PZ Cussons Plc Conditions in Nigeria remain extremely challenging and continue to have a significant negative impact

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PZ Cussons Plc (LON:PZC), a leading consumer products group, announces its unaudited interim results for the six months ended 30 November 2018.

Adjusted results (before exceptional items¹)	Half year to 30 November 2018	(Restated)* Half year to 30 November 2017	Reported % change	Constant currency % change³	Like for like % change⁴

Revenue²	£335.1m	£373.9m	(10.4%)	(4.6%)	(4.6%)
Adjusted operating profit	£35.4m	£36.8m	(3.8%)	(1.1%)	(1.1%)
Adjusted profit before tax	£32.8m	£33.3m	(1.5%)	1.5%	1.5%
Adjusted basic earnings per share	5.67p	5.62p	0.9%
Statutory results (after exceptional items¹)
Revenue²	£335.1m	£373.9m	(10.4%)
Operating profit	£29.3m	£37.0m	(20.8%)
Profit before tax	£26.7m	£33.5m	(20.3%)
Basic earnings per share	4.57p	4.90p	(6.7%)
Interim dividend per share	2.67p	2.67p	–

Net debt⁵	(£177.2m)	(£191.2m)

*The results for the half year to 30 November 2017 have been restated to reflect a change in accounting policy and application of IFRS 15. Further details are set out in note 2.

HIGHLIGHTS

Group

· Adjusted profit before tax slightly lower than the prior period on a reported basis with good performance in Europe and Asia offset by extremely challenging conditions in Nigeria

· Higher levels of innovation, brand support and distribution expansion delivering improved performance in Europe and Asia

· Focus in Nigeria on maintaining market shares and minimising downside risk until growth returns to the country

· Balance sheet remains strong with good cash flow management and net debt lower than the prior period

· Interim dividend maintained at 2.67p per share

Outlook and Initiatives

· Adjusted profit before tax for the full year now expected to be towards £70 million driven by conditions in Nigeria, including an estimated £5.5 million impact as a result of significant port disruption

· Specific strategic initiatives approved to streamline the Group’s portfolio of activities allowing more focused investment behind key brands across Europe and Asia and limiting the exposure to Nigeria volatility

Africa

· Weak consumer environment, higher supply chain costs and lower exchange rate contributing to lower prices, volumes and margins in Nigeria

· Nigerian portfolio under continuous review to ensure best placed for when growth returns to the market

Asia

· Good growth in profitability in Australia across all categories of Personal Care, Home Care and Food & Nutrition

· In Indonesia improved profitability driven by new product launches across Cussons Baby, Cussons Kids and Imperial Leather

Europe

· Good overall performance for Europe despite macro uncertainty in the UK

· Significant step up in new product launches driving good revenue growth in UK washing and bathing division

· Strong revenue growth achieved in Beauty division driven by both innovation and distribution expansion

1 Exceptional items before tax (2018: cost £6.1m; 2017: income £0.2m) are detailed in note 4.

2 Excludes joint ventures revenue of £57.0m (2017: £74.7m at reported rate, £65.4m at constant currency rate).

3 Constant currency comparison (2017 results retranslated at 2018 exchange rates). See page 2 for values of currency impact.

4 Like for like comparison after adjusting 2017 for constant currency and 2018 for the impact of acquisitions and disposals. There were no such acquisitions or disposals in either period.

5 Net debt, above and hereafter, is defined as cash, short-term deposits and current asset investments, less bank overdrafts and borrowings (refer to note 11).

Commenting today, Caroline Silver (Pz Cussons Chair) said:

“The Group continues to make pleasing progress in Europe and Asia, with new product development and increased support across our key brands delivering positive momentum. Disappointingly, however, the macroeconomic conditions in Nigeria remain extremely challenging and continue to have a significant negative impact on overall Group performance. Reflecting this, we now expect Group adjusted profit before tax for the year to be towards £70 million.

Balance sheet strength will remain a priority for the business. The Group’s balance sheet remains strong, with net debt lower than the prior period. The Board has maintained the interim dividend at 2.67p per share.

We anticipate that consumer demand in all our key markets will remain subdued. Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market. In Personal Care and Beauty across Europe and Asia, identified as sources of growth for the Group, we will continue to prioritise higher investment levels behind carefully targeted key brand and market opportunities. Furthermore, the Board has approved specific strategic initiatives which will streamline our portfolio of activities and limit exposure to volatility in Nigeria, with more information to be provided in due course.”

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