Multinational consumer goods conglomerate, PZ Cussons, in Nigeria, has announced its successful repatriation of £35m from the country in the first ten months of this present financial year.
According to a trading update issued by the firm on their website on its third quarter results on Wednesday, they stated that they intend to repatriate an extra £15-20m before the end of May, adding that because of the impact of the devaluation of the Naira and declining profits on their business, they will be reviewing their investment in Africa.
Hear then: ‘This improvement has been underpinned by fiscal policy changes in Nigeria, providing improved access to US dollars, and by other operational initiatives enabling our Nigerian businesses to be self-funding.’
The board of PZ Cussons further stated that they performed a strategic review of their brands and geographies over the past year, in order to boost their profit level.
Hear them: ‘It has concluded that, in addition to the challenges of its significant exposure to Nigeria, the group is too complex for its size, with financial and human resources spread too thinly to generate consistent returns. This means its competitive advantages have been constrained in comparison to those of both larger multinational companies and some focused smaller ones.’
‘Accordingly, the board has decided to refocus the PZ Cussons portfolio on where the business can be most competitive and where it can create the most value for shareholders. As such, we are taking the following actions: ‘St. Tropez has grown significantly since its acquisition, establishing a leading position in its key premium self-tanning market in the US. Given the strength of the brand’s equity, there remains significant long-term growth potential in the US and both new geographies and category adjacencies.’
‘This growth will, however, be harder to realise under PZ Cussons’ ownership, given the need to allocate resources across our diverse geographic and category footprint. We, therefore, plan to realise shareholder value by initiating a process to sell the brand to an owner better placed to capture the brand’s significant long-term potential.’
The company noted that they had made significant progress in strengthening and improving the performance of it operations in Africa where they own a highly attractive group of assets with leading consumer brands, the great operational infrastructure and continued growth potential. They however recognize that it is a complex group of assets, therefore they would evaluate the strategic options both to reduce risk and maximize shareholder value.
The group revenue grew by 6.4% in the third quarter, but declined by 23.7% in dollar terms because of the devaluation of the naira. Apart from its African business, PZ Cussons revenue declined by just 2.9% which is an improvement from the drop of 3.9% that was recorded in the first half of the year.
In the meantime, the Chief Executive of PZ Cussons, Jonathan Myers, informed the Financial Times that the company was exploring every option for its Africa division. He further confirmed that the group had received a lot of unsolicited approaches over the years, even though they have not put the ‘for sale’ sign up yet.
PZ Cussons Nigeria Pls, is still struggling, having posted a loss of N94.78bn in the third quarter of 2023/24, compared to the N11.213bn gain it made in the corresponding period in 2022. They suffered a N74.14bn loss
When their liabilities surpassed their assets by N46.420bn on the back of naira depreciation, PZ Cusson remained in a negative net asset position. The Securities and Exchange Commission rejected a ‘No Objection’ from them to buy out minority shareholders at N23 and delist from the Nigerian exchange, early this year15:40
