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PZ Cussons suffers a pre-tax loss of N7.984 billion in 2020

The decline in revenue is attributable to the fall in sales from the core segment of the group. 

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PZ Cussons suffers a pre-tax loss of N7.984 billion in 2020

PZ Cussons Nigeria Plc, the dynamic consumer products group, has released its year-end audited financial report for the period ended 31 May 2020. The results revealed that the group suffered a pre-tax loss amounting to N7.984 billion. 

According to the figures contained in the audited financial report, the group’s financial performance for the year is unimpressive when compared with the N1.942 billion pre-tax profit the company reported in 2019. 

READ: No trophy for International Breweries after bland Q2 results

Highlights 

  • Revenue decreased by 9.879%
  • Cost of sales increased by 1.984%
  • Exchange loss increased by 112.899%
  • Bottom line decreased by 511.066% 

Facts behind the loss  

A review of PZ audited annual financial report revealed that the decline in revenue which spiked the pre-tax loss of N7.984 billion came from the 17.5% fall in the sale of Home and Personal Care Products, which is the core business segment of the group. 

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READ: Polaris Bank’s profit rises to N26.2 billion from N2.8 billion

However, in the light of the figures contained in the reports, Nairametrics was able to uncover that the sales of the company’s products, which include products such as Morning Fresh, Zip, Canoe, Premier, Joy, Stella, Venus, Imperial Leather, Cussons Baby, Carex, Robb etc., declined in 2020, compared to the sales from this segment in the corresponding period of 2019. 

On the flip side, revenue from the sales of Durable Electrical appliances increased from N27.136 billion in 2019 to N28.053 billion in 2020. 

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READ: PZ Cussons UK to sell Nigerian diary arm to FrieslandCampina WAMCO

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Other downward pressures on profitability 

The group’s prospect for profitability for the financial year 2020 was eroded by Selling and distribution expenses of N10.214 billion, and Administrative expenses of N5.477 billion. However, these expenses completely eroded the Gross Profit of N8.622 billion to the tune of N7.069 billion operating loss. 

READ: Guinness gains on NSE despite N17 billion pre-tax loss

However, the N7.069 billion operating loss was compounded by an Exchange loss of N945.86 million, and an interest cost of N454.234 million, this drove the group’s pre-tax loss to the tune of N7.984 billion. 

Key issues facing the group 

Apart from the pressures from competitors which has led to the commoditization of some of the products in the core business segment of the group, the group’s activities are exposed to the financial risks from the fall in the international value of naira “the exchange rates”. 

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READ: Fidelity Bank announces closed period ahead of H2 financial statements release

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However, PZ manages foreign exchange forward contracts but it is primarily exposed to the US dollar as a 15% decrease in the value of Naira would lead to a decrease in profitability and the total equity of PZ Cussons. 

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Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor. He is a business owner and a stern advocate of Financial literacy, who believes in the huge economic prospect of the Nigerian Payment channels and Fintech space.

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Companies

Multiverse forecasts N39.5 million profit in Q1 2021

The management of Multiverse Plc has projected a revenue of N76 million and a profit of N39.5 million in Q1 2021.

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Multiverse Mining and Exploration Plc has projected that in the first quarter of 2021, the mining and exploration company will generate N76 million in revenue, and post a profit of N39.5 million.

These projections were made by the company in a recent earnings forecast issued by the Management, and signed by the Corporate Secretaries of the company.

Key highlights of the earnings forecast for Q1 2021

  • Total revenue is projected at N76 million.
  • Turnover from agency sale is projected at N1 million.
  • Agency cost is s projected at N850 thousand.
  • Total expenses are projected at N7.8 million.
  • Operating Profit is projected at N67.3 million.
  • EBIT (Earnings Before Interest and Taxation) is projected at N67.3 million.
  • Interest Expense is projected at N27.8 million.
  • Profit after tax is projected at N39.5 million.

Key assumptions made to support the earnings forecast and projection of the company

The earnings forecast was made on the ground that there won’t be any significant change in the economic policies of the Federal Government, while the monetary policies of the CBN would not be altered significantly.

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The company also maintained that there would not be any industrial unrest that would affect its production and sales volume, while the profit of the company would not be pressured by rising costs of inputs, as prices of materials used in production shall be stable in the period under review.

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Companies

Cutix Plc forecasts N148 million profit in Q4 2021

Cutix Plc has projected that its revenue will double and profit will increase by 9% to N148 million.

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Cutix Plc, dividend

Cutix Plc has projected that in the fourth quarter of its financial year 2021, its revenue will double and profit will increase by 9% to N148 million.

These projections were made by the company in a recent earnings forecast issued by the Management, and signed by the Company’s CEO and CFO.

READ: Vitafoam shares gain 9.6%, as company reports N4.11 billion as profit in 2020

Key highlights of the earnings forecast for Q4 ended April 30, 2021

  • Revenue to increase to N1.66billion, 100% Q-o-Q.
  • Cost of Sales to increase to N1.16 billion, 70% Q-o-Q.
  • Distribution, Admin & Other expenses to increase to N232.89 million, 14%% Q-o-Q.
  • Other Income to remain unchanged at N2.50 million,
  • Finance Charges to increase slightly to N47.38 million, 3% Q-o-Q.
  • Operating income to increase to N227.83 million, 14% Q-o-Q.
  • Taxation is projected at N79.74 million.
  • While Profit attributable shareholders is projected at N148.10 million.

READ: Royal Exchange Plc forecasts N500.83 million PAT in Q1 2021

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Bottom line

The earnings forecast was made on the ground that the Nigerian economy will continue improve, as the country recovers from the impact of COVID-19. In this regard, revenue in the fourth quarter of 2021 will be slightly higher than the revenue projected in the third quarter of 2021.

READ: Okomu Oil Plc records 27.01% decline in 2020 Q3 revenues

However, the increase in the cost of sales driven by the input cost will pressure profitability to the tune of N148.10 million, which is 9% higher than the profit after tax made in the corresponding quarter of 2020.

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Company Results

Vitafoam shares gain 9.6%, as company reports N4.11 billion as profit in 2020

Vitafoam Nigeria Plc profit revealed 72.10% increase when compared with the N2.39 billion reported in the corresponding period of 2019.

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Vitafoam Nigeria Plc, Vitafoam returns to a 5-year high

Vitafoam Nigeria Plc has reported in its audited financial statement for 2020 that it made a profit of N4.11billion for the year ended 30 September 2020.

This represents a 72.10% increase in profit when compared with the N2.39billion profit reported in the corresponding period of 2019.

READ: Vitafoam returns to a 5-year high

Key highlights

  • Revenue increased to N23.44 billion in 2020, 5.21% Y-O-Y.
  • Cost of Sales decreased to N12.43 billion in 2020, 8.06% Y-O-Y.
  • Gross Profit increased to N11.01 billion in 2020, 25.68% Y-O-Y.
  • Other income increased to N638.97 million in 2020, 63.91% Y-O-Y.
  • Distribution costs increased to N1.05 billion in 2020, 8.13% Y-O-Y.
  • Administrative expenses increased to N4.13 billion in 2020, 10.57% Y-O-Y.
  • Operating profit increased to N6.47 billion in 2020, 45.58% Y-O-Y.
  • Finance income increased to N106.51 million in 2020, 5.39% Y-O-Y.
  • Finance Costs decreased to N930.17 million in 2020, 11.39% Y-O-Y.
  • Profit from continuing operations increased to N3.92 billion in 2020, 58.88% Y-O-Y.
  • Profit from discontinued operations increased to N191.63 million in 2020, 345.68% Y-O-Y.
  • Profit for the year increased to N4.11 billion in 2020, 72.10% Y-O-Y.

READ: Vitafoam’s 2020 oncourse to make light–work of 2019

READ: Sterling Bank Plc forecasts N2.09 billion PAT in Q1 2021

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What you should know

  • Shares of the company have gained 9.6% within the first one hour of trading, largely at the backdrop of news of the company’s impressive performance as the current valuation of the company in the light of its results suggests that the shares of the Company are undervalued at the current price.
  • Checks by Nairametrics as of 11:10 am today confirmed that the company is on a full bid, as 4,930,245 bids from 23 investors have been placed at the highest price for the day, without a single offer at a price lower than N8.55.

READ: Ecobank Transnational Inc. records 11% increase in interest income for Q3 2020

Bottom line

The profitability of the company was beefed up in 2020 on the back of the decrease in the cost of raw materials coupled with the increase in sales from the core segment of the company which led to the 5.21% increase in revenue in 2020.

READ: Bitcoin miners are super-rich, earn $1,000,000 per hour

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However, it is important to note that the impressive performance of the Vitafoam Group was also strengthened by the increase in other profit owing to improvement in sales, this helped the company to also grow its revenue from services provided to customers’ after-sales.

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