PZ Cussons (PZC) has decided to rationalise its Nigerian interests and hive off non-core brands as it does not envisage any significant near-term economic improvement in its key markets.
A deteriorating macroeconomic backdrop in Nigeria, as highlighted by the personal products group at the time of its half-year release, is still in evidence, leading to an adjusted operating loss of £1m for its African operations, as sales declined and costs increased due to port access issues in Lagos. Earnings were also held in check due to a £22m post-tax impairment of its five:am organic food brand in Australia and Nutricima milk and yoghurt drinks in Nigeria.
The African operations remain a bugbear for the group, with performance across its other locales somewhat mixed. Profitability in the UK was constrained due to increased marketing spend, while the Asia Pacific region delivered a 13.7 per cent constant-currency increase in adjusted operating profit to £20.4m, even though sales have tailed off in its Middle East markets.
Bloomberg consensus is for cash profit of £104m for the May 2020 year-end, leading to EPS of 12.8p, rising to £108.5m and 13.3p in FY2021.
PZ CUSSONS (PZC) | ||||
ORD PRICE: | 227p | MARKET VALUE: | £973m | |
TOUCH: | 227-228p | 12-MONTH HIGH: | 244p | LOW: 175p |
DIVIDEND YIELD: | 3.6% | PE RATIO: | 36 | |
NET ASSET VALUE: | 99p* | NET DEBT: | 36% |
Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2015 | 819 | 84.0 | 12.5 | 8.00 |
2016 | 821 | 83.7 | 16.2 | 8.11 |
2017 | 809 | 86.5 | 14.9 | 8.28 |
2018 (restated) | 740 | 59.2 | 9.6 | 8.28 |
2019 | 689 | 37.0 | 6.2 | 8.28 |
% change | -7 | -38 | -35 | - |
Ex-div: | 08 Aug | |||
Payment: | 03 Oct | |||
*Includes intangible assets of £369m, or 86p a share |