PZ Cussons, the global soaps, confectionery and cosmetics company, with a strong presence in Nigeria, has revised downwards its earlier group profit forecast for 2018, reducing investors and analysts expectations when it said Thursday that profit was now expected to come in at the lower end of the £80 million to £85 million range it previously provided.
The company attributed this downbeat to conditions in Nigeria, which it said had worsened. Specifically, PZ Cussons said while higher oil prices in Nigeria have contributed to increased foreign exchange reserves and a relatively stable exchange rate, liquidity has not flowed down into the economy.
According to the company, Africa is the company’s biggest market, contributing 38 percent to total revenue, followed by the European market with 35 percent.
Aside from home care and personal products, PZ Cussons also sells home appliances, partnering with Haier, in Africa. It is the market leader in Nigeria for freezers and refrigerators.
Back in March, the company issued a profit warning, saying it would cut costs due to weaker sales in important markets like the UK and Nigeria, which was hit by the devaluation of the country’s currency, the naira.
The company said UK consumers have been shopping cautiously because of cost inflation and economic uncertainty.
The Imperial Lather and Carex maker said its bathing product sales in the UK have been hurt by the tightening UK retail landscape and inflation outpacing wage growth.
However, the company said its personal care segment, with brands like Sanctuary and St Tropez, has performed well, particularly in the U.S.
The company said sales in Australia are improving and profits in Indonesia have been boosted by its baby products.
Looking ahead, PZ Cussons said its ongoing initiatives including a review of product costs across all categories, will strengthen its brand portfolio.
“It is expected that macro conditions will remain challenging with general elections in Nigeria and Indonesia falling in the second half of the new financial year,” the company said, adding that it was seeing pressure from volatile exchange rates and commodity costs.
Culled from Yahoo finance