June 14 – Soaps and cosmetics maker PZ Cussons on Thursday said its full year pre-tax profit is expected to be at the lower end of the 80 million to 85 million pound range it previously provided, as conditions in Nigeria have worsened.
The company said while higher oil prices in Nigeria have contributed to increased foreign exchange reserves and a relatively stable exchange rate, liquidity has not flowed down into the economy.
As a result, the company did not see a pickup in sales during the peak selling season in the country, and volumes, prices and margins are being hurt across most areas of the Nigerian product portfolio.
Shares of PZ Cussons fell 5 percent to 223 pence in early market trading. The stock has fallen 35 percent in the last 12 months.
Africa is the company’s biggest market, contributing 38 percent to total revenue, followed by the European market with 35 percent.
Aside from home care and personal products, PZ Cussons also sells home appliances, partnering with Haier, in Africa. It is the market leader in Nigeria for freezers and refrigerators.
Back in March, the company issued a profit warning, saying it would cut costs due to weaker sales in important markets like the UK and Nigeria, which was hit by the devaluation of the Naira currency.
The company said UK consumers have been shopping cautiously because of cost inflation and economic uncertainty.
The Imperial Lather and Carex maker said its bathing product sales in the UK have been hurt by the tightening UK retail landscape and inflation outpacing wage growth.
However, the company said its personal care segment, with brands like Sanctuary and St Tropez, has performed well particularly in the U.S.
The company said sales in Australia are improving and profits in Indonesia have been boosted by its baby products.
Looking ahead, PZ Cussons said its ongoing initiatives including a review of product costs across all categories, will strengthen its brand portfolio.
“It is expected that macro conditions will remain challenging with general elections in Nigeria and Indonesia falling in the second half of the new financial year,” the company said, adding that it was seeing pressure from volatile exchange rates and commodity costs. (Reporting by Sangameswaran S in Bengaluru; Editing by Bernard Orr)