PZ Cussons slumps on Canaccord downgrade

The brokerage noted that since the interim results on 26 January, the shares are up 37%, helped by a 57% rise in the oil price and outperforming the FTSE 250 index by 31%.

“We think risk from the scheduled full year trading update on 9th June is no better than equally weighted (with April's update stating that performance ‘overall...has been in line with expectations’), and would take profits in the light of the rerating and the lack of a near-term catalyst.”

Canaccord pointed out that Nigeria, having been as much as 40-45% of group profit three years ago, now accounts for just 25%. It said visibility here remains limited, with further devaluation of the naira possible and Cussons continuing to have to buy dollars at a 50% - or higher - premium to the official rate.

“While the company has been drawing on its 100+ years of experience in Nigeria, enabling it to perform creditably in Home & Personal Care products (through the sale of smaller pack sizes, for example), we see little prospect of a near term rebound in its more economically sensitive electrical white goods business in Nigeria - despite a strong market share performance.”

As a result, the brokerage cut its growth assumptions for the Africa division.

Still, it said Cussons’ performance elsewhere continues to be strong.

At 1010 BST, shares were down 3% to 330.30p.