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PZ Cussons PLC (LSE:PZC), a global consumer goods company, has announced its financial results for the year ended 31 May 2024. The Group faced significant challenges due to the sharp devaluation of the Nigerian Naira, which heavily impacted its revenue, earnings, and cash generation. Despite these headwinds, the company posted positive like-for-like (LFL) revenue growth driven by pricing improvements and strategic initiatives across key markets.
Financial Highlights
One of the most significant influences on PZ Cussons' FY24 results was the devaluation of the Nigerian Naira, which saw its value against the Sterling fall by an average of 57% during the period. This currency weakness resulted in a 19.6% year-on-year decline in reported Group revenue.
However, excluding Africa, LFL revenue declined by 2.6%, indicating that the rest of the business was also under pressure. For the Group as a whole, LFL revenue increased by 4.4%, driven by price/mix improvements of 6.8%, while overall volumes fell by 2.4%. Revenue trends showed signs of improvement throughout the year, with both volume and Group revenue growing in the fourth quarter.
Profit before tax (PBT) dropped by 39.7%, largely due to reduced operating profit and higher interest charges. Meanwhile, earnings per share (EPS) fell by 28.6%, as the PBT decline was partially mitigated by a lower effective tax rate.
Debt Reduction and Cash Repatriation
Despite the challenges posed by the Naira's devaluation, PZ Cussons successfully reduced its gross debt, lowering it from £251 million in May 2023 to £167 million by May 2024. A key factor in this debt reduction was the repatriation of approximately £50 million of cash from Nigeria, as well as free cash flow generation from other regions. This effort reflects the Group’s disciplined approach to capital management, focusing on maintaining financial flexibility.
Dividend Decline
The Board has announced an interim dividend of 2.10p per share, a sharp 44% reduction compared to last year’s final dividend of 3.73p. This brings the full-year dividend to 3.60p, also down 44% year-on-year. The dividend reduction reflects the impact of the Naira devaluation on earnings per share, while maintaining a coverage ratio of about two times. The dividend is set to be paid on 4 December 2024 to shareholders on record as of 1 November 2024.
Outlook for FY25
PZ Cussons has started the FY25 financial year on a positive note, with Group LFL revenue growth of 4.7%, driven by strong performance in Africa, Europe, and the Americas. However, adverse shipping phasing in Asia tempered some of the gains.
In terms of operating profit guidance, the Group has accounted for ongoing uncertainty related to the Naira's volatility. Assuming the Q1 FY25 exchange rates prevail for the remainder of the year, PZ Cussons expects to deliver an operating profit in the range of £47-53 million. Under the same exchange rate assumptions, FY24 operating profit would have been approximately £40 million.
The movement of the Naira will be a key determinant of the Group’s reported results for FY25. PZ Cussons highlighted the sensitivity of operating profit to foreign exchange revaluations, especially as intra-group liabilities become more exposed to Naira volatility due to accounting changes. The Group will provide further analysis of these impacts in future financial reports.
