By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)- British soap maker, PZ Cussons Plc on Wednesday said its first-half (H1) operating profit declined four percent (4%), due to challenging trading conditions in Nigeria and the devaluation of the naira towards the end of the period, the company said in its HI trading update.
The makers of the Imperial Leather soaps said overall operating profits in Nigeria were lower than the comparative period both as a result of tough trading conditions, particularly in the North, and of the 8 percent devaluation of the naira towards the end of the period.
Nigeria’s central bank on November 25, devalued the country’s local currency by eight percent (8%) to N168 to a US dollar. The CBN also raised interest rates to 13 percent by 100 basis points in a view to check losses to its foreign reserves from defending the currency against weaker oil prices.
‘’In Nigeria, disruption in the north of the country has continued at a high level, resulting in a decline in sales in that region. Good growth has continued in the south of the country, in particular in the electrical goods business and in the two food and nutrition joint ventures,’’ the company affirmed.
Ghana and Kenya accounted for about 42 percent of the company’s revenue in the year ended May 31. ‘’Performance in the smaller markets of Ghana and Kenya was in line with expectations,’’ PZ Cussons said.
Also, the shampoo maker affirmed in its full year outlook that the macro environment in Nigeria in the second half, which includes the February presidential elections and potential further currency volatility, will be a key contributing factor to the overall result for the full year.
‘’The Group remains focused on a dynamic and fast brand renovation and innovation programme, an ongoing cost reduction programme and successful delivery of new areas of growth such as Rafferty’s Garden, Five:AM and the PZ Wilmar joint venture. These initiatives will contribute towards offsetting the continuing macro challenges, particularly in Nigeria, and the reduction in profits from Poland as a result of last year’s home care brands sale,’’ PZ Cussons said.
