PZ Cussons says profits will be flat

CONSUMER goods group PZ Cussons says its half year operating profits will be “broadly flat” as a result of continued challenges in Africa, one of its largest markets.

Last year the Manchester headquartered group which owns brands such as Imperial Leather, Carex, St Tropez and Original Source, made operating profits of £46m in the six months to the end of November.

In an update ahead of its formal announcement, PZ said it had seen a “strong performance” in Europe offsetting a difficult trading environment in Nigeria and the impact of weaker currencies in both Asia and Africa.

The company added: “The strength of the group’s innovative product pipeline and the positive impact of new launches are ensuring our market share positions are held or grown in our major markets and categories.

“Performance in certain categories in Nigeria in the second half is likely to continue to be affected by the ongoing squeeze on consumer disposable income and by the tight environment of foreign exchange liquidity.”

In the UK, performance in the washing and bathing division was strong, driven by a continuous innovation pipeline and the launch of a new range of Carex bodywash products.

The beauty division has performed particularly well across its key markets with St Tropez’s new in shower gradual tan lotion generating strong sales and the Sanctuary brand benefiting from a new #LetGo campaign as well as the launch of new ranges.

In Asia while there were challenges of increased costs from weaker exchange rates, reduced consumer disposable income and reduced results on translation to sterling, the company said it had made good progress overall in its markets there.

In Australia, performance has been good across personal care, beauty and the food & nutrition brands Rafferty’s Garden and five:am, but trading conditions in the homecare category remain challenging.

Looking ahead, PZ said performance in Europe and Asia is expected to continue to be robust in the second half, but added: “In Nigeria, the home and personal care and milk businesses are expected to continue to perform well.

“However, if current economic conditions persist, performance in the electricals business during the seasonal second half is expected to be significantly lower and trading in the PZ Wilmar joint venture will be impacted by restrictions on foreign exchange liquidity.

“The group’s balance sheet remains strong and well placed to pursue new opportunities as they arise.”