PZ Cussons trading as expected, Nigeria plans progressing

23rd Nov 2023 07:27

(Sharecast News) - Consumer goods giant PZ Cussons said in an update on Thursday that its trading performance remained consistent with the outlook provided at its full-year results in September.

The FTSE 250 company, which was holding its annual general meeting, said that in terms of trading, it expected to report low-single-digit like-for-like revenue growth for the first half of the 2024 financial year.

It put that growth down to a strong performance in the Nigeria and ANZ regions, offset by a decline in Indonesia.

The Europe and Americas business segment remained stable overall, with notable improvements in the UK washing and bathing brands but a decline in the beauty business.

PZ Cussons said it anticipates achieving a robust year-on-year operating margin improvement in the first half, with further improvements expected in the second half.

It said it would provide detailed guidance on 2024 financials, including the effective tax rate, non-controlling interest, and net interest charge, in its interim results, which would largely depend on trading in Nigeria and other regional developments.

In Nigeria, PZ Cussons said trading in the first half had been strong, with most of its brands maintaining or gaining market share.

Despite the challenges posed by high inflation, the company expected improvements in gross and operating profit margins for the first half of the year.

The lack of availability of dollars in Nigeria - a challenge highlighted in September - posed difficulties for the company's day-to-day operations and cash repatriation.

However, PZ Cussons said it had accelerated its operational and corporate plans to mitigate those risks in 2024, adding that recent improvements in currency market liquidity were also encouraging.

As a result, PZ Cussons Nigeria expected to meet its foreign currency needs for daily operations, reducing the need for further lending from the group's holding companies.

Meanwhile, cash repatriation had started, with an expected reduction of approximately £20m in group gross debt since 31 May.

The current naira cash balance was estimated to be around £80m to £100m, with plans to repatriate an additional £30m to £50m by the end of the financial year, assuming current market conditions persist.

It added that the proposed transaction to de-list and buy out minority shareholdings of PZ Cussons Nigeria was progressing as planned, funded from the local naira cash balance.

However, PZ Cussons said it anticipated only a minimal surplus cash position remaining in Nigeria beyond what was required for trading by the end of the financial year.

At 0824 GMT, shares in PZ Cussons were up 1.12% at 139.54p.

Reporting by Josh White for Sharecast.com.