UPDATE: PZ Cussons FY10 Profit Jumps But Some Markets Tough

27th Jul 2010 11:20

(Adds chief executive comment, analyst comment, detail.) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Consumer products company PZ Cussons PLC (PZC.LN) Tuesday topped market forecasts with a 20% jump in pretax profit in the 2010 fiscal year, but the consumer outlook in a number of its markets remains uncertain, it said. The launch of new products, including an Imperial Leather range for sensitive skin, contributed to profit growth across its three key regions Africa, Asia and Europe, PZ Cussons said. It expects this momentum to continue in the current fiscal year, which has begun in line with company expectations. "We're very happy with the results, which demonstrate that we have quality in our brands and a good geographic spread," Chief Executive Alex Kanellis told Dow Jones Newswires. Pretax profit in the year to May 31 climbed to GBP101.8 million from GBP84.4 million a year earlier and topped house broker Panmure Gordon's forecast of GBP101 million. PZ Cussons, which also makes Carex soaps and Original Source shower gels, aims to launch new products every six months. "We're nimble and fast to market. We spend the whole year coming up with new ideas which we believe the consumer wants," Kanellis said. However, he said discount promotions and buy-one-get-one-free offers of other brands had probably dented profit. "There's been high promotional activity in supermarkets but we've still managed to grow and believe we will continue to do so," Kanellis added. PZ Cussons increased its pre-exceptional operating profit to GBP42.2 million from GBP39.5 million in Africa, to GBP13 million from GBP10.2 million in Asia and to GBP46.2 million from GBP40.9 million in Europe. The strongest growth was in Asia, where sales rose to GBP165.6 million from GBP135 million, offsetting falls in revenue in Africa and Europe. The company will shortly re-launch its Cussons Baby range in Asia, which it hopes will be another sales driver. Overall group sales fell to GBP771.6 million from GBP781.8 million a year earlier, with trading tougher in U.K. and Greece. "We're expecting higher growth in the emerging markets. In Nigeria and Indonesia for example they're seeing good GDP [gross domestic product] growth," Kanellis said. He remains cautious about spending by what he termed the "fragile consumer" in places like the U.K., where spending cuts will come in to effect next year. "What's important is we have the right product at the right price," he said. Panmure Gordon called the results "impressive," but noted that the stock has risen around 60% in the last year. The shares are due a pause for breath Panmure analysts Graham Jones and Damian McNeela said, cutting their rating to "hold" from "buy." They lifted their earnings per share forecasts for the next two years around 2% to 16.61 pence from 16.28 pence in 2011 and to 18.52 pence from 18.11 pence in 2012. Their price target increased to 350 pence from 325 pence. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires July 27, 2010 06:20 ET (10:20 GMT)