PZ Cussons has opted to retain its Africa business following a review that explored a sale due to an erosion of the group’s profitability.
The consumer goods company said it had received “significant levels of interest from a number of parties” but concluded the offers received “did not reflect the inherent value of the business”.
“After a thorough review of the remainder of the Africa business and careful evaluation of the offers received, the board believes it is in the best interest of our stakeholders to retain the business,” said CEO Jonathan Myers.
The review was launched in April last year amid a devaluation of the Nigerian naira and chronic inflation. However, a more stable economic environment has since helped PZ Cussons grow its African sales by more than 25% in the first half of this year.
The group, which owns brands including Imperial Leather and Original Source, said the decision to stay on the continent was part of a wider group strategy built on a portfolio balanced between developed and emerging markets.
A major factor was the “significant long-term opportunity” in Africa where more than half of the world’s new babies – over 900 million – are expected to be born in the next 25 years.
“Africa is a market of great opportunity,” said Myers. “Given PZ Cussons’ deep heritage there, and given the strength of our brands and operational capabilities, we are well-placed to win over the longer term.”
The group has set out new plans to grow its Africa business including expanding into new markets, a focus on new categories such as men’s grooming, and growing the core business in Nigeria, Kenya and Ghana.
After the recent volatility in the Nigerian business, PZ Cussons will introduce new measures to reduce the risk of currency volatility which will be reviewed at every board meeting.
In June, PZ Cussons sold its stake in PZ Wilmar, its Nigerian edible oils business, to its joint venture partner, with the deal expected to be completed soon.
Myers said that the £70m raised from non-core assets in Africa along with continued cash generation had “significantly” strengthened the group’s balance sheet.
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