PZ Cussons shares tumble to 15 year low due to naira devaluation

 

PZ Cussons Plc, Soap maker has warned of lower annual profit as it cut its interim dividend on Wednesday, pressured by the devaluation of the Nigerian currency, sending shares in the soap maker to a 15-year low.

Shares in the maker of Imperial Leather soap, Carex hand gel and St Tropez tanning spray fell as much as 14 per cent to a low of 110 pence in morning trade.

It expects an adjusted operating profit of 55 million to 60 million pounds for the year to May 31, down from 73.3 million last year.

PZ Cussons has been losing sales revenue and turnover since 2020 and it seems headed back to the level attained as far back as 2016. The consumer goods manufacturing and marketing company suffered a profit drop for the second year in 2019, which worsened into a loss of N1.6 billion at the end of its half year operations ended November 2019.

Analysts as of last September expected an operating profit of 61.5 million to 68.2 million pounds, according to a company-provided consensus.

"The most significant challenge we have faced by far has been the devaluation of the Nigerian naira, which is today around 70 per cent weaker than a year ago, representing the biggest drop in the currency's history," CEO Jonathan Myers said in a statement.

The naira exchange rate plunged to a record low against the dollar on the official market last Tuesday, sinking well below black market levels.

PZ Cussons, which counts Nigeria as one of its four major markets, said it aimed to conclude talks with minority shareholders of PZ Cussons Nigeria to take the business private by the end of the financial year.

The company also flagged weaker beauty products sales and a softer Indonesian market in the first half, while sales of personal care products in the UK remained robust.

The Manchester-based company announced an interim dividend of 1.5 pence per share, down from 2.67 pence a year earlier.