Profits at consumer goods group PZ Cussons have fallen as the Imperial Leather manufacturer continued to suffer from political unrest in Nigeria and the devaluation of the Naira.
Total revenue at the group for the six months to 30 November 2014 declined 10.4% to £386.7m as its business remained subdued in the north of Nigeria with distributors and consumers continuing to trade and shop cautiously as the country focuses on the upcoming presidential elections.
It led to PZ Cussons’ pre-tax profits slipping 7.9% to £39.7m, despite higher operating profits in Europe and Asia.
The washing and bathing division in the UK put in a strong performance despite tough trading conditions, driven by a pipeline of new products and the relaunch of the entire Imperial Leather portfolio, the group said.
All four brands in the beauty division – Sanctuary, St Tropez, Fudge and Charles Worthington – also performed well, with higher growth in the US and Australia offsetting the impact of tougher trading conditions in the UK, PZ Cussons added.
Europe revenues were £43.3m lower than in 2013, mostly as a result of the disposal of the Polish home care brands.
“These are good results in what have been difficult markets,” chairman Richard Harvey said. “The group has delivered underlying revenue and profit growth in the period having adjusted for acquisitions and disposals and the negative exchange impact from translation. This is despite continued challenging trading conditions, particularly in its largest market Nigeria.
“The robust underlying performance in the UK, Australia, Indonesia and, in particular, in the electrical and food divisions in Nigeria, demonstrates that the strategy of ongoing product innovation with a focus on local consumer needs continues to be successful.”
Investors reacted positively to news of underlying growth, sending share prices in PZ Cussons up 3.2% to 321p so far today.
Investec analysts noted that the trading weakness had been well flagged, commenting: ”First half results from PZ Cussons were very much in line with expectations. Some of the headwinds were known of at the start of the year, but trading in Africa has been tougher than anticipated. The 2H period is the busier half for Africa so it can still be influential on the full year outcome.”
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