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PZ Cussons Nigeria has reported a return to annual profit after cutting back an enormous foreign exchange loss that hit bottom line in 2023 by 95.1 per cent.
After-tax profit for the local unit of Manchester-based manufacturer of household consumables PZ Cussons Plc stood at N10.1 billion last year, in contrast to a net loss of N90.3 billion a year earlier, according to its newly released audited financial report.
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The exchange rate, volatile for the most part of 2023 as a result of devaluations and other currency reforms implemented by the Nigerian Government, left the country’s FMCG industry, which relies heavily on imports, particularly vulnerable.
Foreign exchange loss for PZ Cussons Nigeria came to N157.9 billion that year, setting the maker of popular brands like Morning Fresh, Imperial Leather, Premier and Robb up for its biggest loss in years.
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That had adverse implications for shareholders’ fund, which turned negative, standing at -N27.5 billion after liabilities soared past assets. Equity, at the end of 2024, stood at -N17.3 billion.
A sharp reduction in the FX loss to N7.8 billion last year, a period of relative exchange rate stability, helped the company turn the corner.
All the same, net profit would have come out stronger if not for a significant surge in cost pressures, most notable in the increase in cost of sales as a share of revenue.
Turnover climbed by nearly 40 per cent to N212.6 billion as the company’s home & and personal care products business and its durable electrical appliances division both witnessed fair growth.
However, cost of sales-to-revenue ratio jumped to 72.9 per cent from 64.4 per cent a year ago, wearing off most of the increase that was recorded in sales, in turn leaving gross profit growth subdued.
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Profit before tax for the review period totalled N16.7 billion, compared to a pre-tax loss of N122.5 billion in 2023.
In March, PZ Cussons Nigeria announced that the proposal to convert $34.3 million (N51.8 billion) of an intercompany loan it owed to its parent company into equity had collapsed after a significant minority shareholder bloc opposed the move.
Earlier, the board of directors proposed the debt-to-equity swap as a measure to help the company address the impact of naira devaluation and historical forex liquidity challenges on its financials.
PZ Cussons (Holdings) Limited, UK, holds a 73.7 per cent stake in its Nigerian subsidiary.
