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Poor Sales, Naira Instability Threaten PZ Cussons' FY Profits Poor Sales, Naira Instability Threaten PZ Cussons' FY Profits

Economy

Poor Sales, Naira Instability Threaten PZ Cussons’ FY Profits

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By Dipo Olowookere

Leading consumer products company, PZ Cussons Plc, has informed shareholders not to expect rise in its full year profit because of some challenges the firm was battling with.

On Tuesday, the company said its subsidiary in Nigeria is operating under tough conditions, which will eventually have a negative impact on the firm’s overall performance.

PZ Cussons specifically identified low demand of its products in the Africa’s largest market coupled with “extremely challenging conditions.”

As a result, the cosmetics and soap maker said it is likely to declare a sharp decline in pre-tax profit for the year ending May.

The company said full-year adjusted pre-tax profit is now expected to be $92.1 million from 105.4 million a year earlier.

According to the firm on Tuesday, profit from its African business dropped 70.7 percent in the half-year and the arm, which contributes over a third of its revenue, has been struggling to make thing happen with margins being squeezed amid dwindling demand.

In Nigeria, its most important market in Africa, the company said disposable incomes had remained weak ahead of a general election scheduled for February 2019.

PZ Cussons had already warned in December of a lower first-half profit contribution from Nigeria as it faced disruptions in getting goods into the West African nation. It specifically said the major problem is the ongoing cost challenges due to significant disruption being faced in clearing goods at the port and a further 10 percent weakening of the Naira against the US Dollar.

“The group continues to make pleasing progress in Europe and Asia, with new product development and increased support across our key brands delivering positive momentum.

“Disappointingly, however, the macroeconomic conditions in Nigeria remain extremely challenging and continue to have a significant negative impact on overall group performance.

“We anticipate that consumer demand in all our key markets will remain subdued. Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market,” the company’s chair, Caroline Silver, said in an update for the half year to November 30.

Business Post reports that on Tuesday, shares of PZ Cussons rose by 7.52 percent to trade at N12.15k per unit on the floor of the Nigerian Stock Exchange (NSE).

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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