Imperial Leather maker sees profits slump on Nigerian woes
Weak economic conditions in Nigeria and poor sales in Australia have contributed to a slump in profits of more than 30% at consumer goods giant PZ Cussons as the company said it would refocus its attentions on core brands only.
The business, which owns soap brands Imperial Leather and Carex, revealed that pre-tax profits fell 37.5% to £37.0 million for the year to May 31, compared with £59.2 million in the previous 12 months.
Revenues were down 6.8% from £739.8 million to £689.4 million.
Sales in the UK have held up, with bosses saying the firm’s beauty and personal care businesses, including its St Tropez fake tan products, were particularly strong, but profits were hit as spending on marketing increased.
The company said: “This year we planned and achieved strong growth in Original Source on the back of the introduction of a new bottle (which significantly reduced the amount of plastic in the packaging) together with new products such as Original Source Water Infusions.”
It added that its soap brand Carex now has 36% of the market, with Original Source and Imperial Leather taking 20% of the shower market.
But the group said a major overhaul was required to get PZ Cussons back on track after writing off £24.8 million against its Nigerian Nutricima drinks business and Australian brand five:am, which makes yoghurt and granola.
PZ Cussons said it will now focus on personal care and beauty brands because they represent “our strongest brands across the geographies that offer us the best opportunities for revenue and margin growth”.
There will also be a slimming-down of its Nigerian business, where the economy has suffered and disposable income has reduced, to cope with “current economic realities whilst still being ready to take advantage of future recovery”.
The company, which has a huge presence in Nigeria, has also suffered due to long delays at the port in Lagos, along with increased port fees eating into profits.
Finally, PZ Cussons said it will sell off non-core brands that bosses do not think can be made profitable.
The company added: “This will ultimately result in a much greater proportion of group earnings coming from personal care and beauty. These categories provide us with our sharpest competitive edge and offer the highest margin earnings potential.”