PZ Cussons to exit Nigeria, Aba factory faces shutdown

PZ Cussons, a leading multinational consumer goods firm, has revealed plans to sell its African subsidiaries, either partially or fully.

This decision is driven by the need to reduce the company’s vulnerability to the naira’s significant depreciation, which has dropped by 70%.

The announcement was made in the company’s preliminary financial report for the fiscal year ending May 31, 2024, and has attracted multiple offers from potential buyers.

The sale is seen as a strategic move to stabilize the company’s African business operations.

The document read, “Over the last 12 months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges.

“At the same time, we have taken the important first steps to transform our business and maximise shareholder value, by refocusing our portfolio on where we can be most competitive.

“The period was marked by a 70 per cent devaluation of the Nigerian naira, which has had significant implications on our reported financials. We have worked hard to mitigate the impact of this on the group, while continuing to serve Nigerian consumers who are facing unprecedented inflation and economic difficulties.”

It, however, noted that revenue in its UK Personal Care business has significantly improved to a year of profitable, double-digit revenue growth.

On the sales of subsidiaries, the company said it has received, “a number of expressions of interest for our African business”, which recognises the potential of its brands and could lead to a partial or full sale.

“The favourable trends of the second half of FY24 have continued into the new financial year. We are progressing with our plans to sell St. Tropez and have received a number of expressions of interest for our African business, w the potential of our brands and people, which could lead to a partial or full sale.

“Against this backdrop, we remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth,” PZ Cussons said.

Commenting on the impact of the naira devaluation, PZ Cussons said a foreign exchange loss of £107.5m “primarily arose from the translation and settlement of USD denominated liabilities in our Nigerian subsidiaries and is wholly the result of the devaluation of the naira, which fell by 70 per cent from May 31, 2023 to May 31, 2024”.

In April, the Chief Executive Officer, PZ Cussons, Jonathan Myers, said the company was reviewing its brands and geographies over macroeconomic challenges and complexities in Nigeria.

He spoke a month after the Securities and Exchange Commission rejected PZ Cussons’ request to acquire the shares of minority shareholders in PZ Cussons Nigeria Limited, its Nigerian subsidiary.

In September 2023, PZ Cussons had shown interest in buying the remaining 26.73 per cent minority shares in its Nigerian subsidiary, at a price of N21 per unit.

As of May 31, PZ Cussons holds a 73.27 per cent stake in the Nigerian subsidiary, which represents 2.90bn shares, worth N45.53bn as of September 18.

The Nigerian subsidiary of the company, PZ Cussons Nigeria Plc has continued to struggle, as it posted a N94.78bn loss in the third quarter of 2023/24 compared to the N11.213bn gain it had in the corresponding period in 2022.

The firm suffered a N74.14bn loss in Q2. PZ Cusson remained in a negative net asset position, as liabilities surpassed assets by N46.420bn on the back of naira depreciation.

Earlier this year, the Securities and Exchange Commission rejected the ‘No Objection’ sought by the multinational to buy out minority shareholders at N23 and delist from the Nigerian exchange.

In another notice posted on the Nigerian exchange website, the company stated, “Please note that the company’s closed period, which commenced on September 1, 2024, will remain in effect until 24 hours after the release of the Unaudited Financial Statements for the first quarter ended 31 August 2024, to the market.”