, we expected there to be a period of transition and change as we moved to reset our business model and create the conditions to improve performance.  Onto this however was added the immense challenges of responding to the global COVID-19 pandemic, which fully encompassed the final quarter of our financial year.  We could not be more proud of the way that all our people responded, and on behalf of the board I thank them for their incredible hard work, commitment and efforts.

“Overall, it was a mixed year in terms of performance.  We have taken key steps towards returning the Group to growth, including welcoming Jonathan Myers, our new Chief Executive Officer on 1 May 2020.  We have made progress against the strategy that we set out last year, but there is more to do.  We have shown that we can be swift to see opportunities, can move fast and are willing and able to take action.  We saw extraordinary outperformance for Carex in the final quarter tempered with very difficult conditions in Beauty, both as a result of the coronavirus pandemic.  Indonesia continued to perform well, but results in Nigeria remained very disappointing.

“We enter this year with a stronger base to work from and new leadership.  Our financial position, in terms of net debt and working capital management, is robust. We have significant opportunities in the increasingly important hygiene category and across Beauty as our business recovers.  The restructuring of our Nigerian business, also under new leadership, is underway.

“There are plenty of uncertainties in the macroeconomic environment, but we have taken, and will continue to take, decisive actions to drive our return to growth.”

The company also announced that, following a previously announced leave of absence from the board for personal reasons, Tamara Minick-Scokalo, non-executive director, will step down from the board with effect from 26 November and will not stand for re-election.

PZ Cussons said: “The board is extremely sorry that circumstances mean Tamara is no longer able to continue in her role and will miss her valuable contributions.  We wish her all the best for the future.”

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