PZ Cussons, producer of Imperial Leather soap, brushed off concerns about trading in Nigeria, its biggest market, saying at the week- end that full-year profits would be in line with market expectations.
The update by the Man- chester-based group indi- cated that trading in Nigeria had improved in the sec- ond half of its financial year, which ended on May 31. Nigeria, where PZ Cus- sons has been present since 1899, accounts for 40 per- cent of sales.
The group’s first-half profits had been hit by a weakening of the naira and political unrest, including the insurgency in the North.
However, the company that also makes St Tropez self-tanning products modelled by Kate Moss, warned of a potential hit to the spending power of Nigerian consumers from imported inflation.
“While the naira is currently stable, there remains a risk of further cur- rency devaluation,” it said.
Profit margins on personal care items in Nigeria suffered but sales increased, driven by the launch of new products such as a shower gel version of Premier, the country’s biggest-selling soap.
Meanwhile, the electrical home appliances business in Nigeria had a “strong year.”
Darren Shirley, analyst at Shore Capital, said PZ Cussons had “surprised us… by confirming that full-year trading may have been in line with expectations; the surprise comes as we fully expected the Nigerian fuel strike to have materially impacted trading at the end of the year.”
Elsewhere, the UK per- formed well on the strength of demand for bathing prod- ucts and St Tropez. Analysts held expecta- tions of underlying full-year pre-tax profits of £109 mil- lion, which is flat on last year in constant currency terms.
Jonathan Leinster, ana- lyst at Panmure Gordon, said the group’s 2016 financial year was likely to be tough because of the risk of cur- rency devaluation in Nigeria.
“We believe full-year 2016 will be another year without sterling earnings growth and that consensus estimates for 2016-2017 are too optimistic,” he said.
The shares, which have underperformed the FTSE 250 by 10 percent over the past 12 months, rose 1.2p to 363.40p on Thursday af- ternoon.
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