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Tag: PZ Cussons

  • PZ Cussons grows Q3 profit by 32% to N5.2b

    PZ Cussons grows Q3 profit by 32% to N5.2b

    PZ Cussons Nigeria Plc has become more profitable in recent period as latest operational report showed substantial increase in the profit-margin of the conglomerate.

    Key extracts of the interim report and accounts of PZ Cussons for the nine-month period ended February 28, 2014 showed that average pre-tax profit margin improved to 9.83 per cent by February 2014 as against 7.59 per cent recorded in comparable period of 2013.

    The improvement in the cost management enabled the conglomerate to optimize its modest sales growth of 2.04 per cent into 32.3 per cent increase in pre-tax profit. Group turnover stood at N52.59 billion in 2014 as against N51.54 billion in 2013. Profit before tax meanwhile rose from N3.91 billion to N5.17 billion. Profit after tax also rose by 33.3 per cent from N2.90 billion to N3.87 billion.

    PZ Cussons had recently distributed N5.16 billion from its general reserve as a special dividend to shareholders. A breakdown of the special dividend indicates that shareholders will receive N1.30 per share.

    PZ Cussons had also, for the first time, paid an interim dividend of about 20 kobo after posting 53 per cent increase in profit for the half year ended November 30, 2013. Gross turnover rose from N31 billion in 2012 to N32.46 billion in 2013. Profit before tax rose by 53 per cent to N3.1 billion from N2 billion. Profit after tax also rose from N1.515 billion to N2.317 billion.

    PZ Cussons had ridden on the back of improved cost management and internal efficiency to double net earnings in the immediate past year, prompting the company to distribute N2.22 billion as dividends to shareholders. The gross dividend of N2.22 billion represented a dividend per share of 56 kobo, an increase of 30 per cent on 43 kobo paid for the previous year.

    Audited report and accounts of PZ Cussons for the year ended May 31, 2013 showed that while sales slipped by 1.12 per cent, profits before and after tax jumped by 77.6 per cent and 110 per cent respectively. The improvement in the bottom-line impacted on the underlying returns to shareholders as earnings per share increased from 61 kobo in 2012 to N1.23 in 2013.

    Turnover closed May 2013 at N71.34 billion as against N72.15 billion recorded in 2012. Profit before tax meanwhile rose from N4.31 billion to N7.65 billion. Profit after tax also doubled from N2.54 billion to N5.32 billion.

    The performance in 2013 represented a major recovery for the fast moving consumer good company, which had suffered significant decline in the previous year.

    Audited report and accounts for the year ended May 31, 2012 had shown turnover of N72.16 billion as against N65.9 billion in 2011. Gross profit however dropped to N16.18 billion as against N18.45 billion. Profit before tax also halved to N4.31 billion compared with N8.03 billion in 2011 just as profit after tax dwindled from N5.7 billion to N2.5 billion.

    PZ Cussons appeared to have benefitted from extensive cost restructuring and internal efficiency management.

    With costs constraints and efficiency issues becoming evident in its performance, the global conglomerate had started global restructuring of its operations including closure of manufacturing operations in several countries and concentration in some countries including Nigeria.

    The global restructuring project was sequel to high costs of operations that have increasingly impacted on the global profitability of the conglomerate.

    According to a document on the global restructuring operations with details for West Africa, PZ Cussons group developed the global restructuring programmes to ensure that its supply chain cost base remains at a competitive level given sustained rise in raw material costs together with significant wage inflation in emerging markets.

     

     

    The group also focused on reducing significantly its overhead at a number of other manufacturing facilities.

    “We believe the benefits of this project will be seen in the new financial year through lower supply chain overheads, wage inflation mitigation as well as reduction in high capital maintenance cost that would have been associated to the closed or restructured facilities. It will ultimately show an improved performance and higher returns on investments,” the document had indicated.

    PZ Cussons has manufacturing plants in Ilupeju, Ikorodu; both in Lagos State and Aba, in Abia State. The Nigerian operations include manufacturing and marketing of soaps, detergents, health and beauty products, electrical goods and nutritional products. More than 77,000 Nigerian individual and institutional investors hold equity stakes in the conglomerate.

     

     

     

     

     

  • KENNIS, Jaywon’s row deepens

    KENNIS, Jaywon’s row deepens

    IF the rumour making the rounds about the alleged row between Kennis Music and singing sensation, Jaywon, is anything to go by, then, the nation’s music industry may soon witness another major split between an act and his manager.

    The young artiste is reported to have issued a letter, through his lawyer, seeking to terminate his contract with the record company.

    In a statement, the Public Affairs Unit of Kennis Communications is reported to have confirmed Jawon’s intention to end his contract with the outfit.

    According to him, “Iledare Oluwajuwonlo James, aka Jaywon, has written a letter via his lawyer requesting for his contract with Kennis Music to be terminated.

    “Jaywon wrote, in the same letter, his readiness and willingness to pay off all costs therein accordingly. “Meanwhile, Independent Broadcasters Association of Nigeria( IBAN) members and all broadcasters on all platforms are hereby advised to un-list the works (either single performances or and collaborations) of Iledare Oluwajuwonlo James, aka Jaywon, from their respective rotational play lists until his (Jaywon) request to buy over his contract is fully completed to avoid litigation.”

    It will be recalled that Jaywon, who recently signed a deal with PZ Cussons Company, had debunked rumours of any misunderstanding with the management of the company in 2011.

  • Lagos awards PZ Cussons for CSR in education

    Lagos awards PZ Cussons for CSR in education

    PZ Cussons Nigeria has been rewarded by the Lagos State Government for its immense support in the education sector through its Corporate Social Responsibility initiatives.

    At a Breakfast Meeting hosted on Tuesday by Governor Babatunde Raji Fashola (SAN), PZ Cussons and a host of others were presented with the “Support Our Schools Initiative” awards for complementing the government’s effort in reshaping education standards in the state.

    PZ Cussons’ recognition came on the heels of the ground-breaking maiden edition of a senior secondary schools competition last year. PZ Cussons Chemistry Challenge is one of the numerous CSR activities of the company.

    The Breakfast Meeting, held at the jam-packed Lagos City Hall, had in attendance stakeholders in the education sector and top government functionaries.

    In his keynote address, Fashola thanked the award recipients for their contribution to educational growth in the state. He said: “I particularly salute your courage. I salute your steadfastness to work with us. Thankfully government itself has realised this is not a one-man show.”

    The Corporate Affairs and Administrative Director of PZ Cussons Nigeria, Mrs Yomi Ifaturoti said that the company was honoured that the state government “has deemed it fit to give us an award today for the PZ Cussons Chemistry Challenge. We did it in line with our philosophy of partnering with the Lagos State Ministry of Education.”

    She said the company focused on Chemistry because of how important the subject was to the society. “Even Lagos State recognises the essence of Science subjects and that’s why we are getting this award today,” she further said.

    According to Ifaturoti, PZ Cussons placed emphasis on CSR. Her words: “We do good business and we believe business must give back to the community. We have always been giving back to the society and this is our own special way of focusing on the children whom we know as the leaders of tomorrow.”

    Last October, thousands of senior secondary students in Lagos State participated in the inaugural edition of PZ Cussons Chemistry Challenge with 16-year-old Emmanuel Ejiogu Onyekachi of Miketoy College, Ikotun, emerging the grand prize winner at the end of a rigorous three-stage contest. His reward were N700,000 cash, a laptop, a trophy and gold medal, while his chemistry teacher, Mr Jossy Ogunniyi won N100,000. Chemistry books worth N100,000 were also presented to his school.

    Three other runners-up, their teachers and schools also received fabulous prizes.

    An initiative of PZ Cussons Foundation, the corporate social responsibility arm of PZ Cussons Nigeria Plc, the second edition of the competition would soon commence.

    PZ Cussons Foundation focuses on education, health, road rehabilitation and provision of portable water. It has extended its interventions into constructing and donating blocks of classrooms, boreholes, health and youth centers as well as road rehabilitation.

     

     

  • Access Bank appoints director

    Access Bank appoints director

    Access Bank has announced the appointment of Paul Usoro as Non-Executive Director. Usoro is a Senior Advocate of Nigeria (SAN), Fellow of the Chartered Institute of Arbitrator and the Founder and Senior Partner of the law firm of Paul Usoro and Co. He brings on board an extensive boardroom experience from some of Nigeria’s leading companies and multinationals.

    Mr. Usoro has over 30 years post-call experience and is acknowledged as one of Nigeria’s brightest litigators and foremost communication law experts. He has advised a wide range of blue chip Nigerian and foreign companies in project finance and development, equity raising, infrastructure development and Management Buy-outs.

    He currently serves on the Board of Airtel Network Limited (and the Chairman of the Audit Committee), Nigeria Bulk Electricity Traders Plc, Marina Securities Limited, Premium Pension Limited and PZ Cussons Nigeria Plc. He represented Access Bank on the Board of Intercontinental Bank in2011 as a Non-Executive Director following the Bank’s acquisition of the Intercontinental Bank Group.

    Commenting on the appointment, Mr. Gbenga Oyebode, the Chairman of Access Bank said: “I am delighted to welcome Paul on the Board of Access Bank. He brings on board a very rich professional and corporate board experience relevant to our industry as well asa deep understanding of the needs of shareholders. I am certain that these skills can only

  • Winner emerges in PZ Cussons Chemistry Challenge Season 1

    Winner emerges in PZ Cussons Chemistry Challenge Season 1

    IT was a historic moment as sixteen-year-old Emmanuel Ejiogu Onyekachi of Miketoy College, Lagos State, emerged winner of the PZ Cussons’ Chemistry Challenge (PZCCC) maiden edition.

    Emmanuel, who has just been promoted to Senior Secondary Class 3, beat off competition from three others at the grand finale held in Lagos over the weekend.

    He came first at every stage of the competition which had 1,270 candidates in stage one, 97 in stage two and four finalists; garnering a cumulative score of 83.5 per cent.

    For his feat, Emmanuel was rewarded with N700, 000 cash, a laptop, a trophy and gold medal, while his chemistry teacher, Mr Jossy Ogunniyi won N100, 000. Chemistry books worth N100, 000 were also presented to his school.

    Director of Education in Lagos State, Mrs Sewanu Amosu represented the State’s Commissioner for Education, Mrs Olayinka Oladunjoye at the elaborate event.

    Lauding the effort of PZ Cussons in enlivening the passion for sciences in secondary schools, Mrs Amosu said: “Lagos State Government appreciates PZ Cussons for starting this off in Lagos. It shows that all is not lost in Nigeria. We still have hope; all we need to do is to continue to groom the children and have the right teachers who conscientious and committed.

    “It is a big milestone and I congratulate the company for this because a lot has been committed into it. I am also happy that they remembered the teachers. They were also rewarded as the saying goes that teachers’ rewards are not only in heaven.”

    Reacting to the downward trend in the quality of education in the country, “it cuts across all the strata. With students not studying, not paying attention; the parents not minding what the children have done in school.

    “Also the school, the government is doing its best. It is equipping, it’s ensuring, encouraging school as and also putting standards in place.”

    Mrs Amosu implored students to do more in terms of their academic activities, “once you are in school, you learn and pay attention to what the teacher is saying. You should read outside the syllabus. Not just go on the Internet to surf all these social media alone.

    “You can gain a lot from the Internet; like you have people solving Chemistry, Mathematics, Biology and other subjects problem now on the Internet”

    Chief Nike Akande is the Director of PZ Industries and a former Minister of Industries, she spoke on the motive of PZ Cussons Foundation to embark on the project.

    “I am pleased with what has happened today because students shy away from Chemistry and subjects like Mathematics, they go for Art subjects most of the time,” she said.

    Chief Akande went on: “This award today is to encourage students to have interest in Chemistry. And you can see that some of the students are very intelligent; extremely intelligent!

    “One was coming top all the time; there were many schools in Lagos State that put in for the competition and one student was consistently coming first. This is a great achievement for our country. There is hope,” she assured.

    Reacting to a question on how PZ Cussons manages to remain in Nigeria for so many years, “PZ believes in Nigeria. There are little challenges everywhere but you have to face challenges to be successful in life.”

    Obi Uchenna David of Barachel College, Ifako-Agege, was the first runner up with 62.2 per cent of the total score. He was presented with a cheque of N500, 000, a laptop and silver medal, while his chemistry teacher, Mr Ojo Sunday also went home with N60, 000. His school also had chemistry books worth N50, 000.

    With a cumulative score of 56 per cent, Mgbemena Thankgod of Leeland International College, Oregun-Ikeja, finished as second runner-up and got N400,000 cash prize, a laptop and bronze medal. His chemistry teacher, Mr Ugwoke Johnson Ikenna, won N40,000 while his school received N50,000 worth of chemistry books.

    Third runner-up Victor Ike-Okoro of Top Grade Secondary School, Surulere pulled a total of 44 per cent and had a cash prize of N300, 000, a laptop and a consolation medal while his chemistry teacher, Mr Odinibe John Nnani got N20, 000 and his school had N50,000 worth of chemistry books.

    This year’s edition, which commenced in June when the finalists were all in SS2, was open to SS1 and SS2 students in all public and private schools in Lagos State. Initiated by PZ Cussons Foundation, the corporate social responsibility arm of PZ Cussons Nigeria Limited, the competition is to be launched at the national level soon.

    Relieved at the end of the rigorous final stage, which included a practical session, Emmanuel expressed gratitude to God, his parents, teachers and the organisers, as well as the other finalists who he said provided him stiff competition.

    He admitted that the practical session was the most challenging: “I was shivering during the practical. While mixing the chemicals, I did something that would have messed everything up but I quickly made up for it.”

    The first child in a family of seven, Emmanuel said he would like to study chemical engineering and would strive to win more competitions.

    He urged PZ Cussons Foundation to incorporate other science subjects into the competition and also organise it on a national scale.

    Mrs Yomi Ifaturoti, the Group Corporate Affairs and Administration Director of PZ Cussons Nigeria Plc, said the competition has been an eye-opener. “When we conceived this idea, we had thought the elite schools would produce the winners,” she said. “But the competition has indeed turned out to confirm that it is all down to the individual child and his or her dedication and passion to study.”

    PZ Cussons Foundation focuses on education, health, road rehabilitation and provision of portable water. It has extended its interventions into constructing and donating blocks of classrooms, boreholes, health and youth centres as well as road rehabilitation.

     

     

  • PZ Cussons hosts Chemistry Challenge finalists

    PZ Cussons hosts Chemistry Challenge finalists

    The four finalists of the maiden edition of PZ Cussons Chemistry Challenge (PZCCC) last week toured both the corporate head office and the plant of the conglomerate in Lagos.
    Ejiogu Emmanuel Onyekachi of Miketoy College, Ikotun and Obi Uchenna David of Barachel College, Ifako-Agege made it to the final stage of the tightly contested Chemistry Challenge along with Victor Ike-Okoro of Top Grade Secondary School, Surulere; and Mgbemena Thankgod of Leeland International College, Oregun, Ikeja.
    The visit was necessary for “the students to see Chemistry in action,” as highlighted by the company’s Group Corporate Affairs & Admin Director, Ms Yomi Ifaturoti.
    She addressed the students who were accompanied by their teachers and principals.
    Ms Faturoti congratulated the finalists for making it this far despite the tough competition.
    She stressed that PZ Cussons Foundation, which was formally launched in 2008, has been unrelenting in giving back to the society in various facets of life which include road maintenance, health, education and lots more.
    According to her, “The Foundation has completed 43 projects in three years. We are ‘making life better’ as enshrined in our pay off.”
    She acknowledged the efforts of the teachers and school management for seeing to it that they supported the student scientists.
    A delighted Chemistry teacher at Topgrade Secondary School, Mr. Odinibe John Nnani, showered encomium on PZ Cussons for enlivening the love for Chemistry and by extension, science subjects in the students.
    He said the competition has made the students go extra mile and as a result make them study hard in order to make it to the level.
    “Fundamental thing is to fund a mental thing, and that is exactly what PZ Cussons is doing,” he said.
    The next point of call was a visit to the massive PZ Cussons Plant in Ikorodu. The students were taken round the plant’s production chain. “It was a great privilege, today was fun,” said Thankgod
    The students and their teachers were thrilled by what they saw at the PZ Cussons facilities. The staff members’ top-notch human relations were enough to make one feel at home.
    In a separate interview with the finalists, they all attributed their success to hard work, confidence and focus.
    For Thankgod, he would stop at nothing to put in his best: “I believe that I am going to win the first prize. In whatever I do, I am always a winner and I am sure that for God to lead me thus far, I am going to win.”
    Thankgod, who will like to become a Chemical Engineer, said he does not play with his studies and always avoid things that could adversely affect him. “I am a serious student and I don’t joke with my studies.”
    In the same vein, Emmanuel is confident that he will emerge the overall winner in the competition: “I believe in myself and I have confidence that I am going to win.”
    When asked what would be his attitude should he not win, he giggled and said: “Well, I would not let that discourage me because God has been kind to me for making it thus far. However, I believe that I am going to win the first prize.”
    Also, Victor remained resolute that the first prize is for him when he was spoken to. “Although, I would say that I never expected myself to make it to the final stage because the contest was fierce. When I saw my name, I was stunned.”
    Having made it to this final stage, Victor said: “I am going to win this. I need to make my school, friends and my parents proud.”
    Uchenna’s spirit is also high. The handsome-looking young man was looking forward to the final battle slated for October 4.
    The overall winner of PZCCC would be rewarded with N700, 000 worth of scholarship, a laptop and gold medal, while his teacher would have N100,000 cash prize and another N100,000 worth of chemistry books presented to his school.
    The first runner-up would have N500,000 worth of scholarship, a laptop and second place medal, while the teacher would win N60,000 plus a donation of chemistry books worth N50,000 to his school.
    The second runner prize would go away with N400, 000 worth of scholarship, a laptop and third place medal. The teacher would have N40, 000 while the school would receive N50, 000 worth of chemistry books. The third runner-up would win N300, 000 worth of scholarship, a laptop and a consolation medal while the teacher would get N20, 000 and the school N50, 000 worth of chemistry books.
  • How PZ Cussons ended profit fall after losing sales revenue

    How PZ Cussons ended profit fall after losing sales revenue

    PZ Cussons has ended a two-year fall in profit and made a strong return to the recovery path once again. The company’s full year earnings report for the 2012/13 financial year ended May shows that while it lost some sales revenue during the year, profit more than doubled.

    In the preceding two years of operations, the conglomerate improved sales revenue but net profit dropped from the 2010 peak of N5.58 billion to a five-year low of N2.41 billion in 2012. In 2013, when the company suffered a decline of 1.1% in sales revenue, net profit advanced by 102.2% to N4.87 billion.

    Two major developments in the company’s operating structure has made this happen. These are a total clean-up of interest bearing debts from the balance sheet and a cut down on the average cost of products sold. The net effect of these changes is that the company is now in command of significantly increased cash resources at a time that cash has indeed become a powerful king in the economy.

    Net increase in cash flow from operating activities soared by 227% to N9.74 billion for PZ Cussons in the 2013 financial year. With that the company achieved a net cash increase of N593% to N6.35 billion. PZ Cussons has therefore succeeded in changing its position from a net borrower in the credit markets to a big lender.

    This change has made a big impact on the bottom line. In place of a net interest expense of N190 million in the preceding year, the company has reported an interest income of N229 million at the end of the 2013 financial year.

    The second major change in the company’s operating structure is the lowering of the average cost of goods sold. If it is unable to grow sales volume, it can, at least, cut the cost of what it sells. Cost of sales went down by 7.4% to N52.25 billion in 2013. This means that the slight decline in sales revenue was more than countered by the decline in cost of sales. The company therefore converted a lot more sales revenue into gross profit – which rose by 21.2% against the 1.1% slip in turnover.

    Cost of sales declined from 78.2% of sales revenue in 2012 to 73.2% in 2013. The gross profit margin per naira of goods sold therefore improved from 21.8 kobo to 26.8 kobo over the period. This development resulted in the saving of over N3.3 billion in the year, which provided the spur for the high profit lift.

    Only a moderate increase of 5.1% was recorded in the other main expense item, which is distribution/administrative cost. The low growth permitted the cost saving to get down into profit. Profit performance was also boosted by an increase of 152.4% in other income, which amounted to N264 million.

    The high growth in profit against a marginal decline in sales revenue saw a big lift in profit margin. Net profit margin of the company advanced from 3.3% in the 2012 full year to 6.8% in 2013 and from 5.1% reported at the end of the company’s third quarter trading in February. Net profit margin had dropped from a five-year peak of 8.9% in 2010 and 7.9% recorded in 2011.

    The company raised earnings per share from 61 kobo in 2012 to N1.23 in 2013, making a recovery after dropping from the earnings peak of N1.40 per share in 2010 and N1.31 in 2011.

    PZ Cussons has proposed a dividend of 56 kobo per share for the 2012/13 operations compared to 86 kobo per share it paid in the preceding financial year. This represents a pay-out ratio of 45.5%. The company’s register of shareholders will close on 16th September and payment will be made on 2nd October 2013.

    The critical development to watch on PZ Cussons in the current financial year ending 2014 will be the ability of the company to preserve/improve profit margin further and push up sales revenue after a long period of constrained sales volume. If these can be accomplished, the company can be expected to attain new peaks in profit and earnings per share in the current financial year.

    Slow growth in sales revenue has apparently become a fact of even consumer facing industries. The conglomerates, with diversified market presence, are not left out of the slow selling motion. But PZ Cussons is failing to defend market share in the competition.

  • NSE All-Share Index grows by 0.05%

    NSE All-Share Index grows by 0.05%

    The All-Share Index of the Nigerian Stock Exchange (NSE) on Wednesday appreciated marginally by 0.05 per cent.

    The News Agency of Nigeria (NAN) reports that the All-Share Index increased by 18.29  points to close at 33,352.96 against the 33,334.67 achieved on Tuesday.

    Also, the market capitalisation grew by N6 billion to close at N10.661 trillion from the N10.655 trillion recorded on Tuesday.

    Analysts attributed the development to investors’ preference for capital appreciation due to disappointing 2012 result announced by some quoted companies.

    Dangote Cement led the price gainers, appreciating by N4.10 to close at N161.10 per share.

    PZ Cussons came second with a gain of N3.33 to close at N39, while BOC Gases garnered 50k to close at N8.50 per share.

    Unilever gained 41k to close at N52.41, while Zenith Bank appreciated by 36k to close at N19.40 per share.

    On the other hand, Nestle topped the losers’ chart with a loss of N14.01 to close at N922 per share.

    Julius Berger lost N2.01 to close at N51.90, while Presco dipped by N1.57 to close at N24 per share.

    Flour Mills lost N1.29 to close at N76.11, while Ashaka Cement shed 97k to close at N25 per share.

    Wema Bank drove the day’s activities with 302.03 million shares worth N422.75 million.

    It was trailed by ETI with a total of 113.14 million shares valued at N1.81 billion.

    NAN reports that the volume of shares traded increased by 116.55 per cent as investors staked N9.35 billion on 766.57 million shares in 6,183 deals.

    This was against the 352.15 million shares worth N3.59 billion traded in 6,705 deals on Tuesday

  • PZ Cussons Nigeria: Falling behind

    PZ Cussons Nigeria: Falling behind

    Key performance indices of PZ Cussons Nigeria Plc turned negative in 2012 as significant increases in top and mid lines costs overwhelmed modest growth in sales. With lowest profit in nearly a decade, both actual and underlying returns halved to their recent lows while average net assets lost a fifth. Audited report and accounts of PZ Cussons Nigeria for the year ended May 31, 2012 showed that substantial increase in costs undermined profitability of the conglomerate. Substantial increase in interest expenses compounded relatively high cost of sales and steady operating expenses. The costs outline was worsened by exceptional item that arose from restructuring of the multinational’s supply chain and factory operations.

    The conglomerate meanwhile achieved a largely stronger balance sheet and financing position as significant decline in current liabilities compensated for modest declines in assets. The company became more liquid and stable.

    Financing structure

    PZ Cussons Nigeria sustained a zero-leveraged balance sheet while equity coverage for total assets improved in 2012. The proportion of total equity funds to total assets improved from 59.8 per cent in 2011 to 66.6 per cent in 2012. Current liabilities amounted to 27 per cent of balance sheet size in 2012 compared with 32 per cent in previous year. The positive financing structure was however, driven mainly by declines in assets and restructuring of its liabilities. Total assets had dropped by 6.6 per cent from N68.93 billion to N64.41 billion.

    Total liabilities declined by 16.4 per cent to N21.54 billion as against N25.76 billion, reflecting mainly the 22 per cent drop in current liabilities. With the capitalisation of reserves for bonus issue in previous year, paid up share capital increased by 25 per cent from N1.59 billion to N1.99 billion. Total equity funds flattened from N43.17 billion in 2011 to N 42.87 billion in 2012. Out of this, equity attributable to shareholders stood at N40.93 billion in 2012 as against N41.19 billion in 2011.

    Efficiency

    PZ Cussons Nigeria showed considerable decline in cost efficiency and productivity. Total cost of business, excluding financing charges, trended upward by five percentage points to 93.3 per cent of total sales in 2012 in contrast with 88.3 per cent in 2011. Average pre-tax profit per employee dwindled from N2.75 million to N1.74 million. Average cost per staff, on the other hand, steadied to N2.55 million in 2012 as against N2.30 million in 2011. The conglomerate’s workforce had reduced from 2,921 persons to 2,723 persons. Total staff cost however, increased from N6.71 billion to N6.95 billion.

    Profitability

    Considerable declines in profit margins across business segments, decline in export sales and near stagnation of the group’s electrical appliances business segment altogether brought the group’s profitability to its lowest level in nearly a decade. While the core business segment of branded consumer goods increased sales by about 14 per cent, almost 52 per cent decline in pre-tax profit compounded the near-stagnation in sales and 36 per cent decline in pre-tax profit in the electrical appliances segment.

    Also, 10 per cent growth in sales within Nigeria was counterbalanced by 6.2 per cent decline in export sales.
    Group turnover stood at N72.16 billion in 2012 as against N65.88 billion in 2011, representing an increase of 9.5 per cent. Segmental top-line analysis showed that the main branded consumer goods business segment increased sales from N44.83 billion to N50.97 billion. However, sales in the durable electrical appliances business line flattened to N21.19 billion in 2012 as against N21.04 billion in 2011. Geographical sales analysis showed increase in Nigeria’s turnover from N64.29 billion to N70.67 billion. Export sales dropped from N1.59 billion to N1.49 billion.

    Cost of sales rose by 18 per cent to N55.97 billion compared with N47.43 billion. This moderated gross profit downward to N16.18 billion in 2012 as against N18.45 billion in 2011. Total operating expenses inched up to N11.36 billion as against N10.74 billion.

    These consisted of selling and distribution expenses of N8.02 billion in 2012 as against N7.02 billion in 2011 and administrative expenses of N3.34 billion as against N3.72 billion. While non-core business income increased by 33 per cent from N440 million to N585 million, interest expense, which jumped by 433 per cent from N126 million to N670 million, further unsettled the bottom-line.

    With these, group pre-tax profit dropped by 41 per cent from N8.03 billion to N4.73 billion. Exceptional costs due to restructuring during the year reduced pre-tax earnings by N427 million to N4.31 billion. Group profit after tax shrank by 54 per cent from N5.22 billion to 2.41 billion. Provisions for taxes dropped by 24 per cent.
    Underlying profit analysis showed a generally negative outlook. Gross profit margin slipped from 28 per cent to 22 per cent. Group pre-tax profit margin halved from 12.2 per cent to 6.6 per cent. Average pre-tax profit per unit of sales in the branded consumer goods segment had declined from 11.6 per cent to 4.9 per cent while that of durable electrical appliances segment dwindled from 13.4 per cent to 8.5 per cent.

    Further earnings analysis indicated that earnings per share dropped from N1.64 to 61 kobo. Decline in net earnings forced the board of the company to reduce cash payouts from N2.73 billion to N1.71 billion, representing dividend per share of 43 kobo in 2012 as against 86 kobo in 2011. Net assets per share also fell from N12.97 to N10.31.
    The downtrend also reflected on underlying returns as return on equity halved from 12.7 per cent to 5.6 per cent. Return on total assets dropped from 11.6 per cent to 7.4 per cent. In spite of significant decline in cash dividend, the sustainable dividend outlook became less favourable with dividend cover at 1.42 times in 2012 as against 1.91 times in 2011.

    Liquidity

    The liquidity position of the company improved considerably during the period. Current ratio, which indicates the potential ability of the company to meet emerging liabilities, strengthened to 2.32 times in 2012 compared with 1.99 times in 2011. The proportion of working capital to sales remained steady at 32 per cent in 2012 as against 33 per cent in 2011. Debtors/creditors ratio stood at 384.2 per cent as against 371 per cent.

    Governance and
    structures

    PZ Cussons Nigeria is a subsidiary of PZ Cussons (Holdings) Limited, United Kingdom, which holds 68.75 per cent equity stake in the Nigerian company. However, more than 80,000 Nigerian individual and institutional investors hold equity stakes in the conglomerate. One of the earliest companies in Nigeria, PZ Cussons Nigeria was incorporated as a limited liability company in 1948. It became a public limited liability company in 1972 and was subsequently listed on the Nigerian Stock Exchange (NSE).

    The PZ Cussons Nigeria Group included PZ Cussons Nigeria-the parent company, and four other subsidiaries-HPZ Limited, PZ Power Company Limited, PZ Tower Company Limited and Robert Pharmaceuticals Limited. Besides HPZ Limited where the conglomerate holds 74.99 per cent equity stake, it holds 99.9999 per cent stake each in other subsidiaries. All the subsidiaries are active and trading, except Robert Pharmaceuticals.

    The principal activities of the group are the manufacturing and sale of a wide range of fast moving consumer goods including detergent, soap, pharmaceuticals, cosmetics, confectionery, cooling systems, food drinks and other electrical appliances.

    PZ Cussons Nigeria has maintained stable board and management over the years with requisite corporate governance structures to support its expanding business. There were no major changes in corporate governance structure during the period. Professor Emmanuel Edozien still chairs the board while Mr. Christos Giannopoulos leads the executive management team as managing director. The company broadly complies with the Nigerian code of corporate governance as well as the PZ Cussons international best practices.

    Analyst’s opinion

    The performance of PZ Cussons Nigeria underlined the need for comprehensive review of the business model and strategies of the group. With more small and niche companies upping the competition in the consumer goods market, conglomerate needs not only to substantially drive economy of scale to support its large base, but also engage in the delicate balancing act of providing consumers with relatively better package and pricing options. Less purchasing power often impinges brand loyalty.
    Globally, PZ Cussons has recognised the changing time. The multinational conglomerate has embarked on a deft restructuring programme that will concentrate manufacturing operations of the multinational in certain countries including Nigeria.

    The global restructuring project was sequel to high costs of operations that have increasingly impacted on the global profitability of the conglomerate. PZ Cussons thus developed the global restructuring programme to ensure that its supply chain cost base remains at a competitive level given sustained rise in raw material costs together with significant wage inflation in emerging markets. Besides concentration of operations, the group will also focus on reducing significantly its overhead at a number of other manufacturing facilities.

    Recent investments in upgrade and expansion of production facilities and introduction of new products are expected to form the linchpin for future growth. PZ Tower, which commenced operations in March 2012, is expected to increase the competitiveness of the company in the detergent segment.

    Consequently, there is reasonable basis to be optimistic about the prospects of the conglomerate.