P Z CUSSONS YEAR OF PUNCTURED TYRES

From the figures for the year to May 2017 released recently, PZ Cussons PLC was on course to a great year but, unfortunately, its tyres were punctured by foreign exchange loss and so, it had to settle for a good year.

Everything was well in place. Total grew by 14.7% to N80314m despite 30.6% drop in other income to N198.6m because core revenue increased by 14.56% to N79,630.1m and interest income more than doubled to N485.6m.

Then cost of sale rose by only 4.78% to N51,682.2m while generating the double digit core income growth; selling and distribution expenses rose by only 3.06% to N9095.9m; administration expenses increased by only 7.51% to N5636.6m and interest charges dropped by 51.2% to N290.5m.

This kind of combination had all the potential to deliver profit growth in triple digits. Indeed, PZ Cussons operating profit grew by 115.5% to N13,215.4m.

But alas, foreign exchange loss dampened it all by clocking N8,797.9m compared to only N2883.5m in 2016 year.

In the end, PZ Cussons settled for N4,811.2m profit before tax, up only 52.8% on 2016 level leading to 6% profit margin from last financial year's 4.5%.

Not bad but it could certainly have been better if something was done about the leakage through forex transactions. Will that be, perhaps the main tax for PZ Cussons in the new year? May be.

The AGM comes up October 12, 2017 and it is possible that unless minority shareholders demand commitment in this area, PZ Cussons Holdings UK may which holds 73.27% and so manages the company, may not be inclined to bring it up.

PZ CUSSONS NIGERIA: Nbn Full year
                              2017.            2016
Total income.  80314.3.       70023.9
Core revenue.  79630.1.       69527.5
Cost of sale.    51682.2.       49326.2
Gross profit.    27947.9.       20201.4
Distribution.      9095.9          8825.6
Administration 5636.6.          5242.7
Op.profit.         13215.4.         6133.1
Other income.     198.6.           286.1
Exchange loss  8797.9.        2883.5
Interest income  485.6.          210.3
Interest cost.      290.5.          595.7
Profit before tax 4811.2.      3148.2
Profit margin %     6.00.          4.50

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