PZ Cussons: Returning to profitability


Ease on restrictions on trade and travel across several countries due to drop in COVID-19 crisis and other policies is beginning to affect earnings of PZ Cussons Nigeria Plc positively. CHRIS UGWU writes



Like any other sector in Nigerian and other emerging economies, 2020 was not an impressive year for the manufacturing sector, following high costs of operations occasioned by COVID- 19, which ravaged the economy.


With the recent development, analysts believe 2021 doesn’t look much different either, as the world battles the third wave of the pandemic, which has heightened volatility in the economy.

This is because despite efforts by government to create an enabling environment for investment in the nation’s economy, the exchange rate volatility and its attendant effects have impacted businesses negatively.


The increase in exchange rate has forced manufacturers to borrow at a high rate, thereby increasing cost of production, made worse by infrastructure deficiency, which has inevitably transfer the high production cost to consumers as this had made manufacturers less competitive, shrinking their profit margins, as the naira’s devaluation takes its toll on imported raw materials.


Aside increased cost of raw materials, some manufacturers, especially multinational consumer goods companies, who have taken up foreign currency liabilities, are also groaning under the pressure of the increased cost of dollar.


Also, challenges of erratic supply of public electricity, weak logistics, insecurity and other high costs of operations attributable to poor infrastructure has continued to make the business operating environment difficult, especially the real sector of the economy.


However, despite the challenges, PZ Cussons Nigeria Plc, which has for considerable period seen losses in earnings, is gradually returning to profitability.


The company, however, returned to profitability during the half year unaudited financial statements for period ended November 2020/2021. When the closing bell rang on Friday, the company’s share price stood at N5.75.




The cosmetics and soap maker recorded a profit after tax of N807,143 million for the nine months ended February 2019 as against N1.337 billion posted in 2018, accounting for a decline 39.65 per cent. Profit before tax stood at N936.243 million, compared to N1.966 billion in Q3’18, representing 524 per cent YoY drop.



The company’s total revenue was N55.070 billion, compared to N63.259 billion in Q3’18, a 12.95 per cent YoY decline.


Cost of sales stood at N42.432 billion in 2019, from 45.023 billion    recorded in 2018, while administrative expenses accounted for N3.359 billion during the period under review from N5.574 billion in 2018.


However, on q/q analysis, according to InvestmentOne report, similar to the last four trading quarters, PZ’s published Q3 2019 scorecard showed a contraction in its topline performance, reflecting its continued challenges in the nation’s operating environment.


“Consequently, the firm reported a loss before tax of N414 million, following the drop in gross profit, higher operating expenses and a rise in net finance cost, which outweighed the impact of a net foreign exchange gain recorded in Q3’19 Sagainst a net foreign exchange loss in Q3’18.


“In the same vein, on a sequential basis, the highlighted factors combined with a decline in foreign exchange gain as well as a net finance cost in Q3’19 against a net finance income in Q2’19 contributed to the loss before tax of N414million in Q3’19 against a profit before tax of N1.56billion in Q2’19,” the report said.


PZ Cussons Nigeria Plc’s financial results for the business year ended May 31, 2019, showed that the company recorded N74.3 billion revenue as against the N80.5 billion recorded in 2018.


This represents a 7.7 per cent decline. Profit before tax stood at N1.9 billion for the year as against N2.3 billion recorded last year. This represents a 16 per cent decline. Profit for the year stood at N1.2 billion in 2019 as against N1.9 billion recorded last year.


This represents a 40 per cent decrease. Earnings per share stood at 0.25 in 2019 as against 0.46 in 2018, which represents a 45.7 per cent decrease.


Prior to the release of the financial results, the global consumer goods manufacturer blamed its huge decline in profit on sluggish demand and challenging conditions in its important Nigerian market.


For the first quarter ended August 2019, the company recorded N15.80 billion in revenue as against N15.89 billion recorded in the quarter of 2018. This represents a 0.55 per cent revenue reduction.


Similarly, the company recorded a loss after tax of N1.1 billion in the quarter of 2019, compared to a loss after tax of N204 million recorded during the same period in 2018.


This represents a 435.49 per cent decline. Earnings Per Share (EPS) stood at a loss of 28 kobo in 2019 compared to another loss of 5 kobo in 2018.


In the half year results of the company ended November 30, 2019,  the makers of several household products in the country said its revenue declined by 3.2 per cent to N33.95 billion from N35.05 billion achieved in the first half of last year.


Cost of sales rose to 7.46 per cent from N26.224 billion in 2018 to N28.153 billion in 2019.


However, selling and distribution costs reduced to N4.63 billion from N5.12 billion, while the administrative expenses rose to N2.67 billion from N1.99 billion, with an loss after tax of N1.580 billion as against a profit of N1.221 billion in the same period of last year.


The group posted a loss after tax of N7,239 billion for the full year ended May 31, 2020 as against profit after tax of N1.155 billion in 2019. Revenue was N66.992 billion in 2020 from N74.336 billion in 2019, a drop of 9.88 per cent. Cost of sales stood at N58.370 billion in 2020 from N57.235 billion in 2019.


PZ Cussons Nigeria reported a loss after tax of N212.358 million for the first quarter ended August 31, 2020, as against a loss of N1.095 billion posted in 2019. While the group’s revenue increased by 18.3 per cent to N18.700 billion from N15.808 billion in 2019, cost of sales stood at N13.808 billion from N7.620 billion in 2019.


PZ Cussons Nigeria, however, returned to profitability as the half year unaudited financial statements for period ended November 2020/2021 stood at N820.9 million profit as against loss of N1.58 billion reported in second quarter ended November 30, 2019/2020.


The household company, in its results to the Nigerian Exchange Limited (NGX), also migrated from a loss of N1.58 billion in Q2’19/20 to N1.03 billion reported in Q2’20/21. With the growth in profit, PZ Cussons Nigeria Basic Earnings Per Share migrated from a loss of 40kobo to 21 kobo in Q2’20/21.


Key drivers that contributed to profit include 10.1 per cent increase in revenue and 80.1 per cent drop in interest cost in the period under review.


The group reported N37.38 billion revenue in Q2’20/21 as against N33.95 billion reported in Q2’19/20 while interest cost dropped to N58.58 million in Q2’20/21 compared to N293.7 million reported in Q2’19/20.


Also, from the group profit & loss figures, cost of sales dropped by 3.3 per cent to N27.22 billion in Q2’20/21 compared to N28.15 billion reported in Q2’19/20, while gross profit gained 75.3 per cent to N10.2 billion from N5.79 billion  reported in Q2’19/20.


PZ Cussons Nigeria finished the 12 months ended May 31, 2021, with Revenue increase by 23.0 per cent to N82.384 billion from N66.993 billion in 2020. Revenue for the fourth quarter rose to N22.403 billion from N12.250 billion in Q4’20.


The company grew its profit for the full year by 125.3 per cent to N1.831 billion from N7.240 billion loss in 2020. Profit for the Q4 stood at N814.719 million from N3.722 million loss in Q4’20.



The company had, at the its 70th Annual General Meeting ( AGM) in Abuja, informed shareholders that cost of borrowing (about 20 per cent) affected the company’s performance, adding that it largely affected cost of its goods and also acerbated by low volume of sales.


PZ Cussons Nigeria said its shareholders and other stakeholders should expect better value in coming years, even as it restated its confidence in the Nigerian economy.

The Chief Executive Officer, PZ Cussons Nigeria, Mr Christos Giannopoulos, said that having operated in Nigeria for 120 years and listed on the Nigerian Exchange Limited for 48 years, the company was well positioned to deliver better value in the years ahead.


Giannopoulos, while speaking at the closing gong ceremony at the NGX to mark the company’s 120th anniversary, said: “We are very proud to be here today.


Contrary to reports some months back, I want to reiterate that PZ Cussons is here to stay. We are not going anywhere.


“We are confident of our shares; we have confidence in our company. We have about 76,000 shareholders; they expect returns and they are getting returns through continued dividend payment over the years of being a listed company.

The future is bright.”


According to him, the prospects are bright because Nigeria has a population of about 190 million and is the biggest economy in Africa.


He said the company would continue to invest in order to expand capacity and upgrade to ensure it has the latest and best equipment and manufacture quality products.

“We are going through what I will call challenging times right now but the fundamentals of the company are extremely good.


“Our market share is very good. We are competing in the market and our market share is positive and not negative,” the CEO added.


Interim Chief financial officer, PZ Cussons, Alan Bergin, had said: “Strong performance in UK partially mitigate losses in Nigeria, decline in Australia and impact of COVID-19 on beauty, mixed result across top brands.


Significant steps in second half year to strengthen organisation and reduce complexity.”


Last line


With the continuous deterioration in Nigeria’s macro-economic conditions, which has resulted in drop of earnings of many firms, it is important for the company to focus on developing homegrown solutions that will address the business need of people and organisations.


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