PZ Cussons Records Sharp Earnings Growth in Q1

PZ Cussons Records Sharp Earnings Growth in Q1

In the first quarter of the financial year 2023 earnings result submitted to the stock market regulators, the consumer goods company, PZ Cussons Nigerian Plc delivered solid earnings growth but its share price has remained steady at N9.2.

The consumer company’s earnings per share (EPS) printed at 33 kobo in the period; from 6 kobo that was delivered 12-month ago. In the local bourse, investors placed N36.528 billion as market valuation for the company’s outstanding shares.

The company which is currently trading at N9.20 opens the market with impressive top and bottom line growth. However, the stock market has been indifferent to the mothering earnings per share growth.

According to its financial statement, the consumer goods company made N1.34 billion as profit distributable to its shareholders in the first half of 2023. This translates to more than 464% year-on-year growth when compared with N231 million declared as profit in the comparable period in 2022.

The mouth-watering profit came from total sales revenue which printed at N27.391 billion, a 23.4% increase above N22.204 billion reported as turnover 12-month ago. The surge was supported by higher price labels on goods due to rising headline inflation in the Nigerian market.

Its unaudited financial statement showed that PZ Cussons reported revenue for the fourth quarter of the year 2022 accounting period settled at N24.964 billion.

It, therefore, means that sales revenue also inched higher in the last three months to print at N27.391 billion in the first quarter of the new accounting period which is expected to end in June 2023.

Despite a higher profit level, the consumer goods company saw its margins decline. Analysis of the company’s financial statement indicates that the gross margin dropped to 23.3% from 27.7% amidst pressures on the costs profile.

At about a 31% year-on-year increase, PZ Cussons adjusted costs of sales accelerated faster than revenue growth in the period after. The surge clouded the company’s gross profit.

However, a significant drop in the consumer goods company’s net finance costs saved the day as finance income spiked.

The proportion of operating expenses to the company sales revenue then declined to 15%, helping to boost the bottom line from 17.9% reported in the comparable period in 2022. READ: PZ Cussons: Subdued Demand, FX Loss Trigger Loss Per Share

Rising costs of sales has been attributed to the prevailing impact of the Naira devaluation amid global inflationary pressures as the company imports all the electrical appliances sold by the durable electrical appliances segment, according to CSL Stockbrokers note. 

Analysts said PZ Cussons also rely on imported raw materials for the home and personal care (HPC) segment.

In the first quarter of 2023, PZ Cussons’s operating expenses remained largely under control as Administrative Expenses -adjusted for depreciation- declined by 4.2% to N1.61 billion from N1.68 billion a year ago.  

The company’s selling and Distribution Expenses -adjusted for depreciation- increased slightly by 6.2% to N2.43 billion from N2.29 billion in Q1 2022, according to CSL Stockbrokers Limited.

The company recorded a 560% increase in interest Income, but this was outpaced by a jump in interest expense to N1.44 billion in Q1-2023 from N14,000 in Q1-2022. Meanwhile, its net loss on foreign exchange transactions moderated by 21.4% to N0.99 million in Q1-2023 from N1.26 billion in Q1-2022.

Consequently, the consumer company’s pretax profit jumped by 262.5% to N1.44 billion in the first quarter of 2022 from N398 million in the comparable period in 2022.

# PZ Cussons Records Sharp Earnings Growth in Q1#