PZ Cussons Nigeria posts full-year revenue and profit decline amid low consumer demand, competitive pressure

PZ Cussons Nigeria Plc has reported declines in its revenue and profit for the full-year ending in May 2019.

The consumer goods company said that revenue fell by 7.72% to N74.3bn from N80.6bn in 2018, impacted by low consumer demand, which in turn was driven by macroeconomic conditions as well as competition from rival brands.

In a trading update in July, PZ Cussons Plc, the British parent company said that a sustained lack of liquidity at both consumer and trade level in its Nigerian business has resulted in a significant contraction in the size of the market, resulting in lower volumes, prices and margins.

It added that long delays at the port in Lagos, along with increased port fees ate into profits.

Hardest hit by these conditions was the company’s Nutricima milk business, resulting in a 73% drop in operating profit for the year. Profits were also lower across the rest of the portfolio.

According to the company, aggressive competitor discounting in the milk business throughout most of the year resulted in significantly lower revenue and the business moving from an operating profit to an operating loss. It added that a full reassessment of the business model has taken place with greater focus now being placed on consumer pack innovation.

Net profit declined by 40% to N1.2bn, from N1.9bn in the previous year.

The parent company said in July that a major overhaul was required to get the business back on track after writing-off £24.8m against its Nutricima milk business and its Australian brand five: am, which makes yoghurt and granola. It added that it will now focus on personal care and beauty brands because they represent its strongest brands across the geographies that offer it the best opportunities for revenue and margin growth.

The company hinted at a slimming-down of its Nigerian operation, where the economy has suffered and disposable income has reduced, to cope with “current economic realities whilst still being ready to take advantage of future recovery”. The slimming down may involve selling off non-core brands, though it did not say which brands.

PZ Cussons Nigeria manufactures a wide range of consumer products which includes electricals, personal and homecare products, and dairy brands under the Nutricima business line which includes Nunu, Olympic and Coast milk brands. The company celebrated its 120 years in Nigeria in May reaffirming its commitment to the country and economy.

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