Join our community of smart investors

Profit growth at PZ Cussons

TIP UPDATE: PZ Cussons has reported impressive results despite serious headwinds in many of its core markets.
July 23, 2013

Soap-maker PZ Cussons (PZC) has had a tremendous year with growth across all regions and particularly strong trading in the UK, Indonesia and Nigeria.

IC TIP: Hold at 400p

Group underlying operating profit jumped 16 per cent to £108m, driven by revenue growth, a return to profit in Australia, lower raw material costs and margin improvements, the latter of which was helped by streamlining the supply chain. It's also worth pointing out that growth was achieved despite tough trading conditions in Europe, high wage inflation in Indonesia and social unrest and severe flooding in Nigeria.

In fact, operating profit in Africa grew 12 per cent to £37.4m, despite flat revenues, while double digit sales growth in Indonesia helped profits in the Asia division to more than double. European sales rose 3 per cent, helped by new products in the UK such as the Cussons Mum & Me range.

Since the year-end, PZ Cussons has acquired Australian baby food maker Rafferty's Garden, which it plans to export to South East Asia. Meanwhile, the palm oil refinery in Nigeria - a 50/50 joint venture with Wilmar - will launch its first consumer-branded palm oil this quarter, eventually turning over more than $300m (£195.6m) a year.

Panmure Gordon has edged up its current year pre-tax profit forecast to £119m, producing EPS of 18.6p (from £107m and 16.6p in 2013).

PZ CUSSONS (PZC)
ORD PRICE:400pMARKET VALUE:£1.71bn
TOUCH:399-400p12-MONTH HIGH:420pLOW: 296p
DIVIDEND YIELD:1.8%PE RATIO:27
NET ASSET VALUE:112p*NET CASH:£3.4m

Year to 31 MayTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200978284.011.65.27
201077210214.95.90
201182110816.56.61
201285948.58.06.72
201388394.814.87.39
% change+3+95+84+10

Ex-div: 14 Aug

Payment: 1 Oct

*Includes intangible assets of £248m, or 58p a share