PZ CUSSONS NIGERIA PLC: A QUARTER INTO STRESS?

The first quarter of PZ Cussons Nigeria PLC may not be the best pointer to what a particular year may look like  but this financial year, it looks like the first quarter points to stressful 2016 financial year.
PZ Cussons year ends in May on each calendar year and from the figures released to the stock exchange last week for the quarter to August 2015, the Nigerian economic downturn is almost certain to hit below the belt.
According to the figures, PZ Cussons closed the first quarter of 2015 with 5.81 per cent gain on each N100 sale and this eventually increased to 9.0 per cent by May year end. However, it was marginally down on the 9.53 per cent reported in the same first quarter in 2014.
Now in the first quarter to August 2015, it is very possible that the 3.37 per cent gain on N100 sale recorded can be easily surpassed pointing to a repeat of what happened in 2015 year. But then, the figure is so far below levels recorded in 2015 and 2014 first quarters that obviously, 2016 may not be not compare well with both years.
The 2016 first quarter was that low due to marginal drop in turnover (down 0.44 per cent) and intense pressure from 303.4 per cent leap in net finance charges and 7.5 per cent rise in distribution and administration costs in spite of the turnover drop.
The impact of these was so great that 118.5 per cent in income from other sources and  drop in cost of sales by 1.37 per cent could not checkmate. Hence, the company's profit before tax for the quarter dropped to N546.8m from N872.3m by the same time in 2015 financial year.
SO:
* Obviously, PZ Cussons will grow stronger in the last three quarters given past trend but it is doubtful if this can lead to 2015 profit level, not to talk of 2014's.
*A close look at the 2015 financial year cash flow statement indicates that PZ Cussons may grapple with liquidity squeeze in 2016, all thins being equal.

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