Broker snap: FX pressures build but PZ Cussons delivers solid H1, says Panmure

11th Dec 2013 10:34

Panmure Gordon has reiterated its positive stance on consumer products group PZ Cussons, saying that the stock continues to trade at a discount to others in the sector after its in-line first half.A trading update on Wednesday showed that the Imperial Leather owner traded in line with forecasts during the six months to November 30th with constant-currency revenues and operating profits up 6% and 8%, respectively. Panmure highlighted this as a "solid" result.However, currency is providing a 2% drag on reported results for the top and bottom line, with the broker pointing out that it could be more than a 6% headwind in the second half.Nevertheless, despite the currency pressures, Panmure has retained its full-year profit before tax forecast of £119.1m, representing 10.8% growth. The earnings per share forecast has been reduced by 1.6% to 18.34p due to slightly higher tax and minorities assumptions, "but this still equates to 10.3% growth", it said."We think the consumer environment in both developed and developing markets remains difficult for consumer goods companies and currency weakness particularly in Australia and Indonesia impacts both on costs and translation back to sterling. "However, we think PZC has delivered a strong H1 performance, with accelerating top line growth in Nigeria and continued double-digit growth in Indonesia particularly encouraging."The stock trades at 19.7 times calendar 2014 earnings, an 8% discount others in the household and personal care sector. The target price was left at 445p.The share price was down 0.39% at 378.6p by 10:27 on Wednesday.BC