Multinational consumer goods firm PZ Cussons has announced plans to sell its African subsidiaries in response to significant currency fluctuations impacting its operations.
The parent company of PZ Cussons Nigeria is considering both partial and full divestitures as it seeks to lessen its exposure to the Nigerian naira, which has experienced a 70% devaluation recently. This decision was outlined in the company’s preliminary results for the fiscal year ending May 31, 2024, published on its website.
In the report, PZ Cussons acknowledged that it has received multiple inquiries from interested buyers regarding its African operations. The company stated, “In the past year, we have made notable operational strides and adhered to our strategic priorities, despite facing macroeconomic challenges.”
The report further noted the impact of the naira’s depreciation on the firm’s financial performance. “The significant decline in the naira has affected our reported results. We are actively working to mitigate these effects while continuing to serve Nigerian consumers grappling with rising inflation and economic hardships.”
Despite the challenges in Nigeria, PZ Cussons reported robust growth in its UK Personal Care segment, achieving double-digit revenue growth.
On the divestiture plans, the company highlighted a strong interest in its African business, recognizing the potential of its brands. “The positive trends observed in the latter half of FY24 have carried into the new fiscal year. We are advancing plans to sell our St. Tropez brand and have received several expressions of interest for our African operations,” the statement read.
PZ Cussons expressed confidence in its long-term prospects, emphasizing a more focused portfolio aimed at delivering sustainable and profitable growth.
The report also detailed a foreign exchange loss of £107.5 million, primarily attributed to the devaluation of the naira against the dollar. This loss arose from the translation and settlement of USD-denominated liabilities associated with its Nigerian subsidiaries.
In April, CEO Jonathan Myers remarked that the company was reassessing its brand portfolio and geographic focus due to the challenging economic landscape in Nigeria. This reassessment came shortly after the Securities and Exchange Commission denied PZ Cussons’ request to acquire shares from minority shareholders in its Nigerian subsidiary.
As of May 31, PZ Cussons held a 73.27% stake in PZ Cussons Nigeria Plc, which has faced significant financial difficulties, posting a loss of N94.78 billion in the third quarter of 2023/24, compared to a profit of N11.213 billion in the same period the previous year. The firm also reported a N74.14 billion loss in the second quarter and remains in a negative net asset position.
Earlier this year, the Securities and Exchange Commission rejected PZ Cussons’ attempt to buy out minority shareholders at N23 per share to facilitate delisting from the Nigerian stock exchange.
In a recent announcement, PZ Cussons indicated that its closed period will remain in effect until 24 hours after the release of its unaudited financial statements for the first quarter ending August 31, 2024.
