PZ Cussons Nigeria Plc, the Nigerian unit of British consumer goods maker, PZ Cussons Plc reported its full year 2018 results on Friday, with the firm’s profit declining by 48% to N1.9bn from N3.7bn in the previous year.

The company which makes a wide range of consumer products including electricals, personal and homecare products, dairy brands under the Nutricima business line, among others blamed the decline in profits on subdued consumer demand caused by cost inflation outstripping wage inflation. As a result, inventory levels in the trade have remained high leading to intense competition particularly in its milk segment, resulting in lower volumes, prices and margins.

Also blamed for the profit decline is borrowing cost which has remained high despite economic recovery (global oil prices recovering, inflation rate declining and a stable exchange rate). The high borrowing cost has had a material impact on cost of goods sold.

Also, the group reported tepid sales growth of 3% to N80.6bn up from N78.2bn in the previous year.

Facing declining profits and slow sales, PZ Cussons Nigeria said it has outlined a number of initiatives to improve efficiency of its business and strengthen the company’s brand portfolio to better withstand the subdued levels of consumer confidence and higher levels of competition it faces in the market.

The initiatives include re-assessing the structure of the group’s operating model to further reduce the overhead base; review its product cost with a focus on areas such as packaging reduction and in conjunction with a drive to reduce plastic consumption; review the group’s Nutricima milk business with an objective of returning it to profitability; re-prioritisation of the group’s new product pipeline to focus on fewer bigger projects requiring lower levels of complexity, and an evaluation of other growth opportunities utilizing the group’s product portfolio and distribution capability.