PZ Cussons, the multinational consumer goods company, has announced plans to sell its African subsidiaries, including its Nigerian operations, as part of efforts to mitigate the impact of the ongoing foreign exchange crisis.
The company’s decision follows the significant devaluation of the naira by 70%, which has heavily affected its financial performance.
In its preliminary results for the fiscal year ending May 31, 2024, PZ Cussons confirmed receiving multiple expressions of interest from potential buyers for its African business. The company is considering both partial and full sales to reduce its exposure to the naira’s volatility.
“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,” PZ Cussons said in its preliminary results published on its website for the year ended May 31, 2024.
“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.”
PZ Cussons noted the challenges posed by macroeconomic conditions in Nigeria but stressed its commitment to serving Nigerian consumers, despite the economic difficulties and inflation. The company’s UK Personal Care division, however, reported a notable improvement with double-digit revenue growth.
Regarding its Nigerian operations, PZ Cussons recorded a foreign exchange loss of £107.5 million, primarily due to the devaluation of the naira. The company’s Nigerian subsidiary, PZ Cussons Nigeria Plc, posted a significant loss of N94.78 billion in Q3 2023/24, in contrast to a profit of N11.2 billion in the same period in 2022. The subsidiary also remains in a negative net asset position, with liabilities exceeding assets by N46.4 billion.
In a separate development earlier this year, the Securities and Exchange Commission (SEC) rejected PZ Cussons’ bid to acquire minority shares in its Nigerian subsidiary and delist from the Nigerian Exchange. The company had sought to buy out the remaining 26.73% minority stake but was denied approval by the SEC.
PZ Cussons is now moving forward with its closed period, which began on September 1, 2024, and will continue until after the release of its unaudited financial statements for the first quarter ending August 31, 2024.
