PZ Cussons Repatriates £35m from Nigeria, Reviews Business Risk
Multinational consumer goods company, PZ Cussons, has disclosed that it successfully repatriated £35m from Nigeria in the first 10 months of the current financial year.
The firm, in a trading update on its third-quarter results issued on Wednesday on its website, revealed plans to further repatriate £15-20m before the end of May.
It added that it would be reviewing its investment in Africa following the impact of the devaluation of the naira and declining profit.
“This improvement has been underpinned by fiscal policy changes in Nigeria, providing improved access to US dollars, and by other operational initiatives enabling our Nigerian businesses to be self-funding,” the firm noted.
To boost profitability, PZ Cussons said, its board carried out a strategic review of its brands and geographies over the past year.
“It has concluded that, in addition to the challenges of its significant exposure to Nigeria, the group is too complex for its size, with financial and human resources spread too thinly to generate consistent returns. This means its competitive advantages have been constrained in comparison to those of both larger multinational companies and some focused smaller ones.
“Accordingly, the board has decided to refocus the PZ Cussons portfolio on where the business can be most competitive and where it can create the most value for shareholders. As such, we are taking the following actions:
“St. Tropez has grown significantly since its acquisition, establishing a leading position in its key premium self-tanning market in the US. Given the strength of the brand’s equity, there remains significant long-term growth potential in the US and both new geographies and category adjacencies.
This growth will, however, be harder to realise under PZ Cussons’ ownership, given the need to allocate resources across our diverse geographic and category footprint. We, therefore, plan to realise shareholder value by initiating a process to sell the brand to an owner better placed to capture the brand’s significant long-term potential.”
According to PZ, the group has made significant progress in strengthening and improving the performance of its sizeable operations in Africa, where it owns a highly attractive group of assets with leading consumer brands, strong operational infrastructure and continued growth potential.
“However, the board recognises that this is a complex group of assets and is therefore evaluating the strategic options both to reduce risk and to maximise shareholder value,” it declared.
For the third quarter, the group revenue grew by 6.4 per cent but declined by 23.7 per cent in dollar terms because of the devaluation of the naira.
Exempting its African business, the company’s revenue declined by just 2.9 per cent, an improvement from the drop of 3.9 per cent recorded in the first half of the year.
Meanwhile, the Chief Executive of PZ Cussons, Jonathan Myers, told the Financial Times that the company was exploring all options for its Africa division.
“Nothing is ruled out. We see a number of tranches of potential value, whether that is to us or someone else,” he noted.
Myers also confirmed that the group had received several unsolicited approaches over the previous months and years, noting, “We have not put the ‘for sale’ sign up.”
The Nigerian subsidiary of the company, PZ Cussons Nigeria Plc has continued to struggle, as it posted a N94.78bn loss in the third quarter of 2023/24 compared to the N11.213bn gain it had in the corresponding period in 2022.
The firm suffered a N74.14bn loss in Q2.
PZ Cusson remained in a negative net asset position, as liabilities surpassed assets by N46.420bn on the back of naira depreciation.
Earlier this year, the Securities and Exchange Commission rejected the ‘No Objection’ sought by the multinational to buy out minority shareholders at N23 and delist from the Nigerian exchange.
