Clean up with PZ Cussons

Indeed, we’ve previously been negative on the stock, but recent buying by star fund manager Nick Train has encouraged us to reassess the investment case and think the shares now represent a speculative buying opportunity. Indeed, amid global market turmoil, some of the group’s products could actually benefit from changing behaviours. 

People are ramping up their purchases of soap, having been told repeatedly to wash their hands to prevent the spread of infection. According to research house Kantar, sales of hand sanitiser soared by 255 per cent in February. It seems likely that such renewed attention to hygiene will stick – at least for a while – once we get used to it. With nearly 60 per cent of sales coming from personal care and beauty products, including the UK's market-leading handwash Carex, any lasting effects would be good news for PZ.

PZ announced a new strategy last July: concentrating on returning itself to sustainable growth, by investing in ‘focus brands’, which account for two-thirds of revenues and which can scale up. It is also working to simplify its Nigerian activities, while disposing of non-core businesses.

For the half-year to November, PZ cited progress on this game-plan, with stable revenues for its focus brands, notwithstanding a “very challenging” backdrop across all geographies. It also offloaded its Greek business for £40.9m, Polish personal care for £9.2m and a Nigerian business.

Group revenues in the period fell by 4.3 per cent at constant currencies, to £293m. Adjusted pre-tax profits (before disposal proceeds) tumbled by 13 per cent to £28m. By area, Europe and the Americas saw a 4.7 per cent revenue decline to £91.6m, Asia-Pacific sales slipped by 3.8 per cent to £94.2m, and in Africa revenues fell by 4.4 per cent to £108m.