PZ CUSSONS PLC HIT BY NIGERIAN DOWNTURN

The international group, PZ Cussons Plc has been hit by the current economic downturn in Nigeria and weaker currencies in Africa and Asia.
According to figures for the half year to November 2015 released January 26, the group turnover dropped by only 0.2% to 385.9m pounds but gross profit went down by a higher 1.7% to 45.2m pounds from 46m pounds at the same time in 2014.
Thus the group ended the half year with slightly depressed gross margin of 11.7% compared to 11.9% previously.
Yet pressure from overhead depressed this further for a closing 10.9% profit margin as profit before tax came to 42.1m pounds, down 3.7% on 2014's half year.
Commenting on the figures, PZ Cussons Chairman, Richard Harvey said:
"These are a steady set of results in what has been challenging markets with several revenue and profitability broadly flat for comparative period." adding "A strong performance in Europe has offset a more difficult trading environment in Nigeria and the impact of weaker currencies in both Asia and Africa"
He also said: " Looking through short term challenges in Nigeria, we remain confident about the medium and long term opportunities which should begin to materialise once growth returns..."
Here in Nigeria, according to figures released to the stock market also this week PZ Cussons Nigeria PLC is hanging on in these times with the aid of two threads: Fairly good direct cost control and increase in income from other sources.
Although it is hard to estimate its total income flow because gross finance income, if any, was not stated, it was obvious that core business revenue was down and overhead was out of control relative to revenue situation.
Within the half year, PZ Cussons recorded 3.28% decline in core revenue from N31660m to N30619.8m.
However, this was positively accompanied by a higher 3.36% decrease in cost of sale ( direct cost) from N23073.6m to N22299m and 96.3% leap in income from other sources to N134.8m compared to N68.7m previously.
On the negative side, overhead, as represented by distribution and administration costs, grew by 5.05% to N6999.9m from N6663.4m in spite of the revenue drop.
At the same time, the company's net finance deficit rose by 507.4% to N303.1m from N49.9m.
In the end, profit margin decreased to 3.71% from 6.11% previously based on estimated total income by Henates.
It is important to note though that PZ Cussons Nigeria seems to make more money in the second half.

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