PZ Cussons reports on mixed year of trading

Consumer products group PZ Cussons issued a trading update on Thursday, confirming to the market that performance for the year ended 31 May was in line with expectations.

The FTSE 250 firm said performance in Europe and Asia offset more difficult trading conditions in Africa, and the financial position of the group remained strong with cash generation also in line with forecasts.

In Europe, its UK washing and bathing brands performed strongly, driven by a “continuous programme of renovation and innovation”.

Cussons’ Imperial Leather Portfolio was extended, and a new range of shower and bath products performing well under the Carex brand.

“Original Source has also performed well with new fragrances launched across its range of shower, handwash and body care products,” PZ Cussons said in a statement.

In the beauty division, the company said St Tropez has seen excellent growth in key markets.

“The gradual tan in-shower lotion launched last year has been particularly successful and the range has recently been extended with a darker variant.”

Its board said further product launches have also taken place across the Sanctuary, Charles Worthington and Fudge brands.

“Performance in the smaller markets of Poland and Greece has been in line with expectations.”

In the company’s Asia division, it reported good performance across personal care, beauty, and food and nutrition, which offset more difficult trading conditions in the home care category.

“Both five:am and Rafferty’s Garden have extended their product portfolios during the year with Rafferty’s … launching into chilled products and continuing its overseas expansion into selected geographies,” the board said.

Indonesian trading delivered another year of revenue growth, with Cussons relaunching its entire baby range in the second half of the year, and further renovation taking place across Imperial Leather, Carex and Original Source.

“Overall performance in the smaller markets of Thailand and the Middle East has been in line with expectations.”

The company’s key African market of Nigeria was reported to be trading relatively well, despite a challenging macro environment where consumers have been affected by serious inflationary pressures.

“We continue to have market leading brand shares across personal care, home care, electricals, and food and nutrition, and product offerings at all price points.

“In addition, our nationwide distribution and heritage in Nigeria are serving us well in these difficult trading conditions,” the board explained.

PZ Cussons said it was struggling with low levels of dollar liquidity in the economy, with an additional cost of funding naira from the secondary market.

It said its focus is on securing materials for the key selling product lines, developing local sourcing to reduce its overall dollar requirements and ensuring relative pricing remains competitive.

“An exceptional charge of around £17m is expected in relation to settling a brought-forward dollar liability in Nigeria in the secondary market.

“The charge will be accounted for as it is realised with around £7m being taken in the year to 31 May,” the board warned.

The company said overall performance in its smaller African markets of Ghana and Kenya was in line with expectations.

Looking ahead, PZ Cussons said performance in Europe and Asia is expected to remain strong, with trading conditions remaining challenging in Nigeria.

The company is due to deliver its final results for the year to 31 May on 26 July.