PZ Cussons reports drop in full-year revenue, profit

18th Sep 2024 07:18

(Sharecast News) - Consumer goods company PZ Cussons reported a 10.6% drop in full-year revenue to £527.9m on Wednesday, primarily due to the significant devaluation of the Nigerian naira against sterling.

The FTSE 250 company said profit before tax fell 39.7% to £44.7m for the 12 months ended 31 May, reflecting reduced operating profit and increased interest charges.

Profit before tax slid 29.7% year-on-year on an adjusted basis, to £44.7m.

It said the naira's average value was 57% lower against sterling during the year, substantially impacting earnings and cash flow.

Despite those challenges, the company still achieved like-for-like revenue growth of 4.4%, driven mainly by price adjustments in Nigeria to offset inflation.

Excluding the African market, however, like-for-like revenue declined 2.6%.

PZ Cussons reported progress on its strategic priorities, including simplifying and strengthening its Nigerian operations by improving dollar sourcing and increasing direct customer engagement.

In the UK, the company saw strong revenue performance with double-digit growth in brands like Original Source, Imperial Leather, and Childs Farm, and a return to growth for Carex.

As part of its portfolio transformation, PZ Cussons said it was proceeding with plans to sell its St Tropez business.

The board had also received expressions of interest in its African operations, which could lead to a partial or full sale.

Gross debt was significantly reduced from £251m to £167m, aided by the repatriation of about £50m from Nigeria and positive cash flow elsewhere.

However, due to the impact of the naira devaluation on earnings, the board declared a dividend of 2.1p per share, down 44% from the prior year's final dividend, bringing the full-year dividend to 3.6p per share.

Looking ahead to the 2025 financial year, PZ Cussons reported a positive start with a 4.7% like-for-like revenue growth, driven by strong performance in Africa, Europe, and the Americas.

The company said it expected to deliver an operating profit between £47m and £53m, assuming current exchange rates persist.

Movements in the naira would remain a key factor affecting reported results due to their impact on currency translation and intra-group liabilities.

"Over the last 12 months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges," said chief executive officer Jonathan Myers.

"At the same time, we have taken the important first steps to transform our business and maximise shareholder value, by refocusing our portfolio on where we can be most competitive.

"The period was marked by a 70% devaluation of the Nigerian naira, which has had significant implications on our reported financials."

Myers said the company had worked to mitigate the impact of that on the group, while continuing to serve Nigerian consumers who were facing "unprecedented" inflation and economic difficulties.

"Elsewhere, we significantly improved trading in our UK Personal Care business as we returned Carex to growth, maintained our momentum in ANZ, delivered a return to volume-led revenue growth in Indonesia in the fourth quarter and led Childs Farm to a year of profitable, double-digit revenue growth.

"The favourable trends of the second half have continued into the new financial year."

The firm was progressing with plans to sell St Tropez, Jonathan Myers added, and had received a number of expressions of interest for our African business, which could lead to a partial or full sale.

"Against this backdrop, we remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth."

At 0820 BST, shares in PZ Cussons were down 12.5% at 90.3p.

Reporting by Josh White for Sharecast.com.