PZ Cussons Plc (LON: PZC), a leading consumer products group, announced today its interim results for the six months ended 30 November 2019.
Adjusted1 results (before exceptional items)
|Half year to 30 November 2019||Half year to30 November 2018||Reported% change||Constant currency% change2|
|Revenue from continuing operations||£293.3m||£302.8m||(3.1%)||(4.3%)|
|Adjusted operating profit from continuing operations||£30.3m||£34.3m||(11.7%)||(13.0%)|
|Adjusted profit before tax from continuing operations||£28.0m||£31.8m||(11.9%)||(13.1%)|
|Adjusted profit for the period||£21.4m||£24.0m||(10.8%)|
|Adjusted basic earnings per share||5.33p||5.67p|
|Reported results (IFRS) (after exceptional items)|
|Revenue from continuing operations||£293.3m||£302.8m||(3.1%)|
|Operating profit from continuing operations||£37.0m||£28.3m||30.7%|
|Profit before tax from continuing operations||£34.7m||£25.8m||34.5%|
|Profit for the period||£28.8m||£19.2m||50.0%|
|Basic earnings per share||7.10p||4.57p|
|Interim dividend per share||2.67p||2.67p|
1 Exceptional items before tax (2019: income £6.7m; 2018: cost £6.1m) are detailed in note 4.
2 Constant currency comparison. See page 3 for values of currency impact.
3 Net debt, above and hereafter, is defined as cash, short-term deposits and current asset investments, less bank overdrafts and borrowings. It does not include IFRS 16 lease liabilities of £9.9m (refer to note 11).
IFRS 16 was adopted on 1 June 2019 for statutory reporting using the modified approach and therefore prior year figures have not been restated.
Commentary refers to adjusted results of continuing operations on a constant currency basis unless otherwise noted.
· Challenging market conditions across key geographies led to a decline in Group revenue of 4.3%.
· Adjusted operating profit of £30.3m, 13.0% lower, resulting from losses in Nigeria and lower profits in the UK and Australia offset by growth in Indonesia.
· Adjusted profit before tax of £28.0m, a reduction of 13.1% reflecting reduced operating profit.
· Reported profit before tax grew to £34.7m or +34.5%, driven by exceptional profit on disposal of our business in Greece and lower exceptional charges than in the prior period.
· Strategy announced in July 2019 delivering initial progress – two disposals announced, stable revenue in Focus Brands and initial action to reduce overhead costs.
· As a result, balance sheet further strengthened, with net debt of 1.5x EBITDA.
· Interim dividend maintained at 2.67p per share.
Europe & the Americas Highlights
· UK share growth in washing and bathing category despite difficult trading environment.
· 4.7% decline in revenue, reflecting continuing consumer uncertainty, trading down to private label in hand wash and well-documented challenges in the UK high street.
· Modest decline in operating profit of 4.3%, with UK weakness partially offset by a stable performance in Beauty.
· Continued growth in US Beauty retail sales and category market share.
Asia Pacific Highlights
· Continued growth in revenue and market share in Indonesia.
· Leadership maintained in Australia Home Care, but lower share in Food & Nutrition.
· 3.8% decline in revenue, with increased promotional activity and lower consumer confidence in Australia, partly offset by growth in Indonesia.
· Operating profit declined by 17.5% due to performance in Australia, together with increased marketing investment and higher manufacturing costs in the supply chain, more than offsetting increased profit in Indonesia.
· Challenging Nigerian economy resulted in continued weakness in mass market Home and Personal Care sales, with regional revenue 4.4% lower.
· Good revenue growth in Electricals, with profit growth in Kenya, Ghana and the joint venture food business, PZ Wilmar.
· Together with ongoing costs related to the Lagos port congestion, this led to an operating loss of £0.6m.
A stronger second half profit before tax is expected subject to no further worsening of the economic and trading environments across our key geographies. The key areas of improvement for the business are expected to be:
· Return to stability in the UK primarily due to recovery in hand wash driven by environmentally friendly range and marketing plans at trade level;
· Increased revenue in the US Beauty business supported by significant marketing investment;
· Return to more stable results in Australia driven by marketing plans in Home Care and Food & Nutrition categories; and
· Stability in Africa largely driven by marketing investment in our Focus Brands and restructuring benefits.
Assuming these initiatives are successful, full year revenue and profit before tax from continuing operations is expected to be modestly below prior year.
Commenting today, PZ Cussons Caroline Silver (Chair) said:
“The Group’s adjusted results for the first half of the year were impacted by challenging market conditions across our key geographies.
We were pleased to see that the performance of our Focus Brands was stable overall compared to prior year. Our investment remains targeted towards these Focus Brands and this will continue in the second half of the year. We have started to restructure our portfolio of activities, disposing of our business in Greece and agreeing the sale of our Polish brand. Further portfolio reshaping is underway and initiatives to improve our operating efficiency are being implemented at pace.
The Board has maintained the interim dividend in line with last year at 2.67p per share.
On 12th December 2019 we announced that Chief Executive Officer Alex Kanellis will retire on 31st January 2020 after 26 years with the Group. Plans to appoint his successor are well advanced”.