PZ Cussons posts first loss in 9 years as pandemic hurts revenue

PZ Cussons Plc, one of the world’s biggest personal healthcare makers has seen its first loss in 9 years as revenue plunged.

For the year ended May 31st 2020, PZ Cussons posted a loss after tax of N7.2 billion, a 726 percent decline from a profit of N1.15bn made in 2018/2019. PZ Cussons has a unique calendar that runs from May 2019 to May 2020.

The company’s revenue plunged 10% to N67bn in the business year, the lowest in 9 years compared to N74.3bn a year ago.

The loss seems to be just COVID-induced but analysts say the company has had it long coming.

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Although the pandemic significantly impacted performance in Q4 as lower demand for its Home & Personal Care products in Q4 and all through the financial year dragged significantly on revenue, it is not the only driver for the loss.

PZ as a brand has been struggling to compete in the HPC business because of the entry of cheaper and unbranded alternatives to many of PZ’s brands that are fast becoming premium products considering the decline in consumer purchasing power.

Cost of sales was also up 2% to N58.3bn from N57.2bn in the same period last year.

Gross Profit for the period dipped 50% to N8.6bn in business period from N17.1bn in the prior period last year.

PZ Cussons has also seen its share price crash to N4 as market closed on Friday from N5.65, its opening price as at January 2020

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The company made a loss before tax of N7.9bn for the year end, a 511% decline from N1.9bn profit made in the same period last year.

Administrative expenses also rose 31% to N5.4bn for the 2019/2020 period from N5.4bn a year ago.

The foreign exchange crisis as result of the pandemic also seems to have influenced the recorded loss as the company made an exchange loss of N945 million, a 112% increase from the N444 million loss recorded in the same period last year.

FX illiquidity has definitely had an impact particularly in the final quarter. This means they probably have to source for dollars from expensive unofficial sources to finance purchase of inventory which would impact on material cost.

The loss recorded by the company might have been aggravated by COVID-19 but profit has been on the decline in the last three years.

The personal health care maker has seen profit plunge 40% and 48% for the year ended May 31st 2018 and 2019 respectively.

The company only recorded an increase in profit for the year ended May 31 2017 in the last 6 years as profit has been on a decline since 2013.

Revenue has also been on a decline since 2017 as it declined from N80bn in 2017/2018 to N74bn in 2018/2019 and now hit its lowest in 9 years with revenue of N67bn.

“Overall, the drag on performance remains lower demand from consumers in the face of declining purchasing power which forces them to opt for cheaper alternatives” Akinloye said.

PZ Cussons Nigeria Plc is into the sales, manufacture and distribution of consumer goods and home appliances. Popular brands include Morning Fresh, Mamador, Carex, Cussons Baby, Premier, Robb, Venus, Joy soap, and Olympic milk.