REG - PZ CUSSONS PLC - AGM Trading Statement

PZ CussonsAnnouncement

23/11/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231123:nRSW3941Ua&default-theme=true

RNS Number : 3941U  PZ CUSSONS PLC  23 November 2023

 

23 November 2023

AGM TRADING STATEMENT

 

Ahead of its Annual General Meeting which takes place today, PZ Cussons issues
the following update on current trading and developments in Nigeria.

Trading update

 

Trading has continued to be in line with expectations and consistent with the
FY24 outlook provided at our FY23 full year results on 26 September.

 

The Group expects to report low-single-digit like-for-like revenue growth for
H1 FY24. This reflects strong growth in Nigeria and ANZ offset by a decline in
Indonesia. Our Europe and Americas business is stable overall, with
significantly-improving momentum in our UK washing and bathing brands offset
by a decline in our Beauty business.

 

We expect to deliver a robust year-on-year operating margin improvement in H1
FY24 and both revenue growth and operating margin to improve in H2 compared to
H1. Further guidance will be provided at our interim results, including the
FY24 effective tax rate, non-controlling interest and net interest charge,
each of which will be largely driven by trading in Nigeria and other
developments there.

 

Nigeria update

 

Building on the strategic progress already made in Nigeria since the
loss-making position in FY20, trading in the first half of the year has
continued to be strong. The majority of our brands have held or gained market
share and we have seen no material change in our volume trends in recent
weeks 1  (#_ftn1) . We expect to achieve an improvement in both gross and
operating profit margins in the first half of the year, despite very high
levels of inflation.

 

As noted in September at our full year results, the lack of availability of US
Dollars in Nigeria has created significant challenges for the day-to-day
funding of the Nigerian business and the repatriation of cash to the Group's
holding companies. This issue was exacerbated in June 2023, following the new
government's liberalisation of the FX regime and resulting devaluation of the
Naira. We have since accelerated both our operational and corporate plans,
enabling us to mitigate these risks so far in FY24. More broadly, in recent
weeks, FX market liquidity has shown tentative signs of improvement.

 

As a result:

 

·    Our business in Nigeria expects to be able to continue to meet its
needs for the foreign currency required for day-to-day operations, which will
eliminate the need for further lending from the Group's holding companies.

·    We have also started to repatriate cash in recent weeks which,
combined with underlying strong free cash flow, is expected to result in a c.
£20 million reduction in Group gross debt since 31 May 2023 2  (#_ftn2) .

·    Based on prevailing rates, the current Naira cash balance is
equivalent to c. £80-100 million 3  (#_ftn3) . Assuming current market
conditions persist, the Group aims to repatriate a further £30-50 million of
cash by the end of FY24.

·    The proposed transaction to de-list and buy out the minority
shareholdings of PZ Cussons Nigeria plc is progressing as planned. The Group
welcomes the recent recommendation of the Board of PZ Cussons Nigeria to
minority shareholders to accept a revised offer of ₦23 per share 4  (#_ftn4)
and expects the transaction to complete before 31 May 2024. The purchase of
the minority shareholdings will be funded from our local Naira cash balance.

·    We therefore expect only a minimal surplus cash position remaining in
Nigeria, beyond that required for trading, by the end of this financial year.

 

Additional sensitivities and implications of the devaluation in the Naira,
which will impact the H1 FY24 reported results, were set out in our Trading
Statement on 27 June 2023.

 

***

 

The Group will report its FY24 interim results on Wednesday 7 February 2024.

 

For further information please contact:

Investors

Simon Whittington - IR and Corporate Development Director      +44 (0) 77
1137 2928

 

Media

Headland
PZCussons@headlandconsultancy.com
+44 (0) 20 3805 4822

Susanna Voyle, Stephen Malthouse, Charlie Twigg

 

Notes to Editors

 

About PZ Cussons

 

PZ Cussons is a FTSE250 listed consumer goods business headquartered in
Manchester, UK. We employ nearly 3,000 people across our operations in Europe,
North America, Asia-Pacific and Africa. Since our founding in 1884, we have
been creating products to delight, care for and nourish consumers. Across our
core categories of Hygiene, Baby and Beauty, our trusted and well-loved brands
include Carex, Childs Farm, Cussons Baby, Imperial Leather, Morning Fresh,
Original Source, Premier, Sanctuary Spa and St. Tropez. Sustainability and the
wellbeing of our employees and communities everywhere are at the heart of our
business model and strategy and captured by our purpose: For everyone, for
life, for good.

 1  (#_ftnref1) Source: market share for the Nigeria Hygiene, Baby and Beauty
business based on the 12 months to September 2023 (Nielsen Retail Audit)

 2  (#_ftnref2) As at the end of November, after the payment of the FY23 final
dividend

 3  (#_ftnref3) £80-100 million based upon NGN/USD rates of 1,000 and 1,200
which is the range within which US Dollars have been sourced during October
and November and compares to a current official rate of approximately 800

 4  (#_ftnref4) Equivalent to £25 million based on USD/GBP rate of 1.24 and
an assumed NGN/USD rate of 800 which is the approximate current official rate

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTLLLLLXFLZFBD