PZ Cussons Nigeria has announced significant operational updates in its preliminary results for the year ended May 31, 2024. The company is contemplating a partial or full sale of its business in response to the severe impact of the Nigerian naira’s devaluation, which has plummeted by 70 percent.
According to the results published on its website, the parent company of PZ Cussons Nigeria expressed its intent to mitigate exposure to currency fluctuations. The document stated, “Over the last 12 months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges.”
In light of the challenging economic environment, the company has begun to transform its business to maximize shareholder value. The report added, “At the same time, we have taken the important first steps to transform our business and maximise shareholder value, by refocusing our portfolio on where we can be most competitive.”
The severe devaluation of the naira has had profound implications for PZ Cussons’ financial performance. The company noted, “The period was marked by a 70 per cent devaluation of the Nigerian naira, which has had significant implications on our reported financials. We have worked hard to mitigate the impact of this on the group, while continuing to serve Nigerian consumers who are facing unprecedented inflation and economic difficulties.”
Regarding potential sales of subsidiaries, PZ Cussons revealed it has received “a number of expressions of interest for our African business,” recognizing the value of its brands and the possibility of a partial or full sale.
The company commented, “The favourable trends of the second half of FY24 have continued into the new financial year. We are progressing with our plans to sell St. Tropez and have received a number of expressions of interest for our African business, the potential of our brands and people, which could lead to a partial or full sale.”
Despite the challenges posed by currency devaluation, PZ Cussons remains optimistic about its long-term potential. The company stated, “Against this backdrop, we remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth.”
In addressing the impact of the naira’s devaluation, PZ Cussons reported a foreign exchange loss of £107.5 million, which “primarily arose from the translation and settlement of USD denominated liabilities in our Nigerian subsidiaries and is wholly the result of the devaluation of the naira, which fell by 70 per cent from May 31, 2023 to May 31, 2024.”
On a positive note, the company highlighted that revenue in its UK Personal Care business has seen significant improvement, achieving profitable, double-digit revenue growth.
In a strategic move, PZ Cussons indicated its interest in acquiring the remaining 26.73 percent minority shares in its Nigerian subsidiary at a price of ₦21 per unit. Currently, PZ Cussons holds a 73.27 percent stake in the Nigerian subsidiary, which translates to 2.90 billion shares, valued at ₦45.53 billion as of September 18.
However, the Nigerian subsidiary continues to face challenges, posting a loss of ₦94.78 billion in the third quarter of 2023/24, a stark contrast to the ₦11.213 billion gain during the same period in 2022. The firm also recorded a ₦74.14 billion loss in Q2, leaving it in a negative net asset position, with liabilities exceeding assets by ₦46.420 billion due to naira depreciation.
PZ cussion is now moving forward with its closed period, which began on September 1 2024 and will continue until after the release of its audited financial statements for the first quarter till August 31, 2024
