PZ Cussons blames naira for £89.7m loss, reduces shareholders dividend

The earnings of PZ Cussons, a personal healthcare products and consumer goods company, have taken a huge dent as the company reported an operating loss of £89.7 million, an FX loss of £88.2 million in its 2024 interim result for the six months ending 2nd December 2023.

In the report released on February 7, 2024, the company blamed the operating, FX losses on the devaluation of the naira since June last year.

Beyond the reported FX loss, the naira devaluation severely impacted the company’s financial performance in terms of its operating profit, revenue, dividend payment, and so on.

As a result of the huge material financial impact of the Naira devaluation, the board reduced the interim dividend to shareholders by 44% to 1.50p.

“As indicated in previous announcements, the devaluation of the Nigerian Naira has had a significant impact on our financial results and comparisons to the prior year. The foreign exchange loss in the period was £88.2million and was wholly the result of the devaluation of the Naira which fell by 51% between 31 May 2023 and 2 December 2023.

READ ALSO: British manufacturer offers N21 per share to buy PZ Cussons Nigeria

“Statutory results show an operating loss of £89.7 million having been materially impacted by these foreign exchange losses, revenue declined by 17.8% (£59.8 million) to £277.1 million of which £52.9 million was attributable to the Naira devaluation.

“Given the material financial impact of the Naira devaluation, the Board has determined it is prudent to reduce the interim dividend by 44% to 1.50p” Chief Executive of PZ Cussons, Jonathan Myers disclosed in the report.

Continuing, Myers said “The most significant challenge we have faced by far has been the devaluation of the Nigerian Naira, which is today around 70% weaker than a year ago, representing the biggest drop in the currency’s history.”

“As we set out in September 2023, macroeconomic developments in Nigeria would be the key determinant of the FY24 results. Whilst we continue to make good progress in managing this volatility, the further devaluation in recent weeks will inevitably impact our FY23 results.”

“The Board has reviewed the dividend carefully given the material devaluation of the Naira, particularly as it is difficult to foresee a significant rebound in the value of the currency in current circumstances. Had the exchange rate as of 31 January 2024 been the rate used to translate the FY23 results, FY23 EPS would have been over 30% lower.”

On the flip side, the company stated that as of the end of November 2023, it had successfully repatriated £13 million from Nigeria to its Holding company. This follows the confirmation by the company about three months ago of cash repatriation to its holding company and projected to return £30 to £50 million if the macroeconomic conditions remain unchanged.

By Babajide Okeowo

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