PZ Cussons says FY profits to drop amid Nigeria woes

Shares in Imperial Leather maker PZ Cussons tanked on Tuesday after the company said it expects adjusted pre-tax profit for the year to decline as good performances in Europe and Asia were offset by "extremely challenging" conditions in Nigeria.

In an update for the half year to 30 November, the company said it now expects adjusted pre-tax profit for the full year of around £70m, down from £80.1m the year before. The company said consumer disposable income in Nigeria has remained weak ahead of the general election next month.

It pointed to ongoing cost challenges due to significant disruption being faced in clearing goods at the port and a further 10% weakening of the Naira against the US dollar, with port disruption denting adjusted profit before tax by around £5.5m for the year.

For the six-month period, Cussons said adjusted pre-tax profit fell 1.5% to £32.8m, with revenue down 10.4% to £335.1m.

Revenue in Africa fell 23% to £111.3m, with operating profit down 71% to £1.2m. In Europe, meanwhile, revenue edged up 1.2% to £128.2m and operating profit was up 1.7% at £24.6m.

Chair Caroline Silver said: "The group continues to make pleasing progress in Europe and Asia, with new product development and increased support across our key brands delivering positive momentum. Disappointingly, however, the macroeconomic conditions in Nigeria remain extremely challenging and continue to have a significant negative impact on overall group performance.

"We anticipate that consumer demand in all our key markets will remain subdued. Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market."

At 0930 GMT, the shares were down 8.9% to 190.90p.