PZ Cussons Value Drops by 12% as Investors Moods Swing
Sell pressures on PZ Cussons knocked off about 12%, or N11.514 billion, of the company’s market value. This happened as a review of its financials showed net loss moderated sharply in the first quarter of the 2025 earnings period.
The market is awaiting the exit plan of the parent company from Nigeria, as earlier affirmed. But some analysts believe the company may have second thought about leaving the Nigerian market, as the damaging situation is not peculiar to consumer goods players.
Worsening macroeconomic conditions remained top on the list of pressures facing most companies in the consumer goods sectors. For one of Nigeria’s successful businesses, PZ Cussons FX exposures has become a pressure cooker.
But PZ Cussons has no capital to play around with. Details from its latest earnings report showed shareholders’ funds increased to N32.154 billion negative.
In the equities market, PZ Cussons share price declined to N22.05 from N24.95 as investors sold down their interest in the company. The negative mood on the stock reduced its market value to N87.549 billion after losing about N12 billion week on week.
PZ share price nosedived just twice out of five trading sessions on the exchange. The company stock is trading at 44.87% discount to its 52-week high in the equities market. Trading data from the local bourse revealed that PZ share price had peaked at N40 within the last 12 months and its lowest was N15.25.
In Q1-2025 Earnings
The company’s financial performance worsened in the first quarter of financial year 2025 posted on the Nigerian Exchange. PZ Cussons lost after tax settled at N4.647 billion from N83.683 billion in net loss in the equivalent period in 2024/25. This happened despite significant earnings growth in the period.
Details from its Q1-2025 results revealed that the company’s revenue surged by 28.70% year on year to N39.989 billion from N31.070 billion in the comparable period, toning down its margin strength.
But costs of sales accelerated faster than revenue growth. In the period, cost of sales increased by 28.90% year on year to N27.758 billion from N21.451 billion.
Full Year Earnings 2024
In its unaudited earnings report ended May 2024, PZ Cussons Plc. recorded a 33.5% year-on-year revenue growth, increasing to N152.16 billion from N113.96 billion in 2023.
The company’s adjusted cost of sales rose by 13.5% year-over-year to N90.31 billion in 2024, up from N79.58 billion in 2023, according to analysts notes.
Consequently, gross profit grew to N61.85 billion in 2024 from N34.84 billion in 2023, resulting in a gross profit margin of 40.6% in 2024, compared to 30.2% in 2023.
The company reported an exchange loss of N158.03 billion in the period, a significant increase from N4.95 billion FX loss in 2023.
Analysts said this substantial exchange loss heavily impacted its earnings performance. The negative movement in the company’s numbers caused an operating loss of N111.54 billion in 2024, a stark contrast to the operating profit of N8.22 billion in 2023.
Overall, PZ reported a pretax loss of N108.97 billion in 2024, compared with a pretax profit of N20.46 billion in 2023. After accounting for tax income of N12.53 billion, the company’s net loss stood at N96.44 billion, compared to an annual profit of N14.35 billion in 2023.
Plan to Exit Nigerian Market
Earlier in the year, PZ Cussons Plc said it has commenced a strategic review of its business in Africa, with a consideration of exiting the continent, partly driven by economic challenges in Nigeria.
The devaluation of the naira and inflation have significantly impacted the company’s sales and operations. Jonathan Myers, CEO of PZ Cussons, emphasized the importance of looking towards the future while respecting the company’s past, indicating that the review’s outcomes could include changes in ownership.
Myers added: “The macro-economic challenges and complexities associated with operating in Nigeria are significant, and there is much more to do to unlock the full potential of the business.”
“As such, we have undertaken a strategic review of our brands and geographies and have embarked on plans to transform our portfolio, refocusing on where the business can be most competitive.”
PZ further stated: “In addition to the challenges of the significant exposure to Nigeria, the group is too complex for its size, with financial and human resources spread too thinly to generate consistent returns.”
“This means its competitive advantages have been constrained in comparison to those of both larger multinational companies and some focused, smaller ones.”
“We have to have an eye on the future as well as respect for the past. There could be many permutations of the outcome, which could include a change in ownership. We’re going to be objective and not emotional in how we make this decision,” he stated.
Myers confirmed that the group had received a number of unsolicited approaches over the previous months and years.
“Nothing is ruled out; we see a number of tranches of potential value, whether that is to us or someone else, but we have not put the ‘for sale’ sign up,” he added. #PZ Cussons Value Drops by 12% as Investors Moods Swing Naira Plunges on Suboptimal FX Intervention
