It has been a year to forget for PZ Cussons. Not only has the soap-maker had to contend with higher costs and depressed consumer spending in Australia, but also civil and economic unrest in its key Nigerian market. That, and a subsequent restructuring, put a nasty dent in profits - which more than halved. Moreover, and while PZ reckons it will return to profit growth this year, we're not convinced that headwinds from difficult markets will ease.
Nigeria in particular remains a potential trouble spot. Operating profit there fell 18 per cent to £33.5m, as political unrest was exacerbated by high raw material costs and the government's decision to axe a crucial fuel subsidy. Analysts are worried that the subsidy cut - which essentially doubled fuel costs - could have a lasting impact on consumer spending, while PZ itself says the situation in Nigeria remains "fragile".
However, PZ says the restructuring of its supply chain - which resulted in an exceptional charge of £27.5m last year - will underpin profit improvement this year, and noted that strong trading in the UK and Indonesia had continued in the current financial year.
Broker Shore Capital expects underlying full-year pre-tax profit of £100m and EPS of 15.5p (from £92.3m and 14.7p in 2011).
PZ CUSSONS (PZC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 308p | MARKET VALUE: | £1.32bn | |
| TOUCH: | 307-308p | 12-MONTH HIGH: | 387p | LOW: 285p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 38 | |
| NET ASSET VALUE: | 107p* | NET DEBT: | 3% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 661 | 77.0 | 11.0 | 4.70 |
| 2009 | 782 | 84.0 | 11.6 | 5.27 |
| 2010 | 772 | 102 | 14.9 | 5.90 |
| 2011 | 821 | 108 | 16.5 | 6.61 |
| 2012 | 859 | 48.5 | 8.03 | 6.72 |
| % change | +5 | -55 | -51 | +2 |
Ex-div: 15 Aug Payment: 1 Oct *Includes intangible assets of £248m, or 58p a share | ||||
