PZ Cussons profits cut by currency fall, others

Annual pre-tax profits at PZ Cussons, the Imperial Leather soap maker with a major presence in Nigeria, have slumped by almost a third because of severe political and economic problems in the African country, as well as unfavourable currency movements. According to the Financial Times of London, for the year to May, the company’s pre-tax profit fell 32 per cent to £84million, on revenues of £819million.

Nigeria’s new government continues to battle Boko Haram extremists, while the nation’s economy has been blighted by falling oil prices and a currency crisis that has made imported goods much more expensive and eroded people’s spending power. The naira, was devalued by 25 per cent in the second half of PZ Cussons’ financial year. In an effort to stem the flow of dollars out of the country, Nigeria’s central bank has produced a long list of items locals cannot buy with money derived from the foreign exchange market, including soap as well as toothpicks and tinned fish.

PZ Cussons, which has nonetheless increased its annual divided by 3.1 per cent to 8p per share, said: “Within Africa and our largest market Nigeria, disruption in the north, the Ebola outbreak, presidential elections and a significant currency devaluation have all contributed to a very difficult operating environment.” The households goods group added that some of its other important markets were suffering from imported inflation because of their currencies. These included Australia, Indonesia and Nigeria.

The company said the outlook for its business is challenging. PZ Cussons Nigeria Plc had reported a 27.91 per cent decline in net earnings during the third quarter 2015 ended February 28, 2015. In a filing with the Nigerian Stock Exchange (NSE), the company’s profit after tax fell to N 2.787 billion during the period under review against N3.866 billion recorded the previous year, representing a decline of 27.91 per cent. Profit before tax stood at N3.991 billion as against 5.174 billion posted the previous year, accounting for a drop of 22.85 per cent.

Turnover increased marginally by 0.56 per cent to N52.889 billion during the period, compared with N52.594 billion in the same period of last year. The local unit of British soap and shampoo maker had also recorded a 37.82 per cent decline in net earnings during the second quarter 2015 ended November 30, 2014.