PZ Cussons Slips into ‘Coma’ over Naira Devaluation
PZ Cussons Plc’s balance has been broken with more N47 billion negative equity capital at the end of financial year 2024, its unaudited financial statement showed. The company’s accumulated loss totaled N53.627 billion wiped off PZ Cussons’s share capital and premium account in totality, causing the company to be grasping for breathe.
Just last year
In May 2023, the company’s equity capital was strong, settling at N48.360 billion at the time before devaluation policy in mid of 2024. The company suffer loss as government devalued the local currency in 2024.
Due to huge FX losses from its foreign currency exposed balance sheet, company’s turned from profit to loss making. In summary, Naira devaluation policy destroyed its balance sheet. PZ Cussons would require huge capital injection to boost its damaged shareholders fund as its exchange rate loss widened to N158 billion from N4.953 billion in 2023 in 12 months.
PZ Cussons has No Trouble Selling
In its latest earnings release, PZ Cussons reported more than N96 billion loss after tax at the end of fourth quarter of financial year 2024. Details showed that over 12 months, revenue actually grew by 34% to N152.156 billion at the end of the fourth quarter 2024 from N113.964 billion in Q4-2023.
This suggest sales was not the problem but its exposures to exchange rate volatility. Importation of goods is central to PZ Cussons business. The company’s costs of sales climbed to N91.561 billion in 12 months from N81.015 billion in the comparable, up by 13% year on year.
Compared growth in revenue and sales costs suggest that PZ Cussions business activities are not the problem per se. Down the line, selling and distribution costs rose to N13.092 billion in 2024 from N11.72 billion, to support the improved activities level that generated sales growth.
The company impairment on trade receivables also reversed, which was good for its earnings performance if things were to be under normal circumstance. PZ Cussons administrative expenses went down significantly, lower by 84% year on year from N7.881 billion to N11.279 billion. The significant decline was as a result of Group’s parent decision to write down of $11.08 million relating to global IT shared cost.
The elephant in the room was the company huge FX losses. According to its unaudited report, the company recorded operating loss of N111.543 billion in Q4-2024 from N8.22 billion recorded as profit 12 months earlier.
In the period, the company’s loss before tax obligation was about N109 billion, reversing its previous N20.5 billion pretax profit a year ago. #PZ Cussons Slips into ‘Coma’ over Naira Devaluation LASACO Gains 18% Amidst IFRS Implementation Challenges
