The profit of global consumer goods maker, PZ Cussons Plc, has continued to be negatively affected by lower sales in its Nigerian market and elsewhere. Reuters reported earlier today that the British company’s half-year 2019 profit was quite low due to this problem.
The company’s Nigerian subsidiary is PZ Cussons Nigeria Plc, which manufactures soap brands like Premier and Imperial Leather. Once upon a time, these soap brands moved market in Nigeria. Unfortunately, the story has been different lately.
The problem: The company’s reported lower sales in Nigeria has always been blamed on weakened consumer spending due to the bad economy that has affected the disposable incomes of millions of Nigerians. But then again, soap is an everyday essential, which people buy no matter how bad the economy is.
What this means, therefore, is that lower demands for PZ Cussons soap brands may not have been caused entirely by the economy. There is also the possibility that stiff competition between the company and other soap makers might have been a contributing factor.
To address this problem, the company, earlier this year, went about improving and rebranding its Premier Soap brand. As Nairametrics reported in August, the company unveiled two new variants of the Premier Soap brand in a desperate bid to re-capture the market. It has embarked on major campaigns to this effect, albeit with the help of some B-list celebrities. This effort probably has not paid off.
Note that this is not the first time the British company is blaming its Nigerian subsidiary for its declining financial performance. Last year, the company published several trading updates informing stakeholders that unfavourable economic situation in Nigeria was hampering its overall growth.
But Nigeria is not the only one to blame
It is important to clarify that weaker sales by PZ Cussons Nigeria Plc is not the only reason its parent company’s H1 profit was low. As the Reuters report indicated, demand for the company’s products in Britain also reduced because many Britons cut down on expenses.
Across much of the company’s operation in Africa, performance was also low. In the meantime, the company is optimistic that its financials will improve by the time full-year financials are ready.
“A stronger second half is expected subject to no further worsening of the economic and trading environments across our key geographies.”