PZ Cussons Nigeria Reports N96.4 Billion Loss Amid Economic Challenges and Declining Equity

PZ Cussons Nigeria Reports N96.4 Billion Loss Amid Economic Challenges and Declining Equity
Image Credit: Premium Times Nigeria 

PZ Cussons Nigeria Reports N96.4 Billion Net Loss for Fiscal Year 2024

Consumer goods company PZ Cussons Nigeria reported a net loss of N96.4 billion for the fiscal year ending May 31, 2024, according to its latest unaudited financial statements. This significant loss led to a negative equity of N47.2 billion at the end of the fiscal year.

Despite achieving a revenue of N152.2 billion, a 33.5% increase from the previous fiscal year, and a gross profit of N60.6 billion, which represents an 84% increase, the company struggled with high interest rates, exchange rate depreciation, and soaring inflation. These macroeconomic challenges severely impacted its margins.

The company faced a substantial exchange loss of N158 billion, which resulted in a negative operating margin. Consequently, PZ Cussons Nigeria reported an operating loss of N111.5 billion and a pre-tax loss of N109 billion, a stark contrast to the N20.46 billion pre-tax profit posted in the previous fiscal year. After accounting for a tax credit of N12.5 billion, the net loss amounted to N96.4 billion, down from a profit after tax of N13.3 billion in the previous year.

Key financial highlights for FY 2024 compared to FY 2023 include:

• Revenue: N152.2 billion, up 34% YoY
• Cost of sales: N91.6 billion, up 13% YoY
• Gross profit: N60.6 billion, up 84% YoY
• Administrative expenses: N1.3 billion, down 84% YoY
• Exchange loss: N158 billion, up 3090% YoYO
• perating loss: N111.5 billion, down 1456% YoY
• Net interest income: N2.2 billion, down 55% YoY
• Pre-tax loss: N109 billion, down 632% YoY
• Net loss: N96.4 billion, down 772% YoY
• Total assets: N137.6 billion, down 17% YoY

Image credit: Wikipedia 

The net loss wiped out the company’s N34.5 billion retained earnings, resulting in retained losses of N53.6 billion and negative equity of N47.2 billion. Additionally, the group’s net cash declined to N32.7 billion, a 68% drop from the previous year, primarily due to an N87.3 billion negative cash flow from operating activities. Borrowings from the parent company, PZ Cussons (Holding) Limited, surged to N59.8 billion, up from N18.7 billion, largely due to a $40.26 million non-interest loan extended in June 2022 and an FX revaluation adjustment.

In September 2023, PZ Cussons announced plans to buy out the remaining 26.73% shareholding of PZ Cussons Nigeria and delist the company from the NGX, offering N21 per unit to minority shareholders. This price was later increased to N23 in November. However, the Securities and Exchange Commission (SEC) declined the delisting request in March 2024, a decision welcomed by some minority shareholders. The parent company announced plans to review its Nigerian operations to "reduce risk and maximize shareholder value."