TIDMPZC
RNS Number : 9677D
PZ CUSSONS PLC
27 June 2023
27 June 2023
Trading statement
Third consecutive year of like for like revenue growth. New
foreign exchange regime in Nigeria.
The Group today issues a trading statement for the year ended 31
May 2023 and an update on the recently announced foreign exchange
policy changes in Nigeria.
Summary
-- Group Q4 like for like ('LFL') revenue growth of 6.7%, resulting in 6.1% LFL growth for FY23
-- FY23 Group revenue expected to be approximately GBP655
million with LFL revenue growth in each geographic region in Q
4
-- Adjusted profit before tax for the year of at least GBP70
million(1) reflecting a particularly strong Q4 performance in
Africa
-- As anticipated, Europe & Americas operating margin returned to high teens in H2
-- Progress against strategy including
o Majority of Must Win Brands in revenue growth in FY23
o Childs Farm 12% revenue growth in our first full year of
ownership
o Further geographic expansion with the launch of Original
Source into Spain this month
Changes to foreign exchange policy in Nigeria
The Group welcomes the recent policy announcement by the Central
Bank of Nigeria to liberalise the foreign exchange regime which, as
part of a broader suite of economic reforms under the new
government, is highly likely to improve the longer-term prospects
for Nigeria and remove some of the cash challenges faced by
multi-national companies. This has, however, resulted in a
devaluation of the Naira since the announcement on 14 June.
The following information is provided to allow for an assessment
of the impacts of this devaluation on near-term future financial
performance in FY24, recognising that the exchange rates in Nigeria
are currently highly volatile. There is not expected to be any
impact on our audited FY23 results.
-- The NGN/GBP average rate used to translate the FY23 results
of our Nigeria businesses in the Group's income statement was 536
(implied NGN/USD rate of 446) and the NGN/GBP closing rate used for
the Group's balance sheet as at 31 May 2023 was 577 (implied
NGN/USD rate of 465)(2)
-- As a sensitivity:
o every 10% devaluation in the Naira from the rate used to
translate the FY23 income statement is estimated to result in a
GBP23 million reduction in revenue, GBP3 million reduction in
adjusted operating profit, and 0.5 pence reduction in adjusted
earnings per share
o every 10% devaluation in the Naira from the closing rate used
to translate the balance sheet as at 31 May 2023 is estimated to
reduce the Group cash balance, as reported in GBP, by approximately
GBP20 million
-- The devaluation of the Naira will also impact the translation
of USD-denominated liabilities of our Nigeria business. This
adverse impact will be recorded within statutory profit or reserves
in the Group's financial statements in FY24
-- While the devaluation of the Naira will result in higher raw
material costs for our Nigeria business, reflecting the higher cost
of USD imports, we expect to largely offset this through mitigating
actions such as pricing, as successfully demonstrated over the last
two years
Management believes that the Group will be well placed to
withstand any macro-economic volatility in Nigeria given our market
position and the significant improvement in the profitability of
our business there in recent years. It has moved from an operating
loss in FY20 to an operating margin of more than 10% in FY23, and
we have strengthened local capabilities substantially. The Group is
committed to improving the performance of our Nigerian business
further given the significant market opportunity and the strength
of our brands.
All figures throughout this release are presented on an
unaudited basis
[1] FY23 consensus adjusted PBT GBP68.4 million based on
Bloomberg as at 22 June 2023
[2] As per Central Bank of Nigeria website the NGN/USD rate has
ranged between 633 to 754 since 14 June 2023, equivalent to a
devaluation of between 30% and 41%
Jonathan Myers, Chief Executive Officer, said:
"While the Naira devaluation will have a one-off impact to the
Group's near-term reported financial performance, we believe the
medium to long term prospects for our Nigerian business will be
much improved by the economic reforms, currently being introduced
by the new government, the likes of which have not been seen for
decades.
More widely, PZ Cussons has delivered another year of progress
against a challenging economic backdrop. We have continued to
transform the business and build brands for the long term, while
responding to the day-to-day challenges of cost inflation and
meeting the needs of the cost-conscious shopper. This has resulted
in a third consecutive year of like for like revenue growth in
FY23. We remain committed to delivering the benefits of executing
our strategy in the year ahead."
Conference call
PZ Cussons management will host a call for analysts and
institutional investors today at 08:30 UK time.
Dial in details are as follows:
United Kingdom (Local): +44 20 4587 0498
United Kingdom (Toll-Free): +44 800 358 1035
Access Code: 650014
Capital Markets Event
PZ Cussons will host a Capital Markets Event for analysts and
institutional investors on 4 July 2023, focused on Childs Farm, its
leading baby and child personal care business. The event will be
led by Sarah Pollard, Chief Financial Officer, and will include
presentations from Paul Yocum, Managing Director of Business
Development, and Andrew Geoghegan, Chief Marketing Transformation
Officer.
Reporting calendar
PZ Cussons will report FY23 results, along with its Q1 trading
update, on 26 September 2023.
Contact details
Investors
Simon Whittington - IR and Corporate Development Director
+44 (0) 77 1137 2928
Media
Headland PZCussons@headlandconsultancy.com
+44 (0) 20 3805 4822
Susanna Voyle, Stephen Malthouse, Charlie Twigg
Notes to Editors
Unless otherwise stated, all references to revenue growth are on
a like for like ('LFL') basis. See definitions provided in the
interim results announcement for further details.
About PZ Cussons
PZ Cussons is a FTSE250 listed consumer goods business,
headquartered in Manchester, UK. We employ nearly 3,000 people
across our operations in Europe, North America, Asia-Pacific and
Africa. Since our founding in 1884, we have been creating products
to delight, care for and nourish consumers. Across our core
categories of Hygiene, Baby and Beauty, our trusted and well-loved
brands include Carex, Childs Farm, Cussons Baby, Imperial Leather,
Morning Fresh, Original Source, Premier, Sanctuary Spa and St.
Tropez. Sustainability and the wellbeing of our employees and
communities everywhere are at the heart of our business model and
strategy, and captured by our purpose: For everyone, for life, for
good.
Cautionary note regarding forward-looking statements
This announcement contains certain forward-looking statements
relating to expected or anticipated results, performance or events.
Such statements are subject to normal risks associated with the
uncertainties in our business, supply chain and consumer demand
along with risks associated with macro-economic, political and
social factors in the markets in which we operate. Whilst we
believe that the expectations reflected herein are reasonable based
on the information we have as at the date of this announcement,
actual outcomes may vary significantly owing to factors outside the
control of the Group, such as cost of materials or demand for our
products, or within our control such as our investment decisions,
allocation of resources or changes to our plans or strategy. The
Group expressly disclaims any obligation to revise forward-looking
statements made in this or other announcements to reflect changes
in our expectations or circumstances. No reliance may be placed on
the forward- looking statements contained within this
announcement.
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END
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