- PZ Cussons now expects adjusted operating profits of between £55m and £60m this year
- The company’s shares fell the most on the FTSE 250 on Wednesday morning.
Shares in PZ Cussons plunged on Wednesday morning after the group cut its profit and dividend forecasts, as it continues to suffer from the devaluation of the Nigerian naira.
The owner of Imperial Leather now expects adjusted operating profits of £55m to £60m in the current financial year, compared to consensus forecasts of £61.5m to £68.2m.
PZ Cussons Shares sank 16.4 per cent, or 21p, to 107p at 10am, making them by far the biggest fallers on the FTSE 250 index.
Reduced forecast: Imperial Leather owner PZ Cussons now expects adjusted operating profits of £55m to £60m in the current financial year.
Chief executive Jonathan Myers said the weakening naira, which has depreciated 70 per cent over the past year, is “by far the most significant challenge we have faced”.
Last week, Nigeria devalued its currency for the second time in eight months as part of plans to reform its foreign exchange system and attract more foreign investment into the country.
PZ Cussons does not foresee a “significant rebound” in the value of the naira and has therefore decided to cut its interim dividend payment by 44 per cent to 1.5 per share.
Myers said: ‘While we continue to make good progress in managing this volatility, the further devaluation in recent weeks will inevitably impact our FY24 results.
“As a board, we have taken the prudent step of reducing the interim dividend in light of the devaluation.”
In the six months ending December 2, the fall in the value of the naira contributed to foreign exchange losses of £88.2 million and a £150.6 million drop in PZ Cussons’ net assets.
As a result, the Manchester-based company slumped to a statutory operating loss of £89.7m, having made a profit of £39.2m the previous year.
Revenue also fell 17.8 per cent to £277.1 million, despite rising on a like-for-like basis for the ninth consecutive quarter, partly due to price increases.
Turnover was further affected by lower demand for Cussons Baby products in Indonesia, as well as the weakness of the Indonesian rupiah and Australian dollar.
In Europe and the Americas, turnover decreased marginally to £97.2 million as lower purchases of beauty brands Sanctuary Spa and St Tropez offset growth in its Childs Farm and UK personal care businesses.
Founded in Sierra Leone 140 years ago, PZ Cussons’ other brands include Carex and Original Source hand soap, baby food maker Rafferty’s Garden and Morning Fresh dishwashing liquid.
Analysts at Numis said: “We continue to believe in the potential of PZ Cussons’ management to deliver a material transformation in the quality of the group’s earnings, but recognize that recent developments in Nigeria have delayed progress towards this objective.”