PZ Cussons to sell St Tropez tanning brand, evaluating Africa options

24th Apr 2024 07:38

(Sharecast News) - PZ Cussons said on Wednesday that it was planning to sell the St Tropez tanning brand and is reviewing its operations in Africa, as it backed its profit outlook for 2024.

The company said that following a strategic review, it has decided to refocus the portfolio "on where the business can be most competitive and where it can create most value for shareholders".

As far as the St Tropez brand is concerned, PZ Cussons said that while it has grown significantly since the acquisition, this growth will be harder to realise under its ownership, "given the need to allocate resources across our diverse geographic and category footprint".

"We therefore plan to realise shareholder value by initiating a process to sell the brand to an owner better placed to capture the brand's significant long-term potential," the company said.

It also said that while it has made "significant" progress in strengthening and improving the performance of its operations in Africa, the assets there are "complex" and it is therefore "evaluating the strategic options both to reduce risk and to maximise shareholder value".

Proceeds from any transactions will initially be used to invest behind the organic growth of the business and to reduce gross debt further.

"The group will also have the potential and ambition to pursue targeted acquisitions which are highly complementary to its more focused category and geographic footprint," it added.

News of the plans came alongside a third-quarter trading update, in which PZ said trading was in line with expectations.

Group third-quarter like-for-like revenue grew 6.4% to £126.7m. However, at reported FX, revenue fell 23.7%, mainly due to the devaluation of the Nigerian Naira.

The company continues to expect to deliver adjusted operating profit of £55m to £60m for FY24.

Chief executive Jonathan Myers said: "We have made significant progress in strengthening PZ Cussons in recent years - building brands, restoring capabilities and re-energising and professionalising the organisation.

"Today we are re-iterating our FY24 outlook, having delivered improved LFL revenue growth in Q3 on an improved volume trend. Nevertheless, the macro-economic challenges and complexities associated with operating in Nigeria are significant and there is much more to do to unlock the full potential of the business.

"As such, we have undertaken a strategic review of our brands and geographies and have embarked on plans to transform our portfolio, refocusing on where the business can be most competitive. The actions we are taking will crystallise value for our investors from assets better suited to alternative ownership structures."

At 0810 BST, the shares were up 5.7% at 100p.