PZ Cussons Plc, the parent company of Nigeria’s popular consumer goods manufacturer, PZ Cussons Nigeria Plc, has once again complained that the unfavourable economic situation in Nigeria is hampering overall growth.
A trading update published today on the company’s website also warned that the company’s half-year financial result (the period ended November 31st, 2018), may entail a loss.
What is responsible for this?
According to the statement, the soap and other consumer goods manufacturer said it has been experiencing difficulty selling its products due to a reduced consumer demand across its markets; particularly the Nigerian market which is a major one.
A weakened Nigerian economy has drastically reduced consumers’ purchasing power, hence affecting PZ Cussons’ ability to make profit.
“In Nigeria, consumer disposable income has remained weak ahead of the general election which is scheduled for February 2019. There have also been cost challenges
from a further 10% weakening of the naira against the US dollar in the period and additional transport costs from significant disruption being faced in clearing goods at the port. This will result in a lower first half profit contribution than the same period in the prior year.”
Recall that a recent review by the Manufacturers Association of Nigeria (MAN) also explained how lower consumer demands is, indeed, a major problem facing players in the manufacturing industry in 2018.
Meanwhile, the company is also blaming the depreciation of the naira and difficulty in importing goods into Nigeria s some of the other factors hampering its growth potentials.
But while this is quite understandable considering that the Central Bank of Nigeria (CBN) has maintained a serious stance on its importation ban on 41 items, it becomes puzzling why PZ Cussons can neither locally source or produce the goods it imports.
According to the statement, PZ Cussons Plc expects that its half-year 2019 financial result will be made available on Tuesday, January 29, 2019. But ahead of the release date, it has forewarned investors that the result may not be impressive.
This move is similar to what the company did in September ahead of the release of its Q1 2019 result which was also forecast to be unimpressive.
As we reported, the company’s full-year 2018 financial year ended in May, and the result was a huge loss. This is because even though revenue increased, profit after tax, however, dropped by 89.4% from N3.6 billion in 2017 to just N1.9 billion in 2018.
More on the company’s troubles, its stock has hit a one year low, currently trading at N11.50 according to Bloomberg.
The company is a leading Nigerian manufacturer of consumer goods such as soaps, detergent, personal hygiene, and even household appliances.