PZ Cussons To Sell Nigerian Subsidiaries, Others

PZ Cussons has announced plans to sell its African subsidiaries, including its Nigerian operations, due to ongoing foreign exchange challenges. The company disclosed this in its preliminary financial results for the year ending May 31, 2024, which were published on its website.

According to the report, the parent company of PZ Cussons Nigeria is considering a partial or full sale of its African businesses to mitigate the impact of the significant naira devaluation, which has dropped by 70 percent over the past year.

The company stated, “Over the last 12 months, we have made operational progress and met our strategic priorities despite macroeconomic challenges. At the same time, we’ve taken steps to refocus our business and maximize shareholder value by concentrating on areas where we can be most competitive.”

The company highlighted the severe impact of the naira’s 70 percent devaluation on its financials, noting that it has worked hard to reduce the effects while continuing to serve Nigerian consumers facing inflation and economic hardships.

Regarding the potential sale, PZ Cussons revealed it has already received “several expressions of interest” from buyers for its African business. These discussions could lead to a partial or full sale of the company’s operations on the continent.

“The positive momentum from the second half of FY24 has continued into the new financial year. We are progressing with the sale of St. Tropez and have received interest in our African business, recognizing the strength of our brands and workforce, which may result in a sale,” the company noted.

PZ Cussons also addressed the impact of the naira devaluation, explaining that a foreign exchange loss of £107.5 million resulted from the translation and settlement of USD-denominated liabilities in its Nigerian subsidiaries, all due to the 70 percent fall of the naira from May 2023 to May 2024.

However, the company pointed out that its UK Personal Care business has seen notable improvement, achieving double-digit revenue growth during the year.

In September 2023, PZ Cussons expressed interest in acquiring the remaining 26.73 percent of minority shares in its Nigerian subsidiary, offering ₦21 per share. As of May 31, PZ Cussons holds a 73.27 percent stake in its Nigerian arm.

Despite these efforts, PZ Cussons Nigeria continues to struggle financially. In the third quarter of the 2023/24 fiscal year, it reported a ₦94.78 billion loss, a significant drop from the ₦11.21 billion profit posted in the same period of 2022. In the second quarter, the company had suffered a ₦74.14 billion loss, leaving its Nigerian subsidiary in a negative net asset position as liabilities exceeded assets by ₦46.42 billion, largely due to the naira depreciation.