British consumer goods company PZ Cussons which makes products including Imperial Leather soap, is considering selling its Africa operations, citing adverse economic conditions on the continent.
Details
The company’s revenue has been in decline for the past three months, falling by 23.7%. The company cited the devaluation of the Nigerian Naira as a cause of its decline.
What They’re Saying
The company said it has carried out “a strategic review of our brands and geographies” to focus on where it can be most competitive.
In particular, PZ’s board described its Africa operations as “a complex group of assets” and is “evaluating the strategic options both to reduce risk and to maximise shareholder value.”
It could lead to an outright sale, with CEO Jonathan Myers saying “nothing is ruled out.”
Between The Lines
Last year, PZ said it would delist its Nigeria subsidiary from the stock exchange by paying £23 million ($29 million) to buy a 27% stake held by the public.
But Nigeria’s securities and exchange regulator barred the buyout move this March.
Zoom Out
Rising inflation and currency devaluation over the past year have increased production costs in Nigeria. Inflation rose to 33.2% in March.
PZ’s exchange rates for calculating its accounts for the 2022, 2023, and 2024 financial years were 558, 536, and 1,400 naira to the British pound respectively.
Looking Forward
PZ still plans to improve profitability, generate more cash, and stay competitive in Nigeria by finding a way through the naira’s volatility.
“The macro-economic challenges and complexities associated with operating in Nigeria are significant and there is much more to do to unlock the full potential of the business,” PZ’s CEO Myers said in the company’s statement last week.
Source: Semafor
Catch up on news and other tidbits on our WhatsApp Community Page, Twitter/X, and subscribe to our weekly newsletter to ensure you don’t miss out on any news.
