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PZ Cusson reports N15.01bn consolidated revenue Q1 2014


PZ Cusson plc, manufacturer of household consumables, has reported N15.01 billion consolidated revenue as it continues to grapple with the insecurity in North part of the country.

“In Nigeria, disruption in the North of the country has continued to worsen, resulting in a decline in sales in that region,” the company said in a September 23 note posted on its website, saying “good growth has continued in the South of the country.”

For the period ended August 30, 2014 (Q1 August), the company’s revenue remained flat at N15.01 billion.

PZ had a better management of direct costs attributable to projects as gross profits were up by 1.07 percent to N4.04 billion in the review period from N3.97 billion the preceding year, while gross profit margin remained flat at 26 percent.

Cost of sales increased by 1.02 percent to N10.97 billion in Q1 August 2014, from N11.09 billion the preceding year, while cost of sales margin remained flat 73 percent.

Apart from the security challenges crimping PZ’s growth potentials, some analysts say that stiff and intense competition also slowed top-line performance.

“We are now convinced that pressures faced by competition also reflect on PZ’s numbers,” said Uwadiae Osadiaye, analyst with FBN Capital, in an emailed note to BusinessDay.

The company’s pretax profits reduced by 30.84 percent to N872.22 billion in Q1 August 2014, from N1.26 billion caused by a further 9.03 percent rise in operating expenses.

Output in Nigeria’s palm oil sector is revving up as PZ Cussons announced last month that its joint venture, palm-oil processing refinery with Singapore’s Wilmar International Limited, was operating at near full capacity. It expects the venture to gross at least $300 million (N48.3bn), annually within three years after construction.

PZ can also tap into the Nigeria robust economy of $510 billion (N80.22trn) and its rising middle-class with expanding consumption.

Additionally, there are no ambivalent as to the future of the FMCG sector which PZ is a major player as a recent report by McKinsey projected that the country’s consumption could more than triple, rising from current $388 billion/year to $1.4 trillion/year in 2030, an annual increase of about 8 percent.

PZ’s net income margin, a measure of profitability and efficiency, reduced to 4.27 percent in Q1 August 2014, from 6.11 percent as of Q1 August 2013.

Total assets were down by 5.10 percent to N67.34 billion in Q1 August 2014, as against N70.96 billion as of Q1 August 2013.

The company’s share price closed at N33.60 on the floor of the NSE, while total market capitalisation closed 127.05 billion.

“While trading conditions in most markets remain challenging, the Group remains focused on a dynamic and fast brand renovation and innovation programme,” the company said in the statement.