PZ Cussons in lather over raw material costs

19th Sep 2011 07:26

'Imperial Leather' soap maker PZ Cussons said performance in the second half of the year has been in line with expectations, but the company's margins are under threat from rising raw material costs.Looking at European markets, the company said that in the UK, trading in the core washing and bathing division has been robust although margins continue to be affected by high promotional and raw material costs. Meanwhile, the beauty division is trading well across the three brands of Sanctuary, St Tropez and Charles Worthington with good growth in the US offsetting tougher trading conditions in some UK distribution channels. Performance in Poland and Greece has also been in line with expectations.In Asian markets, solid performance in Indonesia is helping to offset poorer trading conditions in Australia, which have continued to worsen in the company's core categories, largely as a result of rising raw material costs.In Africa, positive growth momentum has continued in Nigeria across all business units of Home and Personal Care (HPC), Electricals and Food and Nutrition, although margins in HPC in particular have been affected by the full effect of the continued rise in raw material costs.Construction of the palm oil refinery with Wilmar in Nigeria is on schedule with completion due by the end of the 2012 calendar year."Trading momentum in most markets is positive giving cause for optimism. Margins continue to be affected by raw material cost increases with initiatives under way to recover these through higher selling prices and margin improvement projects," the company said. --jh