PZ Nigeria reports high profit despite increased operational cost

Bisola David
Bisola David
PZ Cussons Nigeria Plc has convened an extraordinary general meeting of shareholders following a N73.8 billion loss that reduced the value of its net assets.

PZ Cusson Nigeria Plc’s unaudited year results and accounts for the period ended May 31, 2022, indicated a continued rise in profit driven by double-digit growth in revenue despite increases in operational costs.

ThisDay reported that the multinational company’s ability to recoup its profit and loss numbers in the year under review was endangered by the interaction between an increase in foreign exchange loss and a sizable increase in the cost of sales.

The corporation announced a dividend payout of N4 billion or N1.01 per common share.

In spite of poor purchasing power caused by double-digit inflation and other reasons, the company’s revenue reaches another milestone in 2022, powered by growth seen in its durable electrical appliances, home and personal care items, and other categories.

According to the breakdown of income during the previous five years, PZ Cusson Nigeria recorded N100.04 billion in sales, an increase of 21.1% from the N82.58 billion reported in 2021. The company reported sales of N66.99 billion in 2020, N74.34 billion in 2019, N80.55 billion in 2018, and N78.22 billion at the end of 2017.

Among the company’s home and personal care, goods are morning fresh, Zip, Canoe, Premier, Excel, Joy, Stella, Venus, Imperial Leather, Cussons Baby, Original Source, Carex, and Robb.

Thermocool refrigerators, freezers, televisions, generators, air conditioners, and washing machines are just a few of the Dural electrical appliances made by PZ Cussons.

The cost of sales over the period increased noticeably by 27.4%, from N59.48 billion in 2021 to N75.7 billion in 2022.

As a result, from 72.03 percent in 2021 to 75.72 percent in 2022, the cost of sales/revenue increased.

The increase in revenue helped the gross profit rise by 5.16 percent to N24.3 billion in 2022 from N23.09 billion in 2021, as reported.

Due to this, the gross profit margin dropped from 27.9% in 2021 to 24.28% in 2022. Cusson, PZ Nigeria is susceptible to the risk of rising commodity prices as a result of its special need to purchase high-quality goods that meet its manufacturing standards.

These raw ingredients include tallow, sodium silicate, linear allyl benzene, and crude palm oil. Based on management’s prior experience with price fluctuation in Nigeria, the company has been successful with its technique of procuring these commodities in advance.

Meanwhile, PZ Cusson Nigeria’s total operating costs increased by almost 7% to N16.9 billion in 2022 from N15.86 billion reported in 2021.

The company’s impairment of trade receivables increased from N85.06 million in 2021 to N139.4 million in 2022 as a result of the operating climate.

The impairment loss as of May 31, 2022, was related to several clients who were not anticipated to be able to settle their outstanding accounts, mostly because of financial difficulties.

It’s interesting to note that the company reported an Exchange loss of N4.2 billion in the year under review as opposed to N5.95 billion the year before.

In light of this, the operating profit for 2021 as a whole was N3.08 billion as opposed to N1.19 billion. In 2022, PZ Cusson Nigeria reported earning N5.76 billion from non-core business activities in 2022 from N2.07 billion in 2021.

According to PZ Cusson Nigeria’s profit and loss statements, interest income increased by 251.96 percent to N839.64 million in 2022 from N238.56 million in 2021, while interest costs dramatically decreased by 84.6% to N11 million from N71.48 million.

In contrast to the N3.44 billion profit before taxes declared in the 2021 financial year, the group ended the year with a N9.67 billion profit before taxes. PZ Cusson Nigeria recorded a profit of N6.4 billion, up from N1.7 billion in 2021, despite tax charges of N3.27 billion.

Cusson, PZ Nigeria reported a large increase in trade and other payables in its 2022 unaudited financial statement, which raised overall liabilities.

The Group Current Liabilities increased by 35.4% to N62.3 billion in 2022 from N46 billion in 2021 as Trade and Other Payables increased by 32.4% to N57.89 billion from N43.74 billion.

Overall non-current liabilities increased from N6.72 billion reported in 2021 to N5.77 billion in 2022, growing by 14.9%.

PZ Cusson Nigeria reported that total assets increased by 12% to N108.05 billion in 2022 from N87.34 billion in 2021, and total equity increased by 16% to N39.96 billion from N34.55 billion.

PZ Cusson Limited, a UK-based corporation that holds 73.27 percent (73.27 percent in 2020) of the shares of the group and company, controls both the group and the company.  The remaining 26.73 percent (2020: 26.73 percent) of the shares are widely held.

PZ Cusson Nigeria’s recent performance has not drawn local or foreign investors to its stock. Earnings and dividends to shareholders are two basic variables driving the stock price on the Nigerian Exchange Limited, which had 3,970,477,045.00 outstanding shares and was trading at N11 per share as of the most recent trading day.

To lower sales costs and improve bottom-line performance, the company seeks to maintain its revenue growth and source materials locally.

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