REG - PZ CUSSONS PLC - Trading Statement

PZ CussonsAnnouncement

27/06/2023 07:15

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RNS Number : 9677D  PZ CUSSONS PLC  27 June 2023

27 June 2023

Trading statement

 

Third consecutive year of like for like revenue growth. New foreign exchange
regime in Nigeria.

 

The Group today issues a trading statement for the year ended 31 May 2023 and
an update on the recently announced foreign exchange policy changes in
Nigeria.

 

Summary

 

·    Group Q4 like for like ('LFL') revenue growth of 6.7%, resulting in
6.1% LFL growth for FY23

·    FY23 Group revenue expected to be approximately £655 million with
LFL revenue growth in each geographic region in Q4

·    Adjusted profit before tax for the year of at least £70 million(1)
reflecting a particularly strong Q4 performance in Africa

·    As anticipated, Europe & Americas operating margin returned to
high teens in H2

·    Progress against strategy including

o  Majority of Must Win Brands in revenue growth in FY23

o  Childs Farm 12% revenue growth in our first full year of ownership

o  Further geographic expansion with the launch of Original Source into Spain
this month

 

Changes to foreign exchange policy in Nigeria

 

The Group welcomes the recent policy announcement by the Central Bank of
Nigeria to liberalise the foreign exchange regime which, as part of a broader
suite of economic reforms under the new government, is highly likely to
improve the longer-term prospects for Nigeria and remove some of the cash
challenges faced by multi-national companies. This has, however, resulted in a
devaluation of the Naira since the announcement on 14 June.

 

The following information is provided to allow for an assessment of the
impacts of this devaluation on near-term future financial performance in FY24,
recognising that the exchange rates in Nigeria are currently highly volatile.
There is not expected to be any impact on our audited FY23 results.

 

·    The NGN/GBP average rate used to translate the FY23 results of our
Nigeria businesses in the Group's income statement was 536 (implied NGN/USD
rate of 446) and the NGN/GBP closing rate used for the Group's balance sheet
as at 31 May 2023 was 577 (implied NGN/USD rate of 465)(2)

·    As a sensitivity:

o  every 10% devaluation in the Naira from the rate used to translate the
FY23 income statement is estimated to result in a £23 million reduction in
revenue, £3 million reduction in adjusted operating profit, and 0.5 pence
reduction in adjusted earnings per share

o  every 10% devaluation in the Naira from the closing rate used to translate
the balance sheet as at 31 May 2023 is estimated to reduce the Group cash
balance, as reported in GBP, by approximately £20 million

·    The devaluation of the Naira will also impact the translation of
USD-denominated liabilities of our Nigeria business. This adverse impact will
be recorded within statutory profit or reserves in the Group's financial
statements in FY24

·    While the devaluation of the Naira will result in higher raw material
costs for our Nigeria business, reflecting the higher cost of USD imports, we
expect to largely offset this through mitigating actions such as pricing, as
successfully demonstrated over the last two years

Management believes that the Group will be well placed to withstand any
macro-economic volatility in Nigeria given our market position and the
significant improvement in the profitability of our business there in recent
years. It has moved from an operating loss in FY20 to an operating margin of
more than 10% in FY23, and we have strengthened local capabilities
substantially. The Group is committed to improving the performance of our
Nigerian business further given the significant market opportunity and the
strength of our brands.

 

All figures throughout this release are presented on an unaudited basis

 1  FY23 consensus adjusted PBT £68.4 million based on Bloomberg as at 22
June 2023

 2  As per Central Bank of Nigeria website the NGN/USD rate has ranged between
633 to 754 since 14 June 2023, equivalent to a devaluation of between 30% and
41%

 

Jonathan Myers, Chief Executive Officer, said:

 

"While the Naira devaluation will have a one-off impact to the Group's
near-term reported financial performance, we believe the medium to long term
prospects for our Nigerian business will be much improved by the economic
reforms, currently being introduced by the new government, the likes of which
have not been seen for decades.

 

More widely, PZ Cussons has delivered another year of progress against a
challenging economic backdrop. We have continued to transform the business and
build brands for the long term, while responding to the day-to-day challenges
of cost inflation and meeting the needs of the cost-conscious shopper. This
has resulted in a third consecutive year of like for like revenue growth in
FY23. We remain committed to delivering the benefits of executing our strategy
in the year ahead."

 

Conference call

 

PZ Cussons management will host a call for analysts and institutional
investors today at 08:30 UK time.

 

Dial in details are as follows:

 

United Kingdom (Local): +44 20 4587 0498

United Kingdom (Toll-Free): +44 800 358 1035

Access Code: 650014

 

Capital Markets Event

 

PZ Cussons will host a Capital Markets Event for analysts and institutional
investors on 4 July 2023, focused on Childs Farm, its leading baby and child
personal care business.  The event will be led by Sarah Pollard, Chief
Financial Officer, and will include presentations from Paul Yocum, Managing
Director of Business Development, and Andrew Geoghegan, Chief Marketing
Transformation Officer.

 

Reporting calendar

 

PZ Cussons will report FY23 results, along with its Q1 trading update, on 26
September 2023.

 

Contact details

Investors

Simon Whittington - IR and Corporate Development Director

+44 (0) 77 1137 2928

Media

Headland PZCussons@headlandconsultancy.com
(mailto:PZCussons@headlandconsultancy.com)

+44 (0) 20 3805 4822

Susanna Voyle, Stephen Malthouse, Charlie Twigg

Notes to Editors

Unless otherwise stated, all references to revenue growth are on a like for
like ('LFL') basis. See definitions provided in the interim results
announcement for further details.

 

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.

 

Cautionary note regarding forward-looking statements

 

This announcement contains certain forward-looking statements relating to
expected or anticipated results, performance or events. Such statements are
subject to normal risks associated with the uncertainties in our business,
supply chain and consumer demand along with risks associated with
macro-economic, political and social factors in the markets in which we
operate. Whilst we believe that the expectations reflected herein are
reasonable based on the information we have as at the date of this
announcement, actual outcomes may vary significantly owing to factors outside
the control of the Group, such as cost of materials or demand for our
products, or within our control such as our investment decisions, allocation
of resources or changes to our plans or strategy. The Group expressly
disclaims any obligation to revise forward-looking statements made in this or
other announcements to reflect changes in our expectations or circumstances.
No reliance may be placed on the forward- looking statements contained within
this announcement.

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