• Thursday, July 25, 2024
businessday logo

BusinessDay

PZ Cussons swings to N96.4bn loss on naira weakness

PZ Cussons swings to N96.4bn loss on naira weakness

PZ Cussons Nigeria, a fast-moving consumer goods company, has reported a loss after year of N96.4 billion for the financial year ended May 2024 driven by naira devaluation, BusinessDay analysis shows.

That compared with an after-tax profit of N14.4 billion in the previous year, according to the firm’s latest financial statements.

“The company reported an exchange loss of N158.03 billion for 2024, a significant increase from the N4.95 billion loss in 2023. This substantial exchange loss heavily impacted its EBITDA, resulting in a loss of N109.65 billion for 2024, compared to a gain of N10.38 billion in FY 2023. Consequently, the company reported a negative EBITDA margin,” CSL Research analysts said in a recent note.

Further analysis reveals that PZ Cussons’ foreign exchange loss occasioned by naira devaluation widened to N158.03 billion from N4.95 billion.

Shareholder’s funds stood at a negative of N47.16 billion from a positive N48.36 billion.

In May 2023, the company’s equity capital was strong, settling at N48.360 billion at the time before the devaluation policy in mid-2024. The company suffered losses as the government devalued the local currency in 2024.

Total assets dipped to N137.6 billion from N166.4 billion in the period reviewed.

Cash, cash equivalents, and bank overdrafts at the end of the year dipped to N32.7 billion from N101.6 billion.

Read also: SEC rejects PZ Cussons minority shareholders buy-out, delisting plans

Movement in cash and cash equivalents reveals that net cash flow generated from operating activities stood at a negative N87.3 billion from a positive N17.9 billion.

Net cash used in investing activities dipped to N3.38 billion from N10.9 billion. Net cash flow used in financing activities dropped to N14.9 billion from N20.8 billion.

The firm’s revenue surged to N152.2 billion from N113.9 billion while the cost of sales also surged to N91.6 billion from N81 billion.

Net interest income declined to N2.21 billion from N20.5 billion with interest income of N6.1 billion and interest cost of N3.89 billion.

Selling and distribution expenses grew to N13.1 billion from N11.7 billion while Administrative expenses dropped to N1.28 billion from N7.9 billion.

In September 2023, the parent company announced its plan to buy out the remaining 26.73 percent shareholding of PZ Cussons Nigeria and delist the company from the NGX.

At the time, an offer price of N21 per unit was made to the minority shareholders. However, this price was rejected by certain shareholders who claimed such a price was unfair to them.

In November, the offer price was increased to N23. However, in March 2024, the Securities and Exchange Commission (SEC) declined PZ Cusson’s request to delist from the NGX. A move which was applauded by some of the minority shareholders.

In a statement released in March 2024, the holding company, PZ Cussons (Holding) Limited announced plans to review its Nigerian operations in order to “reduce risk and maximize shareholders value.”

PZ Cussons is a major British manufacturer of personal healthcare products and consumer goods. It operates worldwide, especially in nations in Africa and the Commonwealth. The company is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.