PZ Cussons has disclosed that it would be trimming down its operations in Nigeria after the country’s hostile business environment caused the company’s 2018 global profit to slump.
The makers of Imperial Leather disclosed that sales in the United Kingdom grew but Nigeria and Australia affected its profits, causing it to fall by 37.5% from £59.2 million to £37 million for the year to May 31. Its revenues were also down by 6.8% to £689.4 million from £739.8 million.
How Nigeria is affecting profit: The company had to write off £24.8 million against its Nigerian Nutricima drinks business and Australian brand Five:am. Also, the slow growth of the economy, drop in disposable income and delays at the port in Lagos have taken a toll on the company.
Now, there are plans to focus solely on the company’s personal care and beauty brands after PZ Cussons’ St Tropez fake tan products posted a strong sales result, although marketing spends affected its profits.
The reduction in the company’s Nigerian business came at a time PZ Cussons intended to sell off its non-core brands that are viewed unprofitable, but it’s not clear if Nutricima will be affected, but brands like Imperial Leather and Carex are expected to enjoy the repositioning of the company.
Despite the economic downturn, the company said it still plans to take advantage of future recovery.
“This will ultimately result in a much greater proportion of group earnings coming from personal care and beauty. These categories provide us with our sharpest competitive edge and offer the highest margin earnings potential.
“This year, we planned and achieved strong growth in Original Source on the back of the introduction of a new bottle (which significantly reduced the amount of plastic in the packaging) together with new products such as Original Source Water Infusions.”
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Note: The company’s soap brand, Carex now has 36% of the market, with Original Source and Imperial Leather taking 20% of the shower market.