PZ Cussons warns tension in Nigeria could dent profits

City A.M. Reporter
SOAP maker PZ Cussons warned yesterday it was likely to report disappointing full-year profits, pointing to political upheaval in Nigeria, challenging trading conditions in Australia and high raw materials costs.

Shares in the maker of Imperial Leather soap fell as much as 4.8 per cent after it reported an 11.7 per cent drop in first-half pre-tax profit and said full-year results would be towards the bottom end of current market expectations.

It had already issued a profit warning in December as pressure on consumers compounded the pain of high raw materials costs and adverse moves in exchange rates.

PZ Cussons said it was monitoring social and economic tensions in Nigeria closely after gun and bomb attacks by Islamist insurgents last week killed at least 186 people.

Nigeria, PZ Cussons’ biggest single market, accounts for around 30 to 40 per cent of the group’s total revenue.

The company, which also makes Carex hand soap and recently bought the Fudge haircare brand, said profit before tax in the six months to November fell to £39.3m from £44.5m a year earlier as higher costs helped undermine a 10.5 per cent rise in revenue to £414m.

PZ Cussons chairman Richard Harvey said the company anticipated difficult trading in some markets for the rest of the year.

“In particular, we are closely monitoring the current economic and social tensions in Nigeria which may further impact the year-end outturn,” Harvey said.