Business
PZ Blames Crisis For Drop In Sales
Soap and shampoo maker PZ Cussons has issued a second profit warning in less than four months, blaming a hit to sales from social unrest in Nigeria, its biggest single market.
Shares in the maker of Imperial Leather soaps and Carex anti-bacterial hand washes were down 10.2 percent at 1001 GMT on Tuesday after it said profits in Nigeria over the last two months had been affected by a continuation of economic and social tensions.
Nigeria, Africa’s most populous country, accounts for 30-40 percent of PZ Cussons’ total revenue.
“Given the importance of Nigeria to the group, the impact of the continuing tensions in the country will be significant, resulting in the group’s overall (year to May 31, 2012) performance being some way below expectations,” the firm said.
PZ Cussons highlighted the continuation of social instability in northern Nigeria which has directly impacted sales, and the removal of a fuel duty subsidy in January that has hit consumers’ disposable income and led to higher transport costs and port disruption, affecting both sales and costs.
Despite its current problems in Nigeria the firm expects the removal of the fuel duty subsidy to be beneficial for the medium term macroeconomic health of the country.
PZ Cussons, which also owns beauty brands Charles Worthington, Sanctuary and St Tropez, first warned of problems in Nigeria in January.
Shares in the firm were down 34 pence at 300 pence at 1001 GMT, valuing the business at about 1.26 billion pounds ($2 billion).
“This is undoubtedly a disappointing statement, and while we feel this may ultimately prove to be the bottom of the news flow cycle, we acknowledge that the outlook in Nigeria remains uncertain,” said Panmure Gordon analyst Graham Jones, who cut his 2011-12 pre-tax profit forecast by 13 percent to 89.1 million pounds.
PZ Cussons said trading in the January 25 to March 26 period in all its other markets in Europe and Asia had been in line with management expectations and was expected to be so for the balance of the year.
“Looking ahead to the new financial year commencing June 1, the group is expected to return to profitable growth in all markets including Nigeria,” it said.
It said this growth would be supported by the benefits of a major programme to cut costs in its supply chain, also announced on Tuesday.
That will see the firm close manufacturing plants in Australia and Ghana and restructure facilities in Poland.
The programme will have a cash cost of 19 million pounds, mainly for redundancies, with a further non-cash charge of 20 million pounds for asset write downs. Payback is expected within three years.
($1=0.6275 British pounds)
“Payment of tuition fees for undergraduate/postgraduate studies shall be subject to a maximum limit of $25,000.00 per semester,” the Manual states.
The expansion of international card limits also reflects growing confidence among lenders that foreign exchange liquidity has improved enough to support retail dollar transactions.
Speaking recently at the BusinessDay 14th Annual CEO Forum in Lagos, CBN Olayemi Cardoso, governor of the CBN said buying and selling activities now increasingly determine outcomes in the foreign exchange market, unlike in the past when market participants relied heavily on routine Central Bank interventions.
According to Cardoso, Nigeria’s net foreign exchange reserves have risen from just over $3 billion at the start of the reform programme to more than $40 billion, while gross reserves have climbed to about $52 billion, providing stronger confidence for investors and enabling the Central Bank to reserve interventions for periods of market stress rather than day-to-day liquidity management.
The restoration and expansion of international naira card spending limits are increasingly being seen as one of the clearest signs that the benefits of the CBN’s foreign exchange reforms are beginning to reach households, students and businesses making legitimate cross-border payments.
The Secretary-General and Chief Executive Officer, WEC, Dr Angela Wilkinson, disclosed this in a statement, last Thursday.
“Nigeria’s participation comes at a pivotal time as the country seeks to expand energy access, strengthen energy security, accelerate gas development and mobilise the capital required for industrialisation and sustainable economic growth.
“WEC Nigeria will convene leaders from across the energy ecosystem, apply the WEC’s globally recognised Energy Trilemma framework to Nigeria’s unique context, and promote evidence-based dialogue, practical collaboration and informed policymaking.
“It will also ensure that Nigerian and broader African perspectives contribute meaningfully to global energy conversations,” she said.
Wilkinson expressed confidence that Nigeria would play a significant leadership role at the World Energy Congress scheduled for Riyadh in April 2027 and beyond.
The statement also quoted the Chairman of WEC Nigeria, Isa, as describing the country’s participation as an opportunity to deepen national and African leadership within the global energy community through practical solutions tailored to regional development priorities.
He said the platform would promote collaboration across sectors and attract sustainable investments into Nigeria’s energy sector.
The Chief Executive Officer of WEC Nigeria, Wunti, was quoted in the statement as saying that the council would connect leadership, evidence and investment to build a secure, affordable and sustainable energy system.
“This system will be capable of driving economic growth and shared prosperity.”
According to him, the platform will also connect Nigerian institutions and businesses with international knowledge, technology, partnerships and investment opportunities through the World Energy Council’s global network.
Recall that WEC, founded in 1923, is the world’s oldest independent and impartial community of energy leaders and practitioners, advancing informed, collaborative and practical action across the global energy system.