PZ Cussons Plc, a leading consumer products group, today issues the following trading update for the year ended 31 May 2014.
Overview of financial performance and position
The board is pleased to announce that the performance of the Group for the year ended 31 May 2014 has been in line with management expectations with sterling profits* for the year expected to be approximately 6% higher than the previous year.
This result has been achieved despite a significant exchange impact of circa £12m from the translation and transactional effect of weakening currencies. Excluding this impact, profits* would have been 17% higher than the previous year.
The financial position of the Group remains strong with good cash generation and only a small net debt position at the year end.
In the UK washing and bathing division, Imperial Leather, Carex and Original Source have performed well driven by a significant renovation and innovation programme. The entire Imperial Leather range is being relaunched over the coming months with exciting new products, imagery and fragrances. Product portfolios have been optimised both for the big four supermarkets as well as further increasing distribution in other channels. The Cussons Mum & Me range is growing well together with new products under the Little Explorers sub-brand.
In the beauty division, consumer demand for St Tropez has been boosted by Kate Moss as brand ambassador. The Sanctuary, Charles Worthington and Fudge brands have performed well in the UK and have also now secured new overseas distribution.
In Poland, following the sale of the homecare brands in February for £46.6m in cash, focus is now on investing in and growing the personal care brands of Luksja, Original Source and Carex.
Performance in Greece has continued to show some improvement as the economy begins to stabilise.
Whilst profitability in Australia has been affected by the weaker Australian dollar, the core brands of Morning Fresh and Radiant have performed well. Rafferty's Garden has seen a number of new product launches and the international expansion will begin to be executed before the end of the calendar year.
Continued positive momentum in Indonesia has delivered another year of revenue growth although a weaker rupiah has impacted profits. Growth has been achieved across both the babycare and non-babycare portfolios as well as continued progress being made with distribution in other South East Asian territories.
Overall trading in the smaller territories of Thailand and the Middle East has been broadly in line with expectations.
In Nigeria, unrest in the North of the country has continued with increased levels of disruption over recent months. Economically, interest rates have been maintained at a high level reducing levels of liquidity in the trade. The naira has remained stable versus the US$, despite coming under pressure ahead of a change in the central bank governor.
In personal care and home care, whilst commodity products have had to trade in an extremely competitive environment, growth has been achieved in the value add portfolio driven by a significant brand renovation programme. Good growth has been achieved in the electricals business as well as in Nutricima, the nutritional beverage JV with Glanbia.
The palm oil joint venture with Wilmar has performed very well with the refinery already operating towards capacity and ahead of expectations. Good growth has been achieved in the consumer brands of Mamador and Devon Kings with the balance of output sold business to business.
Profitability in Ghana continues to be impacted by further weakening in the cedi. Kenya has performed well and in line with expectations.
Whilst trading conditions in most markets remain challenging, the Group remains focussed on a dynamic and fast brand renovation and innovation programme, an ongoing cost reduction programme and successful delivery of new areas of growth such as Rafferty's Garden and the Wilmar joint venture.
These initiatives will help to offset the continuing macro challenges and the reduction in profits from Poland as a result of the homecare sale.
The Group's balance sheet remains strong and well placed to pursue new areas of growth.
Preliminary results for the year ended 31 May 2014 will be announced on Tuesday 29 July 2014.
An analysts’ presentation will be given at 9:30am on that day. This will be held at the new offices of Instinctif Partners, 65 Gresham Street, London, EC2V 7NQ. Dial in details will be available immediately following the Preliminary results announcement.
*profit before tax and exceptional items
For further information contact:
PZ Cussons Plc Tel: 0161 435 1027
Brandon Leigh – Chief Financial Officer
Instinctif Tel: 020 7457 2020
Toby Bates / Tim Linacre
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