Clean slate as manufacturer ‘stabilised’ by new leadership team

Strong sales for its hand washing products helped PZ Cussons add a shine to its performance during the pandemic.

The Carex manufacturer increased sales by 10% to £313m in the six months to November, with adjusted pre-tax profits up 16% to £35m.

The Manchester-based company was facing challenges before the arrival of Covid-19, after a difficult leadership transition.

Former longstanding chief executive Alex Kanellis retired in January 2020 but had payments withheld after an investigation into cash withdrawals and payments that had been made over a period of years.

Jonathan Myers

Jonathan Myers became chief executive in May, joining from Avon Products where he had been chief operating officer.

PZ Cussons’ chair Caroline Silver said: “The organisation has been stabilised in the last twelve months with the arrival of Jonathan Myers as CEO and his new management team.

“Our fast start to this financial year was maintained with the group delivering strong growth in revenue and adjusted profit across all regions, notwithstanding increased investment in marketing and organisational capabilities.”

PZ Cussons’ share price has also rallied in recent months. Last night’s closing price of 238p valued the manufacturer at £1bn – up more than 20% on a year ago, and 60% higher than its low when the first lockdown hit the markets badly last March. The group has said it will pay a 2.67p interim dividend.

Silver added: “In the second half of this year, with our recent strategy review moving into execution, we expect further progression in brand building, the continued turnaround of key brands and the implementation of our simplification project in Nigeria.

“The external environment continues to remain very challenging and volatile but we remain focused on developing our strategic plans that will benefit all stakeholders in the longer term.”

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “The latest update from consumer goods firm PZ Cussons suggests recently appointed chief executive Jonathan Myers’ strategy is already starting to bear fruit.

“What Myers is attempting isn’t rocket science.

“He’s simply trying to clean up the mess left by several predecessors by focusing investment on key brands like Carex, the UK’s number one hand wash; Imperial Leather soap-to-shower gel; and tanning product St Tropez.

“The pandemic has boosted demand for hygiene products and cultural memory of the crisis means habits like stringent and regular handwashing are likely to remain legacies of COVID.

“Despite this boost, and the double digit increase in first half revenue it helped deliver, it has not all been plain sailing. Like many businesses PZ Cussons has incurred coronavirus-linked costs.

“These extra costs and the uncertain environment help explain why the dividend is unchanged, despite a material improvement in the balance sheet.

“A big challenge for the company in recent years has been the poor performance of its Nigerian business. It has regularly racked up losses thanks to the devaluation of the naira currency, in-country turmoil and a volatile supply chain.

“Myers clearly believes the prize in Nigeria and Africa more widely is still worth chasing, but wants to ‘simplify’ the business and has completed stage one of a review of basics like its portfolio of products, route to market and organisational structure.

“The demographic and economic developments in Nigeria suggests there is significant long-term potential, but the same could have been said at any point in the last five or 10 years and it has not been delivered on yet.”