ii view: results cause big slip at soap maker PZ Cussons

Full-year results to 31 May

• Revenue down 19.6% to £528 million
• Adjusted operating profit down 20.5% to £58.3 million
• Pre-tax loss of £95.9 million, down from a profit of £61.8 million 
• Gross debt of £167 million, down from £251 million
• Dividend of 2.1p per share
• Total dividend for the year down 43.8% to 3.6p per share

Chief executive Jonathan Myers said:

"Over the last twelve months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges.

“At the same time, we have taken the important first steps to transform our business and maximise shareholder value, by refocusing our portfolio on where we can be most competitive.

“We remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth."

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ii round-up:

Imperial Leather soap maker PZ Cussons (LSE:PZC) today detailed a decline in both sales and trading profits broadly matching its previous estimates, with management outlook comments further stressing the importance of movements in the Nigerian currency on group performance for the year ahead. 

A 70% plummet in the value of the Nigerian Naira over the last financial year to late May was behind a near one-fifth slump in 2024 revenue to £528 million. A pre-tax loss of £95.9 million was fuelled by reduced trading profits and increased interest charges, contrasting with a £61.8 million profit in 2023. 

Shares in the FTSE 250 company fell 8% in UK trading having come into this latest news down by a third year-to-date. That’s worse than a 15% fall for fellow consumer goods maker Reckitt Benckiser Group (LSE:RKT). The FTSE 250 index is up 7% year-to-date. 

Originally started in Africa, PZ Cussons sells hygiene, baby and beauty related consumer goods around the world, but with a particular emphasis on Nigeria, the UK, Indonesia and Australia.

A dividend of 2.1p per share leaves the total payment for the year down 43.8% at 3.6p. The Manchester headquartered company pointed to a positive start to the current 2025 financial year. Strong growth across Africa, Europe and the Americas had fuelled like-for-like revenue growth of 4.7%, partially hindered by adverse shipping in Asia. 

Previously announced plans to sell its St Tropez tanning product business continue to progress. Interest in its Africa business had also been received, potentially leading to a partial or full sale of the business. 

PZ detailed a full-year 2025 estimate for trading, or operating profit of between £47 million and £53 million, compared with an adjusted operating profit of £58.3 million in 2024, and which remains subject to movements in the Nigerian Naira. 

A trading update is likely mid-to-late November. 

ii view:

Tracing its history back to 1894, PZ Cussons today employs over 2,600 people across operations in Europe and the Americas, Africa, and Asia-Pacific. Group brands include Carex, Childs Farm, Cussons Baby, Imperial Leather, Morning Fresh, Original Source, Premier, Sanctuary Spa and St Tropez. Europe and the Americas generated its largest chunk of sterling sales in this latest year at 38%, followed by Asia Pacific at 33%, and Africa at 29%. Africa is down from top slot at 39% the previous year. 

For investors, exposure to more volatile currencies such as Nigeria’s Naira has in this latest fiscal year impacted heavily and could affect results further. Sale prices for African assets may prove more challenged under current currency conditions. Group product and geographical diversity may be reduced, while the tough currency backdrop has resulted in a near halving of the dividend payment year-over-year. 

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To the upside, revenue growth at its UK business was seen over this latest year. Management initiatives include simplifying the business, potentially via asset sales. Reducing group debt remains a focus, while a history of dividend payments is not to be dismissed. 

For now, while management initiatives and a stable of recognised brands might pique the interest of investors brave enough to bet on a recovery, more cautious investors are likely to await an upturn in fortunes before making any move. 

Positives: 

• Potential asset sales
• Focus on reducing debt

Negatives:

• Exposure to emerging market currencies
• Uncertain economic outlook

The average rating of stock market analysts:

Buy