PZ 2013 H1 Interim Results ↑
PZ Plc released its 2013 to November H1 results with revenue rising 4.7% to N32billion year on year (2012 H1:N31billion). Gross profit rose 17% to N9billion compared to N7.6billion the year before. Pre-tax profits will rise at the end of the period by 41% to N3billion (2012 H1:N2.1billion)
- Cost of sales remained flat at 0.7% which very well helped push up Gross profit by 17%
- Their ability to maintain a flat cost of sale was similarly seen in operating expenses. Opex rose just 9% and also helped push Operating profit to N2.7billion.
- This is reflected in the drop of percentage of operating expenses to Gross profit
- Finance income rose 176% to N224million helping push pre-tax profits to N3billion
- PZ Cussons have no debt and finances it operations with its N46billion equity.
- The company also has strong working capital of N25.8billion indicating a financially sound business model
- The downside of this result however, is that low Returns on Equity generated this period. At 5% the company is well below the likes of Cadbury at 18% and Nestle at 48% and Unilever 38% respectively during the same period.
- Another downside too is that margins are still single digits. Opex margin 8.6%, profit margin 7%
- It is important to note though that PZ unlike Cadbury and Nestle sells White goods products, soaps, creams etc. As such it may be fair to judge the company specifically to its product lines and cost specifics.
- We like PZ and it is included in our Stock Pick. However, we feel its current price of N38 is way above out preferred entry price. That price comes with a pricey 31x P.E and projected P.E of 28.6 according to analyst.
- That price also portends a less than 2% dividend yield which is way low our expectations.
PZ released its 2013 to November H1 results in the website of the NSE[/upme_private]