PZ Cussons, a multinational consumer goods firm, announced plans to sell its African operations to any interested buyer.
The parent company of PZ Cussons Nigeria says it is considering a partial or full sale to reduce the business’s exposure to naira swings, which have devalued by 70%.
This was indicated in the company’s preliminary results for the fiscal year ending May 31, 2024, which were made available on its website.
According to the consumer goods giant, the board has received numerous enquiries for the sale of its African business.
The document read, “Over the last 12 months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges.
“At the same time, we have taken the important first steps to transform our business and maximise shareholder value by refocusing our portfolio on where we can be most competitive.
“The period was marked by a 70 percent devaluation of the Nigerian naira, which has had significant implications on our reported financials. We have worked hard to mitigate the impact of this on the group while continuing to serve Nigerian consumers who are facing unprecedented inflation and economic difficulties.”
However, it noted that revenue in its UK personal care business has significantly improved to a year of profitable, double-digit revenue growth.
Speaking on the sales of subsidiaries, the company said it has received “a number of expressions of interest for our African business,” which recognises the potential of its brands and could lead to a partial or full sale.
“The favourable trends of the second half of FY24 have continued into the new financial year. We are progressing with our plans to sell St. Tropez and have received a number of expressions of interest for our African business, with the potential of our brands and people, which could lead to a partial or full sale.
“Against this backdrop, we remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth,” PZ Cussons said.
Speaking on the impact of the naira devaluation, PZ Cussons said a foreign exchange loss of £107.5m “primarily arose from the translation and settlement of USD-denominated liabilities in our Nigerian subsidiaries and is wholly the result of the devaluation of the naira, which fell by 70 percent from May 31, 2023, to May 31, 2024.”.
In April, Jonathan Myers, Chief Executive Officer of PZ Cussons, stated that the business was assessing its brands and regions due to macroeconomic issues and complications in Nigeria.
He commented one month after the Securities and Exchange Commission denied PZ Cussons’ proposal to buy minority owners’ shares in PZ Cussons Nigeria Limited, the company’s Nigerian affiliate.
In September 2023, PZ Cussons expressed interest in purchasing the remaining 26.73 percent minority interests in its Nigerian business for N21 per unit.
As of May 31, PZ Cussons owns 73.27 percent of the Nigerian subsidiary, which translates to 2.90 billion shares worth N45.53 billion as of September 18.
The company’s Nigerian affiliate, PZ Cussons Nigeria Plc, has continued to struggle, posting a N94.78 billion loss in the third quarter of 2023/24, compared to a N11.213 billion gain in the same period in 2022.
The corporation lost N74.14 billion in the second quarter. PZ Cusson’s net asset position remained negative, with liabilities surpassing assets by N46.420 billion due to naira depreciation.
Earlier this year, the Securities and Exchange Commission rejected the multinational’s ‘No Objection’ request to buy out minority owners for N23 and delist from the Nigerian exchange.
Another notice posted on the Nigerian exchange website stated, “Please note that the company’s closed period, which commenced on September 1, 2024, will remain in effect until 24 hours after the release of the unaudited financial statements for the first quarter ended August 31, 2024, to the market.”
