PZ Cussons warns over half-year operating profit

Imperial Leather and Original Source owner PZ Cussons warned on Thursday that first-half operating profits will be around 10% lower than the previous period due to reduced margins in some business units in Europe and Africa.

In an update for the half year to 30 November, the company said strong profitability in Asia was being offset by reduced margins in Europe and Africa as a result of the economic environment and competitive trading conditions.

However, the performance of these businesses is expected to improve in the second half on the back of new product launches and distribution expansion, along with the usual seasonal uplift in Nigeria.

Cussons said revenue was slightly higher than the prior period thanks to a "robust and innovative" product pipeline, while brand initiatives planned across the group for the second half are expected to deliver a full year outturn broadly in line with the prior year.

The company said UK consumers are shopping cautiously as general cost inflation outstrips wage growth, and amid broader economic uncertainty. Meanwhile, its business in Nigeria has been hit by the devaluation of the naira, but performance in the smaller markets of Ghana and Kenya has been in line with expectations.

"Whilst tough trading conditions are expected to continue for the full year with the consumer under pressure in all markets, brand initiatives planned for the second half are expected to deliver a full year outturn broadly in line with the prior year.

"The group's balance sheet remains strong and well placed to pursue new opportunities as they arise."