PZ Cussons to sell Nigerian subsidiary, other assets

PZ Cussons said it has begun planning to sell its African subsidiary to any interested buyer due to foreign exchange challenges. Its parent company said it is considering a partial or full sale to mitigate the company's exposure to the volatility of the naira, which has depreciated by 70%.

The filing reads: "Over the past 12 months, we have continued to make operational progress and deliver on the strategic priorities set out at the beginning of the year against a backdrop of macroeconomic challenges. At the same time, we have taken the important first steps in transforming our business and maximizing shareholder value by realigning our portfolio to our most competitive areas. The 70% depreciation of the Nigerian naira during this period has had a significant impact on our financial reporting. We have worked hard to mitigate the impact this has had on the Group while continuing to serve Nigerian consumers who are facing unprecedented inflation and economic difficulties."

On the sale of the subsidiary, the company said it has received "many expressions of interest in our African business," which recognizes the potential of its brands and could lead to a partial or full sale.

“Against this backdrop, we remain confident in the long-term potential of PZ Cussons as the company, with stronger brands and a more focused product portfolio, is positioned to deliver sustainable profitable growth,” PZ Cussons said.

However, the company noted that revenues from its UK personal care business have improved significantly, delivering earnings and double-digit revenue growth this year.

In September 2023, PZ Cussons expressed its intention to acquire the remaining 26.73% minority stake in its Nigerian subsidiary for N21 per share. As of May 31, PZ Cussons held 73.27% of the Nigerian subsidiary, representing 2.9 billion shares, valued at N45.53 billion as of September 18.

The company’s Nigerian subsidiary, PZ Cussons Nigeria Plc, continues to struggle, posting a loss of N94.78 billion in the third quarter of 2023/24, compared to a profit of N11.213 billion in the same period of 2022.

“The company posted a loss of N74.14 billion in the second quarter. PZ Cusson’s net assets remain negative, with liabilities exceeding assets by N46.420 billion due to the depreciation of the naira,” the report said.