Nigeria's plunging currency has forced Imperial Leather maker PZ Cussons (PZC) to overhaul its product range as consumers there deal with spiralling living costs. The naira currency fell 40 per cent against the dollar last June to 280 to the dollar but has since fallen further to roughly 305. This has doubled living costs there - and pushed up the group's production costs, too. As such, volumes were lower as a result of resultant price increases. Chief executive Alex Canellis said the company had previously modelled a scenario where the naira went as low as 500 to the dollar, levels it has reached on the secondary currency market. This means the group has mitigated some of the impact from the tougher economic climate.
In Asia, promotional activity ramped up in Australia (which halved the region's operating profit) but Mr Canellis said some brands' market share had grown as a result. The five:am food business has also started solving its stocking issues at various supermarkets. In Europe, new product launches by Imperial Leather, Carex and Original Source have played out well in the UK, while further innovations are expected from the likes of tanning brand St Tropez before the end of the year.
Broker Investec Securities expects pre-tax profit of £100m for the year to May 2017, leading to EPS of 16.9p, compared with £103m and 17.2p in FY2016.
| PZ CUSSONS (PZC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 306p | MARKET VALUE: | £1.31bn | |
| TOUCH: | 305.8-306.2p | 12-MONTH HIGH: | 375p | LOW: 241p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 111p* | NET DEBT: | 38% | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 386 | 40.0 | 6.8 | 2.61 |
| 2016 | 378 | 24.9 | 4.6 | 2.67 |
| % change | -2 | -38 | -32 | +2 |
Ex-div: 16 Feb Payment: 7 Apr *Includes intangible assets of £385m, or 98.7p a share | ||||
