PZ Cussons (PZC) H2 2024 earnings summary

Executive summary

• Achieved operational progress and delivered operating profit in line with guidance despite a 70% devaluation of the Nigerian naira, which significantly impacted reported results and the balance sheet.

• Advanced portfolio transformation, including plans to sell St. Tropez and exploring a partial or full sale of the Africa business, with multiple expressions of interest received.

• UK Personal Care delivered double-digit revenue growth and improved profitability, while Childs Farm achieved a second year of double-digit growth and expanded international distribution.

• ANZ performed strongly with revenue and margin growth; Indonesia returned to growth in Q4.

• Continued operational progress with delivery against FY24 strategic priorities.

Financial highlights

• Reported revenue declined 19.6% to £527.9m, mainly due to a £130.6m impact from Naira devaluation; like-for-like revenue grew 4.4%.

• Adjusted operating profit fell to £58.3m, in line with guidance; statutory operating loss of £83.7m due to Naira devaluation and impairment charges.

• Adjusted EPS dropped 28.6% to 8.02p; full year dividend reduced by 44% to 3.60p per share, maintaining a 2x earnings cover.

• Free cash flow was £41.6m; net debt increased to £115.3m from a net cash position, mainly due to Naira devaluation.

• Adjusting items totaled £140.6m, mainly FX losses and Sanctuary Spa impairment.

Outlook and guidance

• FY25 adjusted operating profit guidance is £47m–£53m, assuming Q1 exchange rates hold; underlying profit growth expected at £7m–£13m.

• Sensitivity to naira/sterling and naira/USD exchange rates remains high, but expected to reduce if Africa business is sold.

• Q1 FY25 started with 4.7% like-for-like revenue growth, with broad-based, volume-led growth in most brands.