PZ Cussons Reports 46% Drop In Q2 Net Earnings | Independent Newspapers Limited
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PZ Cussons Reports 46% Drop In Q2 Net Earnings

Posted: Jan 28, 2016 at 12:19 pm   /   by   /   comments (0)

PZ Cussons has posted a 46 per cent decline in profit after tax for the second quarter 2016 ended November 2015. In a filing from the Nigerian Stock Exchange (NSE), the unaudited consolidated statement of profit or loss and other comprehensive income of the company for the period ended showed profit after tax of N779.452 million as against N1.441 billion recorded in 2014, accounting for a drop of 45.92 per cent. Profit before tax was equally down by 40.64 per cent from N1.941 billion posted the previous year in contrast to N1.152 billion recorded during the period under review.

The company’s revenue declined by 3.29 per cent to N30.619 billion as against N31.659 billion in 2015. The company had said the violence affecting parts of Nigeria was causing only limited disruptions to business in what is one of the company’s most important countries. Most of PZ’s Nigerian factories are located in the south, while the conflict that has left thousands dead is mostly confined to the north east of the African nation, according to Chief Financial Officer, Brandon Leigh.

“It does impact business, but it doesn’t impact all of the business,” Leigh said by phone from London recently after the company reported a drop in first-half sales and profit. According to reports, about 30 per cent of PZ’s sales and a quarter of profit come from Nigeria, where at least 65 people were killed in an attack last Sunday by Islamist militants in Maiduguri, the capital of the northeastern state of Borno. Analysts at FBN Capital believe the naira’s devaluation during the quarter more than offset any benefits accruing from subdued crude palm oil prices (CPO), a key raw material.

They noted that the decline in y/y sales and profits in Nigeria were mainly due to difficult trading conditions, insecurity in the North and the naira devaluation. According to the analysts, these factors continue to offset meaningful growth in the south of the country, especially in the electrical goods business and food segment joint ventures. Market analysts have also predicted that the company’s profit was likely to decline further following the disappointing drop in profit margins in recent times.

And just as expected, the published Q1 2016 (end-Aug) numbers recently, confirmed their view. Just as other quoted firms in Nigeria facing depression in share prices, Market sentiments for the shares of PZ Cussons, one of the Nigeria’s leading personal and household companies listed on the floor of the Nigeria Stock Exchange has dwindled relatively due to challenging environment faced by the real sector of the economy.