July 1, 2024/CSL Research

n its unaudited earnings report for FY 2024 (ending May 2024), PZ Cussons Plc. (PZ) recorded a 33.5% y/y revenue growth, increasing to N152.16bn from N113.96bn in FY 2023. On a quarter-over-quarter basis, PZ’s revenue decreased by 2.4% to N41.53bn in Q4 2024 from N42.54bn in Q3 2024. The company’s cost of sales (excluding depreciation) rose by 13.5% year-over-year to N90.31bn in FY 2024, up from N79.58bn in FY 2023. Consequently, gross profit grew to N61.85bn in FY 2024 from N34.84bn in FY 2023, resulting in a gross profit margin of 40.6% in FY 2024, compared to 30.2% in FY 2023.

PZ’s total Operating Expenses (excluding depreciation) decreased by 27.29% in FY 2024, dropping to N13.73bn from N18.89bn in FY 2023. This reduction was primarily driven by a significant decrease in its administrative expenses (excluding depreciation), which fell by 86.9% to N995m in FY 2024 from N7.57bn in FY 2023. However, the company’s selling and distribution expenses (excluding depreciation) increased by 12.2% year-over-year, rising to N12.73bn in FY 2024 from N11.31bn in FY 2023. As a result, the company’s OPEX margin improved to 8.8% in FY 2024, compared to 16.7% in FY 2023.

PZ Cussons Nigeria Plc, FY 2024 (N’m)

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The company reported an exchange loss of N158.03bn for FY 2024, a significant increase from N4.95bn loss in FY 2023. This substantial exchange loss heavily impacted its EBITDA, resulting in a loss of N109.65bn for FY 2024, compared to a gain of N10.38bn in FY 2023. Consequently, the company reported a negative EBITDA margin of -72.1% in FY 2024, down 81.2 points from a positive margin of 9.1% in FY 2023. Depreciation and Amortization Expenses amounted to N1.90bn in FY 2024, slightly down from N2.16bn in FY 2023. As a result, PZ reported an Operating Loss of N111.54bn in FY 2024, a stark contrast to the Operating Profit of N8.22bn in FY 2023.

The company’s Other Income dropped significantly to N369m in FY 2024 from N7.34bn in FY 2023, solely from rental income. Consequently, EBIT fell to a loss of N111.17bn in FY 2024 from a gain of N15.57bn in FY 2023. Additionally, PZ saw a 16.5% y/y increase in Finance Income, reaching N6.10bn from N5.23bn in FY 2023, while its Finance Costs rose sharply to N3.89bn in FY 2024 from N335m in FY 2023. This resulted in Net Finance Income of N2.21bn in FY 2024, down from N4.90bn in FY 2023. Overall, PZ reported a Loss Before Tax of N108.97bn in FY 2024, compared with a Profit Before Tax of N20.46bn in FY 2023. After accounting for a Tax Income of N12.53bn, the company’s Loss After Tax stood at N96.44bn, compared to a Net Profit of N14.35bn in FY 2023.

We retain our Sell recommendation on the stock and a target price of N24.70/s. Current price; N22.00/s.

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