PZ blames Boko Haram and fuel subsidy removal for poor sales
British soap and shampoo maker PZ Cussons has issued a second profit warning in less than four months, blaming social unrest in Nigeria, its biggest single market.
“Given the importance of Nigeria to the group, the impact of the continuing tensions in the country will be significant, resulting in the group’s overall performance being some way below expectations,” the firm said on Tuesday.
Shares in the maker of Imperial Leather soaps and Carex anti-bacterial hand washes fell 7.5 percent to 308 pence at 0710 GMT in London, valuing the firm at around 1.3 billion pounds.
The group said profitability in Nigeria in the January 25 to March 26 period, its fiscal third quarter, had been affected by a continuation of the economic and social tensions detailed when it posted interim results in January.
PZ Cussons particularly highlighted the continuation of social instability in northern Nigeria which has directly impacted sales, and the removal of a fuel duty subsidy in January that has hit consumers’ disposable income and led to higher transport costs and port disruption, affecting both sales and costs.
Despite its current problems in Nigeria the firm expects the removal of the fuel duty subsidy to be beneficial for the medium term macroeconomic health of the country.
It said third quarter trading in all its other markets in Europe and Asia had been in line with management expectations and was expected to be so for the balance of the year.
“Looking ahead to the new financial year commencing June 1, the group is expected to return to profitable growth in all markets including Nigeria,” it said.
It said this growth would be supported by the benefits of a project to improve its supply chain, also announced on Tuesday.
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