Naira depreciation: PZ Cussons reports £88.2m FX loss, slashes dividends

Naira depreciation: PZ Cussons reports £88.2m FX loss, slashes dividends

PZ Cussons recorded an FX loss of £88.2 million for the six months that ended on December 2, 2023 in its 2024 interim result which is due to the devaluation of the naira since June of last year.

According to the Times, it was stated that In addition to the reported foreign exchange loss, the devaluation of the naira had a negative impact on the company’s operating profit, revenue, dividend payment, and other financial metrics.

Since PZ’s Nigerian operations account for 22% of its net assets and 35% of its revenue for 2023, the depreciation of the naira has had an effect on the holding company’s performance.

PZ Cussons had an operating loss for the reviewed period of £89.7 million, of which £88.2 million was the FX loss previously reported. This is a considerable decrease from the £39.2 million profit that was made during the same period last year.

PZ Cussons’ CEO, Jonathan Meyers , said The company also disclosed a £59.8 million drop in revenue, of which the depreciation of the naira was the cause for £52.9 million of that drop. This indicates a decrease of 17.8% for the time frame being examined. LFL revenue did, however, only increase by 2.2% over that time.

The company’s profit for FY24 has been lowered to be between £55 and £60 million due to the decline in revenue.

Due to Nigeria’s macroeconomic problems and their impact on the company’s financial performance, the Board decided to reduce the dividend payout from 2.67p in H1 2024 to 1.50p, a 43.8% decrease.

It stated that the EPS would have been less by more than 30% if the 2023 EPS payment had been translated using the NGN/USD exchange rate as of January 31.

Conversely, the corporation reported that it had successfully repatriated £13 million to its Holding company from Nigeria as of the end of November 2023. This comes after the business announced roughly three months ago that it will be returning funds to its parent company, with an estimated return of between £30 and £50 million, assuming that the macroeconomic environment holds steady.