PZ Cussons has warned that profitability will be “some way below expectations” because of continued instability in Nigeria.

Civil unrest and a reduction in the fuel duty subsidy have both increased costs and flattened sales growth in Nigeria.

Accounting for over a third of pre-tax profits last year, the weakness of the Nigerian business is expected to have a substantial impact on group profitability for the year to the end of May.

“Given the importance of Nigeria to the group, the impact of the continuing tensions in the country will be significant, resulting in the group’s overall performance being some way below expectations,” said PZ Cussons in a statement.

The Imperial Leather maker also announced a plan to bring down supply chain costs by outsourcing some of its production in foreign markets. The programme will cost £19m and result in write downs of about £20m – both will be treated as exceptional items in the current fiscal year.

Analysts at Panmure Gordon expect that the restructuring will produce savings of about £8m a year by the end of next fiscal year.

“This is undoubtedly a disappointing statement,” said Panmure. “While we feel this may ultimately prove to be the bottom of the newsflow cycle, we acknowledge that the outlook in Nigeria remains uncertain.”