Soap maker, PZ Cussons has announced it will review its business operations in Nigeria geared towards reducing risk and maximising shareholder value.
This was disclosed in a statement following the disclosure of its financial result for Q3, 2024 ending March 3, 2024.
The company announced it will sell its brand St. Tropez and evaluate its options for its Africa business noting that as part of the group, it is a very complex asset to manage despite its attractiveness.
- The statement reads, “The Group has made significant progress in strengthening and improving the performance of its sizeable operations in Africa, where it owns a highly attractive group of assets with leading consumer brands, strong operational infrastructure and continued growth potential. However, the Board recognises that this is a complex group of assets and is therefore evaluating the strategic options both to reduce risk and to maximise shareholder value.”
Revenue for the period
The company’s group revenue in the period under review grew by 6.4% but declined at reported FX rates by 23.7% because of the devaluation of the Naira. Exempting its African business, the company’s revenue declined by just 2.9%- an improvement from the drop of 3.9% recorded in the first half of the year.
In its African business, the company reported continuous increase in prices during to mitigate foreign exchange driven inflation. It noted that despite the increase in prices, its volumes increased indicating the impact of its marketing activities.
Cash repatriation from Nigeria
Furthermore, the company reported the successful repatriation of £35 million of cash from Nigeria and expects to send back another £15-20 million by the end of next month.
Speaking on the result for the quarter under review, the CEO of PZ Cussons, Jonathan Myers said there is much more to do to open the opportunities in its Nigerian business due to the severe macroeconomic challenges in the country.
- He said, “We have made significant progress in strengthening PZ Cussons in recent years – building brands, restoring capabilities and re-energising and professionalising the organisation.”
- “Today we are re-iterating our FY24 outlook, having delivered improved LFL revenue growth in Q3 on an improved volume trend. Nevertheless, the macro-economic challenges and complexities associated with operating in Nigeria are significant and there is much more to do to unlock the full potential of the business.”
What you should know
PZ Cussons in the past year has been battered by the effects of Nigeria’s macroeconomic woes on its global business. In its 2024 interim result for the six months ending 2nd December 2023, PZ Cussons reported an FX loss of £88.2 million as a result of the devaluation of the naira since June last year.
Also, the company’s plan to delist from the Nigerian Stock Exchange has hit a brick wall after the Nigerian Securities and Exchange Commission (SEC) rejected its proposal.
