Manchester-headquartered manufacturing group PZ Cussons has reported a drop in annual profit and revenue amid continued problems with sales in Africa.
The group, behind the Imperial Leather, Carex, St.Tropez and Sanctuary Spa brands, reported a 6.8 per cent drop in revenues to 拢689.4m for the year ended May 31, down from 拢739.8m in 2018.
Profit before tax dropped by 37.5 per cent, from 拢59.2m to 拢37m, while adjusted profit before tax dropped 12.9 per cent, from 拢80.1m to 拢69.8m.
PZ Cussons said its decline in revenue was driven by the personal care and home care categories in Nigeria and the food and nutrition category in Europe & the Americas.
鈥淭his was due to economic volatility leading to the value brands being squeezed reflecting lower consumer confidence, price reductions and down-trading,鈥 the group said.
The group experienced a 鈥渄isappointing鈥 adjusted operating loss of 拢1m for the year in Africa, while revenues in the region dipped by 15.2 per cent.
Lower revenues were also driven by increased operating costs predominantly relating to charges associated with port access issues in Lagos, the group said.
Non-executive chair Caroline Silver said PZ Cussons鈥 financial results were 鈥渕ixed鈥, with 鈥渁 combination of solid performances in Europe & the Americas, with strong growth in the beauty business unit and Asia Pacific, compared with very disappointing results in Africa鈥.
鈥淎s we anticipated at the half year, the adjusted profit before tax of 拢69.8m reflects the negative impact of the extremely tough macroeconomic conditions in Nigeria, which has historically been a key profit driver.鈥
The group set out a strategy alongside its financial results, which it hopes will deliver increased focus and scale, accelerating the group鈥檚 return to profitable growth.
Ms Silver said: 鈥淲e cannot rely upon short term economic conditions improving markedly in our key markets and are therefore taking action to reposition the group to return to profitable growth.
鈥淲e have today announced a new strategy, built around focus, scale and accelerate.鈥
She continued: 鈥淥ur resources and investment will be prioritised behind key categories and brands in only those geographies offering the clearest opportunities in order to return the Group to sustainable, profitable growth.
鈥淥ur cost base will be tightly managed and we will act at pace. The results from this will not be immediate, but we expect 2019-20 to be an important transitional year.鈥
Analyst Russ Mould, investment director at AJ Bell, said the company needed to 鈥渟crub up鈥 for its shareholders.
He said: 鈥淐onsumer goods firm PZ Cussons already delivered a hefty profit warning to get the market in a lather in January but if investors thought all the bad news was out of the way they need to think again.
鈥淎gain it is the long-running Nigerian soap opera which is creating all the drama. Having contributed heavily to a near-40 per cent fall in full-year profit, the ongoing troubles faced by its business in the country are likely to weigh on performance in the 12 months to 31 May, 2020.
He continued: 鈥淭he dreaded word 鈥榯ransitional鈥 is being applied to the year but the company is at least taking action 鈥 with a plan to pull back from some non-core brands and geographies in order to return to sustainable growth and chief executive Caroline Silver suggests she will not waste time, pledging to 鈥榓ct at pace鈥.
鈥淣et debt is declining so there is less danger of a fall in earnings raising question marks over the company鈥檚 financial position.
鈥淓lsewhere, a maintained dividend offers at least a modest indication of confidence in its future prospects.鈥
