PZ Cussons confident of returning to profit growth

HEALTH, beauty and personal wash group PZ Cussons is “confident” of growing profits this year, despite continuing challenges in key markets such as Nigeria.

The Manchester-based company, one of the region’s most consistent performers in recent years, has had a tough year and in July said profits in the year to the end of May had more than halved as restructuring costs, raw material price hikes and political unrest in Nigeria all taking a toll.

Finance director Brandon Leigh told TheBusinessDesk.com: “The message is, so far so good for the first quarter. Last year was clearly very difficult and thwe key impact for this year will be Nigeria, while on a positive note raw material costs are proving to be more favouravble.”

In a trading update for June 1 to September 18 ahead of its annual meeting, the company said performance had been in line with management expectations.

Performance in the UK – where it sells and manufactures the Imperial Leather, Original Source and Carex brands – trading has been robust, despite continued high levels of promotional activity in the trade.

It is continuing to woo customers by launching new products, and in the coming months will unveil an Imperial Leather limited edition shower and bath range, and a new seasonal edition of Original Source.

Its ‘Cussons Mum and Me’ mother and baby range , achieved full UK distribution by the end of July and an extensive advertising campaign began in mid August.  Early sales rates are encouraging.

In its beauty division the poor summer weather hit sales of self tanning brand St Tropez, but the brands “performed well”, the company said, with Sanctuary benefiting from the launch of the new Active Reverse skin care range with ballet star Darcey Bussell as brand ambassador.

Mr Leigh said: “We now have four brands in the Beauty division – Fudge, Sanctuary, Charles Worthington and St Tropez, so there’s strength and depth there if one brand does not perform as well as expected.

“The issue with the summer is that if it’s raining, people wrap up and don’t show as much skin, whereas they will tan more if it’s sunny.”

Performance in Poland has been strong whilst trading conditions in Greece remain difficult.

The company said trading in Indonesia was strong with further growth in revenue and profitability during the period, but Australia, where it has been restructuring its business,  is more challenging.

Commenting on the Nigerian situation, the company said: “The two key issues affecting the performance of the business have remained. Unrest in the north of the country has continued to affect sales rates and consumer disposable income remains affected by the removal of part of the fuel subsidy in January.

“More positively however, margins have improved as a result of lower raw material costs and margin improvement projects,” it added.

Looking ahead PZ Cussons added: “Trading conditions in most markets remain challenging as a result of general uncertainty regarding the global economic outlook and pressures on consumer disposable income from high food and fuel prices.”

It concluded: “The board remains confident of a return to profitable growth in the current financial year.”