Half year profits down 13% at PZ Cussons
TRADING difficulties in Asia and the Middle East and higher raw material costs sparked a 13% slide in profits at PZ Cussons, the personal wash and beauty products manufacturer.
Shares fell 7% or 22p to 288.9p on the news and the prediction that full year prospects will be at the lower end of forecasts.
Despite a 10% rise in group revenues in the six months to November 30 last year to £414m, the Manchester-based group said profits in the period came in at £40.2m compared with £46.2m last year.
PZ Cussons, which owns the Carex, Imperial Leather, Original Source brands, said its businesses in Australia, Thailand and the Middle East had been beset by a number of challenges which led to operating profits in the Asia region falling from £8.6m to £2.1m.
The Australian market saw highly competitive trading, Thailand was affected by the floods there lat last year and business in the Middle East was disrupted by the political uprisings in the region last year.
In Africa – where PZ Cussons has a major presence in Nigeria – revenues rose from £142.3m to £162.7m but operating profits were flat at £13.7m.
In Europe – revenues rose from £146.4m to £174.5m while operating profits rose from £23.7m to £24.3m.
The impact of rises in key raw materials was £20m, while exchange rate fluctuations also hit revenues and profits to the tune of £8m and £1.1m respectively.
The group said its beauty division, which includes hair care brand Charles Worthington and market-leading self tan brand St Tropez, had completed the £25.5m acquisition of Fudge, the hair products brand.
Despite the hit to the bottom line, PZ Cussons proposed a 5% hike in its interim dividend to 2.23p per share.
Looking ahead the company said that a deterioration in the social and political situation in Nigeria, its largest single market, was causing concern, and that this could impact its full-year results.
Chairman Richard Harvey said: “We anticipate trading conditions in some markets will continue to be difficult for the remainder of the year, and, in particular, we are closely monitoring the current economic and social tensions in Nigeria which may further impact the year-end outturn.
“Overall, we anticipate that results for the full year will be towards the bottom end of the range of current expectations.”
