PZ Cussons Nigeria Reports Staggering Losses in FY 2024

PZ Cussons Nigeria Reports Staggering Losses in FY 2024

In a stark contrast to its previous financial successes, PZ Cussons Nigeria, a leading consumer goods company, has reported a staggering net loss of ₦96.4 billion for the fiscal year ending May 31, 2024. This unprecedented loss has wiped out the company’s shareholders’ funds, leaving it with a negative equity of ₦47.2 billion.

The company’s struggles can be attributed to the overwhelming macroeconomic headwinds it has faced, including high interest rates, exchange rate depreciation, and skyrocketing inflation. These external factors have significantly impacted PZ Cussons’ margins, leading to a bleak financial performance.

Despite the company’s impressive revenue growth of 33.5%, reaching ₦152.2 billion during the fiscal year, the challenges it encountered proved too formidable to overcome. The gross profit of ₦60.6 billion, representing an 84% increase from the previous year, was overshadowed by a substantial exchange loss of ₦158 billion, resulting in a negative operating margin.

Consequently, PZ Cussons reported an operating loss of ₦111.5 billion, a stark contrast to the ₦20.46 billion pre-tax profit it had posted in the 2022/2023 fiscal year. The net loss of ₦96.4 billion, down from the ₦13.3 billion profit after tax in the previous year, underscores the company’s dire financial situation.

Key Highlights FY 2024 vs FY 2023:

Revenue: ₦152.2 billion, +34% YoY
Cost of Sales: ₦91.6 billion, +13% YoY
Gross Profit: ₦60.6 billion, +84% YoY
Administrative Expenses: ₦1.3 billion, -84% YoY
Exchange Loss: ₦158 billion, +3090% YoY
Operating Profit/(Loss): (₦111.5 billion), -1456% YoY
Net Interest Income: ₦2.2 billion, -55% YoY
(Loss)/Profit Before Tax: ₦109 billion, -632% YoY
(Loss)/Profit for the Year: ₦96.4 billion, -772% YoY
Total Assets: ₦137.6 billion, -17% YoY

The financial woes of PZ Cussons Nigeria have led to a significant decline in its cash and cash equivalents, from ₦101.6 billion at the end of the 2022/2023 fiscal year to just ₦32.7 billion at the end of the 2023/2024 fiscal year. This was due to an ₦87.3 billion negative cash flow generated from operating activities.

To mitigate the crisis, PZ Cussons Nigeria has turned to its parent company, PZ Cussons (Holding) Limited, for support. The company’s borrowings from its parent have surged to ₦59.8 billion, up from ₦18.7 billion in the previous year, largely due to a $40.26 million non-interest loan facility extended by the parent company in June 2022.

The delisting saga In a move to address the company’s woes, the parent company, PZ Cussons (Holding) Limited, announced plans to buy out the remaining 26.73% shareholding of PZ Cussons Nigeria and delist the company from the Nigerian Stock Exchange (NGX). The initial offer price of ₦21 per unit was rejected by certain minority shareholders, who claimed the price was unfair. Subsequently, the offer price was increased to ₦23 per unit.

However, in March 2024, the Securities and Exchange Commission (SEC) declined PZ Cussons’ request to delist from the NGX, a decision that was applauded by some of the minority shareholders.

In a statement released in March 2024, the holding company, PZ Cussons (Holding) Limited, announced plans to review its Nigerian operations in order to “reduce risk and maximize shareholders value.” This move suggests that the company is exploring various options to stabilize its Nigerian subsidiary and chart a path forward.

The challenges faced by PZ Cussons Nigeria are a testament to the volatility and complexity of the Nigerian market. As the company navigates these turbulent waters, it will need to devise a comprehensive strategy to address the macroeconomic headwinds, streamline its operations, and regain the trust of its shareholders. The road ahead may be arduous, but the resilience and adaptability of the company will be crucial in determining its long-term viability and success.