PZ Cussons Shares Plunged 19.5% on Naira’s Devaluation Impact

The PZ Cussons plc (LON: PZC) share price plunged 19.5% after releasing its interim results for the six months ended 2 December 2023. The company highlighted the impact of the significant depreciation of the Nigerian Naira, which has considerably affected its financial outcomes and year-on-year comparisons.

The six-month period experienced a foreign exchange loss of £88.2 million solely due to the Naira's 51% depreciation from 31 May 2023 to 2 December 2023. The statutory financials recorded an operating loss of £89.7 million, significantly influenced by these foreign exchange losses.

There was a 17.8% decrease in revenue (£59.8 million) to £277.1 million, with £52.9 million of this drop directly linked to the Naira's devaluation. Given the substantial effect of the Naira's devaluation, the Board has decided cautiously to cut the interim dividend by 44% to 1.50p.

The like-for-like (LFL) revenue increase was 2.2%, propelled by a 7.0% enhancement in price/mix and a 4.8% decrease in volume. There was a 110 basis point enhancement in adjusted operating profit margin across our three regions, primarily due to a higher gross profit margin.

Profit before tax fell by 24.3% due to an increased interest charge. Still, the decline in adjusted EPS was limited to 16.3%, thanks to a lower effective tax rate and the impact of the Naira devaluation on non-controlling interests.

The company’s financial resilience is evident on a constant currency basis, with a 17.2% rise in adjusted operating profit and a 9.0% increase in EPS.

Jonathan Myers, Chief Executive Officer, said: “PZ Cussons is a stronger business than when we launched our new strategy, as demonstrated by our ninth consecutive quarter of like-for-like revenue growth and, on a constant currency basis, double-digit operating profit growth in the first half of the financial year. We have clearly had our challenges but have also delivered a turnaround in our UK Personal Care business and put in place measures to address the underperformance in our Beauty business. The most significant challenge we have faced by far has been the devaluation of the Nigerian Naira, which is today around 70% weaker than a year ago, representing the biggest drop in the currency's history.” 

PZ Cussons share price. 

The PZ Cussons share price plunged 19.52% to trade at 102.05p from Tuesday’s closing price of 126.80p.