THE HOLE IN PZ CUSSONS NIGERIA's POCKET.

Do not be shocked if, after all the potential rewards from good cost management the year offers, PZ Cussons Nigeria ends this financial year deep in the loss league.

The first quarter figures to August point in this direction because, unfortunately, loss due to foreign exchange dealings has become a big whole in its pocket.

All else, perhaps with the exception of other income, had done very well during the quarter but, no thanks to N4701m foreign exchange loss compared to N15m gain previously, PZ Cussons Nigeria landed in N2431.1m loss.

Core revenue had grown by 12.1% to N16752.8m with a tasty sweetener in the form of only 1.18% increase in cost of sale to N10970.6m.

Thus, from the 12.1% rise in core income, PZ Cussons Nigeria recorded 40.7% increase in gross profit to N5782.2m.

Yet the build up had just begone. This was followed by only 5.7% rise in distribution expenses to N2255.1m and very heartwarming 2.65% decrease in administration cost to N1316.7m.

Hence, growing operating profit from N624.4m to N2210.4m, PZ Cussons Nigeria seemed set to lay very solid foundation for a fantastic full year.

But alas, the loss from foreign exchange was too huge and income from other sources also chipped in 18.7% less at N58.6m to deflate the rising balloon of profit in mid air.

In the end, compared to gain of N3.62 on each N100 income during the first quarter of 2016 year, this time PZ Cussons Nigeria PLC lost N14.4 on each N100 income.

This was despite 55.5% drop in interest paid to N94.8m and 95.8% increase in interest income to N95.8m.

Naturally, the company's working capital was hit too as it dropped to N17832.4m from a far more comfortable N20829.6m by the same time last year

Now your guess is good enough for what the full year will look like, all things being equal.

PZ CUSSONS NIGERIA PLC: Nbm
                     First quarter
                        2016.            2015
Total income 16907.2.    15088.5
Core income. 16752.8.    14953.1
Cost of sale   10970.6.    10842.7
Gross profit.    5782.2.       4110.3
Distribution     2255.1.       2133.4
Administration 1316.7.     1352.6
Operating profit 2210.4.      624.4
Other income      58.6.          72.1
Forex gain       (4701.0).       15.0
Interest inc.         95.8.          48.3
Interest paid.       94.8.        212.9
Profit b4 tax    (2431.1).      546.8
Margin %            (14.4).          3.62
Working capital 17832.4.  20829.6

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