PZ Cussons has announced plans to sell its African subsidiaries, either partially or fully, due to ongoing foreign exchange challenges.
The company disclosed this in its preliminary financial results for the year ending May 31, 2024, published on its website.
The parent company of PZ Cussons Nigeria cited the need to reduce its exposure to naira fluctuations, which has seen a 70% devaluation, as the primary reason for exploring the sale.
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The document read, “Over the last 12 months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges.
“At the same time, we have taken the important first steps to transform our business and maximise shareholder value, by refocusing our portfolio on where we can be most competitive.
“The period was marked by a 70 per cent devaluation of the Nigerian naira, which has had significant implications on our reported financials. We have worked hard to mitigate the impact of this on the group, while continuing to serve Nigerian consumers who are facing unprecedented inflation and economic difficulties.”
On the sales of subsidiaries, the company said it has received, “a number of expressions of interest for our African business”, which recognises the potential of its brands and could lead to a partial or full sale.
“The favourable trends of the second half of FY24 have continued into the new financial year. We are progressing with our plans to sell St. Tropez and have received a number of expressions of interest for our African business, the potential of our brands and people, which could lead to a partial or full sale.
“Against this backdrop, we remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth,” PZ Cussons said.
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Commenting on the impact of the naira devaluation, PZ Cussons said a foreign exchange loss of £107.5m “primarily arose from the translation and settlement of USD denominated liabilities in our Nigerian subsidiaries and is wholly the result of the devaluation of the naira, which fell by 70 per cent from May 31, 2023 to May 31, 2024”.
PZ Cussons noted a significant improvement in its UK Personal Care business, with double-digit revenue growth leading to a profitable year.
In September 2023, the company expressed interest in acquiring the remaining 26.73% minority shares of its Nigerian subsidiary at ₦21 per share.
As of May 31, PZ Cussons held a 73.27% stake in the Nigerian unit, representing 2.90 billion shares valued at ₦45.53 billion as of September 18.
“The Nigerian subsidiary of the company, PZ Cussons Nigeria Plc has continued to struggle, as it posted a ₦94.78bn loss in the third quarter of 2023/24 compared to the ₦11.213bn gain it had in the corresponding period in 2022.
“The firm suffered a ₦74.14bn loss in Q2. PZ Cusson remained in a negative net asset position, as liabilities surpassed assets by N46.420bn on the back of naira depreciation,” the report said.
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