PZ Cussons Plc has started its 2025/2026 financial year on a strong note, posting a profit before tax of N21.541 billion for the first quarter ended August 31, 2025.
This marks a sharp turnaround from the loss before tax of N5.22 billion recorded in the same period of the previous year.
Notably, the Q1 profit already outpaced the company’s full-year profit of N16.66 billion for the financial year ended May 2025.
Profit after tax stood at N13.486 billion, a significant improvement from the loss after tax of N4.648 billion in the corresponding quarter of the previous year.
Earnings per share rose to N3.29 in Q1, surpassing the company’s full-year EPS of N2.32 in 2025.
Drivers
Further review of the unaudited results shows that a combination of revenue growth, profit on disposal of assets and reduced interest expenses buoyed the impressive bottom-line performance, although cost pressure remains evident as gross margins declined.
- The company reported revenue of N59 billion, up 48% year-on-year and already 28% of the last full year’s revenue.
- Other income jumped to N12.175 billion, boosted by N11.965 billion from the disposal of three properties earlier classified as assets held for sale, alongside scrap sales.
- On financing, interest expenses dropped by 84% year-on-year to just N221 million, compared to N1.4 billion in Q1 of last year and N3.6 billion for the full year 2025.
- Total borrowing fell by 18% to N58.386 billion, with the bulk of loans still owed to the ultimate parent company, PZ Cussons (Holding) Limited UK.
However, cost pressure persisted.
- Cost of sales grew faster than revenue, causing gross profit margin to contract to 27% from 31% in the prior period, though gross profit in absolute terms was higher at N16.099 billion versus N12.231 billion last year.
- Overheads also remained elevated, consuming over 63% of gross profit.
Despite the cost pressures, operating profit came in strongly at about N22 billion, 14% higher than last full year’s operating profit, lifting operating profit margin to around 37%.
Balance sheet strength and health:
Total assets expanded by 8.6% to N183.487 billion in six months, with over 74% drawn from current assets, mainly inventories, trade receivables, and cash and cash equivalents.
On the liability side, the company continues to be weighed down by retained losses, though this decreased to N25.72 billion, consequently reducing the negative shareholders’ funds to N3.855 billion.
If the bottom-line results seen in Q1 are sustained, the company is likely to exit retained losses and restore shareholders’ funds to positive territory by the end of Q2.
However, trade and other payables rose to N117 billion from N105 billion as of May 2025, suggesting working capital strain.
While this provides short-term funding support, management will need to strengthen operating cash flows to ensure that the earnings rebound translates into a more resilient balance sheet.
Key highlights: (Q1 2025/26 vs. Q1 2024/25)
- Revenue: N59.015 billion; +47.58% YoY
- Cost of sales: N43.113 billion; +53.31% YoY
- Gross Profit: N15.902 billion; +30.01% YoY
- Admin, Distribution expenses: N10.030 billion; +37.43% YoY
- Cash and cash equivalent: N30.624 billion; -24.68%
- Total Assets: N183.487 billion; +8.64%
Insight
PZ Cussons has opened its 2025/26 financial year with a performance that exceeded past performance, as Q1 profit already outpaced the full-year result of 2025.
- Debt has come down to N58.385 billion from N71.268 billion, retained losses have narrowed, and shareholders’ funds are edging closer to positive territory.
- Earnings per share also rose to N3.26, surpassing the full-year EPS of N2.32, underlining the earnings momentum.
Yet, the bigger test lies in fixing the balance sheet.
While profitability is rebounding, the company remains highly geared, with the bulk of its borrowings still owed to its UK parent.
In May 2025, management admitted that tough capital decisions could be on the table adjusting dividends, raising fresh capital, or selling assets.
- One of those options has already been implemented: the disposal of properties and scraps, which provided a major boost to Q1 earnings.
At this stage, the results suggest that PZ may be able to “earn its way out” of negative equity if recurring profits are sustained.
However, reliance on one-off gains means the turnaround is not yet fully secured.
Raising fresh capital would accelerate balance sheet repair, while delaying dividends could conserve cash.
Investors will be watching closely to see if Q1 marks the start of a sustained recovery or a temporary lift helped by asset sales.
PZ Cussons began the year with a share price of N24.30 and closed September at N34.50, reflecting a 42% year-to-date gain.
