18th Sep 2024 09:40
(Alliance News) - Carex owner PZ Cussons PLC slashed the dividend on Wednesday in response to falling sales and foreign exchange headwinds.
The Manchester-based consumer goods firm, which also owns Imperial Leather, said revenue in the year ended May 31 declined 20% to GBP527.9 million from GBP656.3 million a year prior.
PZ Cussons posted a pretax loss of GBP95.9 million, swinging from a profit of GBP61.8 million. Hurting its bottom line, it reported a GBP140.6 million hit from 'adjusting items'.
"This related primarily to a GBP107.5 million foreign exchange loss arising from the devaluation of the Nigerian naira. A charge of GBP24.4 million was incurred due to the impairment of the Sanctuary Spa brand in the first half of the year, and costs of GBP10.1 million were incurred on simplification and transformation projects," PZ explained.
In response, shares in PZ Cussons fell 7.6% to 95.41 pence each in London on Wednesday.
Like-for-like revenue growth was 4.4%, driven by price/mix improvements of 6.8% and a 2.4% decline in volume. This was driven primarily by growth in Nigeria, as the firm offset cost inflation with pricing. Excluding Africa, LFL revenue declined 2.6%.
Revenue trends improved across each region throughout the year, with growth in both group revenue and volume in the fourth quarter, the firm added.
Adjusted operating profit fell 21% to GBP58.3 million from GBP73.3 million a year prior, in line with guidance provided in June.
It expects operating profit for the new year between GBP47 million and GBP53 million, assuming average foreign exchange rates seen in the first-quarter of the financial year continue. Based on these exchange rates, operating profit for the year just ended would have amounted to around GBP40 million.
Reflecting the weaker financial picture, PZ Cussons cut the final dividend by 44% to 2.10 pence per share from 3.73p. It means its total dividend amounts to 3.60p, down 44% on-year from 6.40p, "reflecting the impact of the naira devaluation on earnings per share".
PZ Cussons noted it has an earnings cover of approximately two times.
Looking ahead, the firm said: "The FY25 financial year has started positively, with group like-for-like revenue growth of 4.7% driven by strong growth in both our Africa and Europe and Americas regions, partly offset by adverse phasing of shipping in Asia."
The company said plans to dispose the St Tropez tanning business are progressing, and that the firm has received a number of expressions of interest in the Africa business which could lead to a partial or full sale.
This follows an announcement in April in which the firm launched a strategic review of brands and operations.
By Jeremy Cutler, Alliance News reporter
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