TIDMPZC
RNS Number : 3941U
PZ CUSSONS PLC
23 November 2023
23 November 2023
AGM TRADING STATEMENT
Ahead of its Annual General Meeting which takes place today, PZ
Cussons issues the following update on current trading and
developments in Nigeria.
Trading update
Trading has continued to be in line with expectations and
consistent with the FY24 outlook provided at our FY23 full year
results on 26 September.
The Group expects to report low-single-digit like-for-like
revenue growth for H1 FY24. This reflects strong growth in Nigeria
and ANZ offset by a decline in Indonesia. Our Europe and Americas
business is stable overall, with significantly-improving momentum
in our UK washing and bathing brands offset by a decline in our
Beauty business.
We expect to deliver a robust year-on-year operating margin
improvement in H1 FY24 and both revenue growth and operating margin
to improve in H2 compared to H1. Further guidance will be provided
at our interim results, including the FY24 effective tax rate,
non-controlling interest and net interest charge, each of which
will be largely driven by trading in Nigeria and other developments
there.
Nigeria update
Building on the strategic progress already made in Nigeria since
the loss-making position in FY20, trading in the first half of the
year has continued to be strong. The majority of our brands have
held or gained market share and we have seen no material change in
our volume trends in recent weeks [1] . We expect to achieve an
improvement in both gross and operating profit margins in the first
half of the year, despite very high levels of inflation.
As noted in September at our full year results, the lack of
availability of US Dollars in Nigeria has created significant
challenges for the day-to-day funding of the Nigerian business and
the repatriation of cash to the Group's holding companies. This
issue was exacerbated in June 2023, following the new government's
liberalisation of the FX regime and resulting devaluation of the
Naira. We have since accelerated both our operational and corporate
plans, enabling us to mitigate these risks so far in FY24. More
broadly, in recent weeks, FX market liquidity has shown tentative
signs of improvement.
As a result:
-- Our business in Nigeria expects to be able to continue to
meet its needs for the foreign currency required for day-to-day
operations, which will eliminate the need for further lending from
the Group's holding companies.
-- We have also started to repatriate cash in recent weeks
which, combined with underlying strong free cash flow, is expected
to result in a c. GBP20 million reduction in Group gross debt since
31 May 2023 [2] .
-- Based on prevailing rates, the current Naira cash balance is
equivalent to c. GBP80-100 million [3] . Assuming current market
conditions persist, the Group aims to repatriate a further GBP30-50
million of cash by the end of FY24.
-- The proposed transaction to de-list and buy out the minority
shareholdings of PZ Cussons Nigeria plc is progressing as planned.
The Group welcomes the recent recommendation of the Board of PZ
Cussons Nigeria to minority shareholders to accept a revised offer
of 23 per share [4] and expects the transaction to complete before
31 May 2024. The purchase of the minority shareholdings will be
funded from our local Naira cash balance.
-- We therefore expect only a minimal surplus cash position
remaining in Nigeria, beyond that required for trading, by the end
of this financial year.
Additional sensitivities and implications of the devaluation in
the Naira, which will impact the H1 FY24 reported results, were set
out in our Trading Statement on 27 June 2023.
***
The Group will report its FY24 interim results on Wednesday 7
February 2024.
For further information please contact:
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
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.
[1] Source: market share for the Nigeria Hygiene, Baby and
Beauty business based on the 12 months to September 2023 (Nielsen
Retail Audit)
[2] As at the end of November, after the payment of the FY23
final dividend
[3] GBP80-100 million based upon NGN/USD rates of 1,000 and
1,200 which is the range within which US Dollars have been sourced
during October and November and compares to a current official rate
of approximately 800
[4] Equivalent to GBP25 million based on USD/GBP rate of 1.24
and an assumed NGN/USD rate of 800 which is the approximate current
official rate
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END
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