PZ Cussons Nigeria stocks near 52-week low as group moves to sell St Tropez

The share price of PZ Cussons Nigeria Plc (PZCN) at N15.8 on September 19 neared its 52-week low of N15.25 as against its 52-week high of N40. The stock has decreased this year by 40.8 percent.

The negative returns investors see in the PZ Cussons Nigeria shares comes as the parent company PZ Cussons, the maker of Carex soaps, said it is progressing with plans to sell St Tropez and “have received a number of expressions of interest for our African business, recognising the potential of our brands and people, which could lead to a partial or full sale.”

PZ Cussons, the parent company of PZ Cussons Nigeria Plc hopes that exiting St Tropez and addressing complexity in Africa will enable it to put more focus on those parts of the business that are doing much better than its share price slump would suggest.

St Tropez is seen by PZ Cussons as non-core in a ‘too complex’ portfolio. Analysts estimate that its St Tropez brand, which it purchased for £62.5million more than a decade ago, could be worth £100million.

Earlier this year, Nigeria’s Securities and Exchange Commission (SEC) rejected PZ Cussons minority shareholders buy-out, delisting plans.

“The Board of PZCN has not at this time received any formal notification or more detail on this matter from the parent company, and will make the necessary disclosures as and when it receives more information,” said PZ Cussons Nigeria Plc in a September 19 notice at the Nigerian Exchange Limited (NGX).

The Nigerian unit further said, “Please note that the Company’s closed period, which commenced on September 1, 2024, will remain in effect until 24 hours after the release of the Unaudited Financial Statements for the first quarter ended August 31, 2024, to the market. Consequently, no Director, persons discharging managerial responsibilities, Audit Committee Members, Advisers, Consultants and Employees, with insider information or their connected persons shall deal directly or indirectly in the securities of the Company during this closed period”.

PZ Cussons put its tanning business St Tropez up for sale as part of a turnaround plan. It had noted that despite “strategic” progress, the devaluation of the naira had significant implications on its reported financials.

The parent company had said it has 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.

Read also: PZ Cussons swings to N96.4bn loss on naira weakness

PZ Cussons Nigeria, a fast-moving consumer goods company reported a loss after tax (LAT) of N96.4 billion for the financial year ended May 2024 driven by naira devaluation compared with an after-tax profit of N14.4 billion in the previous year, according to the firm’s latest financial statements.

“The company reported an exchange loss of N158.03 billion for 2024, a significant increase from the N4.95 billion loss in 2023. This substantial exchange loss heavily impacted its EBITDA, resulting in a loss of N109.65 billion for 2024, compared to a gain of N10.38 billion in FY 2023. Consequently, the company reported a negative EBITDA margin,” CSL Research analysts said in a recent note.

Further analysis reveals that PZ Cussons’ foreign exchange loss occasioned by naira devaluation widened to N158.03 billion from N4.95 billion.

PZ Cussons Nigeria has on August 30 notified its shareholders, the investing public and the Nigerian Exchange Limited of the resignation of Kevin Massie as a director of the Company.

“Massie, the representative of the majority shareholder on the Board, resigned with effect from Wednesday, August 28, 2024 due to his imminent resignation from the Group on September 13, 2024,” the company noted.

Shareholder’s funds stood at a negative of N47.16 billion from a positive N48.36 billion. In May 2023, the company’s equity capital was strong, settling at N48.360 billion at the time before the devaluation policy in mid-2024. The company suffered losses as the government devalued the local currency in 2024.

Total assets dipped to N137.6 billion from N166.4 billion in the period reviewed. Cash, cash equivalents, and bank overdrafts at the end of the year dipped to N32.7 billion from N101.6 billion.

PZ Cussons had noted this in a March 19 notice at the NGX on the SEC response to PZ Cussons (Holdings) Limited’s offer to acquire shares held by other shareholders of PZ Cussons Nigeria. PZ Cussons Plc had filed an application with the Securities and Exchange Commission in November 2023 for its no-objection to the proposed scheme.

The offer was increased from N21 per share to N23 per share as announced on November 9, 2023. “PZ Cussons Nigeria Plc hereby notifies the Nigerian Exchange Limited (NGX) and the investing public that the Securities and Exchange Commission (SEC) has declined the Company’s request for its No Objection to PZ Cussons (Holdings) Limited’s (the majority shareholder) intention to acquire the shares held by all the other shareholders of PZ Cussons Nigeria Plc at an offer price of N23 per share (the Proposed Transaction),” PZ Cussons Nigeria said in the March 19 statement signed its Company Secretary, Olubukola Olonade-Agaga.