23rd Sep 2014 09:11
LONDON (Alliance News) - Consumer products group PZ Cussons PLC Tuesday said its has traded in line with its own expectations so far this year, but warned that trading conditions in most of its markets remain challenging, and it is using its cost cutting programme to help offset headwinds in the business.
In a trading update, PZ Cussons, which owns brands including Imperial Leather and Original Source, said weakened currencies, volatile raw material prices, and a loss in profit from the sale of its Polish home care brands last year also added to its woes.
"Whilst trading conditions in most markets remain challenging, the group remains focussed on a dynamic and fast brand renovation and innovation programme, an ongoing cost reduction programme and successful delivery of new areas of growth such as Rafferty's Garden, Five:AM and the PZ Wilmar joint venture," the company said.
Earlier this month, the company said it has acquired Australian food brand Five:AM for GBP44.1 million in cash, plus up to GBP7.7 million more depending on the Five:AM's performance in the current financial year. Five:AM is an Australian organic yoghurt brand based in Melbourne.
To combat the challenging trading conditions, the company has been trying to drive new areas of growth such as its Rafferty's Garden baby-food brand and the Wilmar joint venture.
In the company's statement Tuesday, PZ Cussons said its trading performance so far in the year has been in line with management expectations, and its financial position remains strong, with cash generation as expected.
In the UK, the company said its washing and bathing division is traded well in the four months to September 22, buoyed by its innovation pipeline including the relaunch of its entire Imperial Leather range.
Its beauty division also has performed well across the UK, US and Australia, with consumer demand for its St Tropez tanning products still boosted by the appointment of the model Kate Moss as brand ambassador.
The company said trading in smaller markets such as Poland and Greece has been in line with expectations.
PZ Cussons said that in Indonesia, it is making good progress in expanding its babycare portfolio as well as brands such as Original Source.
In Australia it said it saw a good trading performance across its home care, personal care, beauty and food & nutrition categories.
In Africa, however, PZ Cussons said levels of disruption in northern Nigeria have worsened due to violence by the Boko Haram extremists, resulting in a decline in sales in the region, while profitability in Ghana continues to be held back by further weakening in the cedi. Kenya meanwhile, performed in line with expectation, it said.
"Good growth has continued in the south of the country [Nigeria], in particular in the electrical goods business and in the two food and nutrition joint ventures. Whilst the impact of the West African Ebola outbreak has been relatively small in Nigeria, the situation is being carefully monitored," the company said.
PZ Cussons shares were trading 1.9% lower Tuesday morning at 372.80 pence, one of the worst-performing stocks on the FTSE 250.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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