PZ Cussons Plc (LON: PZC), a leading international consumer products group, announced today its final results for the year ended 31 May 2019.
|Adjusted1 results||Year ended 31 May 2019||(Restated*) Year ended 31 May 2018||Reported % change||Constant currency % change3||Like for like % change4|
|Adjusted operating profit||£76.5m||£85.7m||(10.7%)||(9.7%)||(9.7%)|
|Adjusted profit before tax||£69.8m||£80.1m||(12.9%)||(11.8%)||(11.8%)|
|Adjusted basic earnings per share||13.01p||13.39p||(2.8%)|
|Reported results (IFRS)||Year ended 31 May 2019||(Restated)*Year ended 31 May 2018||Reported % change|
|Profit before tax||£37.0m||£59.2m||(37.5%)|
|Basic earnings per share||6.24p||9.63p||(35.2%)|
|Total dividend per share||8.28p||8.28p|
*The results for the year ended 31 May 2018 have been restated to reflect the application of IFRS 15 and prior year adjustments. Further details are set out in note 9.
· Moderate decline in revenue of 2.6% at constant currency – driven by weak economic conditions in Africa, partially offset by a solid performance in Asia Pacific and Europe & the Americas.
· Adjusted operating profit of £76.5m, 9.7% lower in constant currency – strong performance in Asia Pacific and a solid result in Europe & the Americas, offset by losses in Africa.
· Adjusted profit before tax of £69.8m, in line with expectations announced at the half year.
· Reported profit before tax declined to £37.0m, largely driven by the non-cash impairment of intangible assets. This impairment is for five:am in Australia and Nutricima in Nigeria.
· Improvement in net debt, following a stronger focus on cash management throughout the business – reduction to £152.2m.
· New strategy to deliver increased focus and scale, accelerating the Group’s return to profitable growth.
· Reflecting good cash generation and confidence in the new strategy, proposed full year dividend maintained in line with prior year at 8.28p per share.
Europe & the Americas Highlights
· Solid adjusted operating profit performance with a constant currency decline of 6.2% to £57.1m. This reflects a strong result in Beauty, offset by lower profit in the UK as a result of planned increased marketing investment.
· Revenue adversely impacted by weaker performance in Food & Nutrition in Greece.
· Solid revenue and market share performance in Personal Care in the UK across all brands.
· Strong revenue and operating profit growth in Beauty largely driven by excellent growth in the US through successful St Tropez roll out.
Asia Pacific Highlights
· Strong growth in adjusted operating profit, up 13.7% at constant currency to £20.4m driven by Indonesia and Australia, partially offset by impact of lower revenue in the Middle East.
· Good growth in revenue and operating profit in Indonesia, with strong performance of Cussons Baby.
· Pleasing operating profit recovery in Australia, largely driven by focus on improving margins across all categories.
· Non-cash impairment of five:am intangible assets.
· Disappointing result with adjusted operating loss for the year of £1.0m. Reflects lower revenue, primarily in Personal and Home Care categories, and increased operating costs predominantly relating to previously highlighted charges associated with port access issues in Lagos.
· Good revenue growth in premium brands of Cussons Baby and Morning Fresh in Personal and Home Care categories, offset by decline in value brands due to weak economic conditions.
· Strong revenue and profit growth in Electricals in Nigeria, mainly due to increased sales of energy-saving products and related consumer campaigns.
· Improvement in Food & Nutrition, with Nutricima loss significantly reduced.
· Non-cash impairment of Nutricima intangible assets.
We anticipate that the current economic conditions in our key markets will remain challenging whilst we transition towards a return to revenue growth. Our new strategy increases resources and investment behind key categories and brands in those geographies that have scale to drive a sustainable improvement in Group performance.
Commenting today, Caroline Silver PZ Cussons Plc Non-executive Chair said:
“The Group’s results for the year were mixed. A combination of solid performances in Europe & the Americas, with strong growth in the Beauty business unit and Asia Pacific, compared with very disappointing results in Africa. As we anticipated at the half year, the adjusted profit before tax of £69.8m reflects the negative impact of the extremely tough macroeconomic conditions in Nigeria, which has historically been a key profit driver.
“We cannot rely upon short term economic conditions improving markedly in our key markets and are therefore taking action to reposition the Group to return to profitable growth. We have today announced a new strategy, built around Focus, Scale and Accelerate.
“Our resources and investment will be prioritised behind key categories and brands in only those geographies offering the clearest opportunities in order to return the Group to sustainable, profitable growth. Our cost base will be tightly managed and we will act at pace. The results from this will not be immediate, but we expect 2019/20 to be an important transitional year.
“With good free cash flow and confidence in our new strategy, the Board is recommending a final dividend of 5.61p (2018: 5.61p) per share, making a total of 8.28p (2018: 8.28p) per share for the year in line with prior year. The overall dividend remains approximately 1.5 times covered by adjusted earnings per share. Subject to approval at the AGM, the final dividend will be paid on 3 October 2019 to shareholders on the register at the close of business on 9 August 2019.”