PZ Cussons issues low profit warning ahead of release of first-half results

PZ Cussons Plc, the British maker of a wide range of consumer goods and parent company of PZ Cussons Nigeria Plc, issued a profit warning on Thursday ahead of the release of its half-year results in January for period ending 30th November, 2018.

While its business in Europe and Asia have seen continued good performance as a result of product innovation and distribution expansion, the company said that its African business remains challenging due in part to the economic situation in Nigeria.

The company noted that consumer disposable income in Nigeria remained weak ahead of the election scheduled for February 2019. There have also been cost challenges from a further 10% weakening of the naira against the US dollar in the period and additional transport costs from significant disruptions being faced in clearing goods at the port. This will result in a lower first-half profit contribution than the same period in the prior year.

Furthermore, it said with prices, volumes and margins remaining under pressure, the business has been focusing on optimizing price points and pack sizes across key brands in the portfolio.

However, the company happily revealed that its Nutricima dairy business, which was loss making last year, had turned the corner towards a break-even position.

Looking forward to the rest of the year, the company expects trading conditions in Nigeria to remain subdued as it continues to actively manage and review its Nigerian portfolio to ensure that it mitigates short term volatility and is best placed for when growth returns to the market.

PZ Cussons Nigeria Plc, declared a net loss of N208 million in the first quarter of 2018/2019 financial year, citing low patronage of its products due to subdued consumer disposable income. The company produces a diverse line of consumer products, including dairy brands Nunu, Olympic and Coast milk brands as well as drinking yoghurt “Yo!” under its Nutricima business.

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