Soap maker Cussons boosts profit, eyes Africa growth
30 July 2014, 08:53
Nairobi - PZ Cussons Plc, maker of Imperial Leather soap, posted a higher full-year profit after cost cuts scrubbed out the effect of a strong pound and periodic disruptions to sales in Nigeria, its largest market.
Cussons' shares rose as much as 3.3 percent on Tuesday.
The British company expects revenue in Africa, flat last year, to rise about 10 percent in the current financial year, helped by the sale of cooking oil from its new joint venture with Wilmar International Ltd in Nigeria.
Unrest in northeast Nigeria, scene of numerous attacks by Islamist militants, has made distributors and customers there more cautious, Cussons said in a statement. There are no signs that this disruption will ease.
But Cussons' chief financial officer, Brandon Leigh, said the company had been "growing quite strongly" in the south and east of Africa's most populous country and biggest economy.
"Together with the new business areas that we have gone into, that's been delivering growth," Leigh told Reuters.
Africa accounted for about 42 percent of Cussons' revenue in financial 2014, which ended on May 31. Nigeria is by far its biggest market, though it also sells in Ghana and Kenya.
The PZ Wilmar joint venture's palm oil refinery in Lagos is running at close to capacity in its first full year of operation, Cussons said. The joint venture sells cooking oil under the brand names Mamador and Devon King's.
Cussons said full-year 2014 adjusted operating profit rose 7.4 percent to 116.4 million pounds ($197.2 million), citing improving margins and the success of new brands as the main reasons it was able to offset sterling's strength against various currencies.
Cussons said Rafferty's Garden, the Australian baby-food business purchased in 2013, had performed well and would probably be launched outside Australia before the end of this calendar year.
The company, which also sells Carex handwash, Charles Worthington shampoos and St Tropez spray tan, declined to give more details about its cost-cutting measures.
Alicia Forry, analyst at Canaccord Genuity, said Cussons had improved its "buying power" by reducing procurement costs, as well as cutting some jobs. The brokerage has a "buy" rating on the stock, with a target price of 440 pence.
Cussons' shares were up 2.7 percent at 357.2 pence at 1235 GMT, outperforming the FTSE-250 index's 0.7 percent rise .
The Manchester-based company raised its final dividend to 5.23 pence per share from 5.04 pence.
For the latest on national news, politics, sport, entertainment and more follow us on Twitter and like our Facebook page!