British manufacturer personal care product maker, PZ Cussons’ Nigerian unit, PZ Cussons Nigeria, would be winding down its operation in some product categories.
The London Stock Exchange-listed personal care product maker said in its trading update that it continues to witness weak consumer environment, higher supply chain costs and lower exchange rate contributing to lower prices, volumes and margins in Nigeria.
The group’s revenue fell from £335.1 million for the year ended November 2018 to £373.9 million for the year ended November 2017, a 10.4% fall in topline revenue. Cussons said it looks to do a review of its Nigerian portfolio to ensure best placed for when growth returns to the market.
The company has not announced the product line that will be cut-off from the market. Despite the panic the announcement is bound to generate, Cussons said it looks to maintaining market shares and minimizing downside risk until growth returns in Nigeria.
In the last 15 years, analysts contend that Cussons has seen a major decline in its market share across major product lines.
Commenting today, Caroline Silver (Chair) said:
“The Group continues to make pleasing progress in Europe and Asia, with new product development and increased support across our key brands delivering positive momentum. Disappointingly, however, the macroeconomic conditions in Nigeria remain extremely challenging and continue to have a significant negative impact on overall Group performance. Reflecting this, we now expect Group adjusted profit before tax for the year to be towards £70 million.
Balance sheet strength will remain a priority for the business. The Group’s balance sheet remains strong, with net debt lower than the prior period. The Board has maintained the interim dividend at 2.67p per share.
We anticipate that consumer demand in all our key markets will remain subdued. Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market. In Personal Care and Beauty across Europe and Asia, identified as sources of growth for the Group, we will continue to prioritise higher investment levels behind carefully targeted key brand and market opportunities. Furthermore, the Board has approved specific strategic initiatives which will streamline our portfolio of activities and limit exposure to volatility in Nigeria, with more information to be provided in due course.”