Profits at PZ Cussons plunged as consumers abandoned beauty products while stuck at home during lockdowns, but Carex has emerged as a star performer within the personal care group.
Operating profits in the year to 31 May declined 32.9% to £33.4m, resulting from losses in Nigeria, the decline in beauty sales and lower profits in Australia.
However, an “excellent” performance in the UK, driven by a boost to the Carex handwash brand during the pandemic, helped to partially offset the fall in profits.
Revenues at the group, which also owns Imperial Leather and Original Source, fell 2.6% to £587.2m as a result of weakness in Nigeria and a mixed impact of the Covid crisis on the business.
Despite the mixed performance, PZ Cussons recommended a final dividend of 3.1p a share, making it one of only a few listed companies to reward shareholders during the pandemic.
In a separate first-quarter trading update, the group reported a 23% jump in revenues as demand remained high for hygiene brands. Sales soared 49% to £61.5m in the Europe and Americas division, with the UK continuing to deliver a strong performance and beauty making a continued recovery. Carex remained the driver of growth in the first quarter and has increased its UK market share in the hand sanitiser category to about 40%.
Despite the renewed momentum in the quarter, PZ Cussons warned it expected volatility and risk to continue. However, the group planned to increase investment in its brands and capabilities as it prepared for a multiyear turnaround of the business.
“There is no doubt that this was one of the most challenging periods that the company has faced across its long history,” said chairman Caroline Silver.
“Having reviewed our strategy last year, we expected there to be a period of transition and change as we moved to reset our business model and create the conditions to improve performance. Onto this, however, was added the immense challenges of responding to the global Covid-19 pandemic, which fully encompassed the final quarter of our financial year.
“We could not be more proud of the way that all our people responded, and on behalf of the board I thank them for their incredible hard work, commitment and efforts.
“Overall, it was a mixed year in terms of performance. We have taken key steps towards returning the group to growth, including welcoming Jonathan Myers, our new CEO on 1 May 2020. We have made progress against the strategy that we set out last year, but there is more to do. We have shown that we can be swift to see opportunities, can move fast and are willing and able to take action.
“We saw extraordinary outperformance for Carex in the final quarter tempered with very difficult conditions in beauty, both as a result of the coronavirus pandemic. Indonesia continued to perform well but results in Nigeria remained very disappointing.”
Annual revenues in the Europe and Americas region grew 6.2% to £214.5m thanks to “an outstanding set of results” in the UK on the back of the performance of the Carex brand.
However, Imperial Leather and Original Source declined in the first half, reflecting consumer uncertainty and lower footfall in the UK, and were impacted in the final quarter by the contraction in the shower category and the focus of the business to produce Carex given limitations in its supply chain as a result of the pandemic.