- PZ Cussons reported macro conditions will remain challenging with general elections in Nigeria and Indonesia falling in the second half of the new financial year in its trading update for the year to 31 May 2018.

In the interim results announcement in January, the company reported that performance in the first half of the year had been constrained by trading conditions in the UK and Nigeria.

In the trading update in March, PZ Cussons said trading conditions in these two markets remained difficult and it expected profit before tax for the full year to be in the range of £80m to £85m.

During the last few months of the year, performance in the UK was in line with revised expectations and, whilst trading conditions in Nigeria have tightened further, expected profit before tax for the full year will be in the range previously indicated, albeit towards the bottom end of the range.

Results in the group's other markets remain robust with performance in Australia, Indonesia and the Group's beauty division ahead of the prior year.


In Nigeria, whilst higher oil prices contributed to increased foreign exchange reserves and a relatively stable exchange rate regime, liquidity has not flowed down into the economy. In addition, wage inflation continued to remain well behind the significant cost inflation of recent years, resulting in consumer discretionary income under pressure with subdued buying levels.

As a result, the usual peak season uplift did not materialised resulting in volumes, prices and margins being impacted across most areas of the Nigerian portfolio.

There was no structural change in the landscape of the categories in which we operate with brand shares remaining strong. The lower profitability is therefore a reflection of a weaker overall market with total volumes, prices and margins all lower.

ASIA In Australia, profitability of the business continued to improve with new product launches and margin improvement initiatives across the key categories of Personal Care, Home Care, Beauty and Food & Nutrition.

In Indonesia, profitability was good with mix improvement across both the core Cussons Baby range as well as from recent new product launches under Imperial Leather and Cussons Kids.


Revenue and profitability in the UK washing and bathing division were affected by the tightening UK retail landscape, with consumers shopping more cautiously as a result of economic uncertainty and inflation out-stripping wage growth. Whilst new product launches have been well received, these have not been sufficient to compensate for the wider volume and margin shortfall.

The Beauty division performed well across all brands of St Tropez, Sanctuary, Charles Worthington and Fudge, with good growth in particular coming from the US market.


As outlined in March, there are a number of initiatives underway to improve the efficiency of the business:

- A further optimisation of the group's operating model. This will further reduce the overhead base, as well as improve the speed at which new products are brought to market. The cash cost will be circa £10m over the next two years, offset by lower capital expenditure requirements

- A further optimisation of the group's product portfolio in Nigeria across the HPC (Home and Personal Care) and Nutricima (milk) businesses. The objective is to restore margins in the HPC business and restore the Nutricima business to profitability

- A re-prioritisation of the group's new product pipeline in all markets to focus on fewer, bigger projects requiring lower levels of complexity

- A review of product costs across all categories with a focus on areas such as packaging reduction and in conjunction with a drive to reduce plastic consumption

- An evaluation of other growth opportunities utilising the Group's product portfolio and distribution capability.

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