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A major consumer goods company, PZ Cussons, has announced plans to commence the sell of its Nigerian subsidiaries to any interested buyer.
The parent company of PZ Cussons Nigeria said it is looking at a partial or full sale to mitigate the company’s exposure to fluctuations in the naira, which has devalued by 70 per cent.
Africa accounts for 28.7 per cent of the group’s revenue, with Nigeria being its biggest and most diverse single market
We “have received a number of expressions of interest for our African business, recognising the potential of our brands and people, which could lead to a partial or full sale,” the parent company was quoted as saying in a Thursday statement by PZ Cussons Nigeria, its local subsidiary.
PZ Cussons Nigeria stated in the regulatory filing at the Nigerian Exchange it will make relevant information about the move public once a formal notification from its parent company is in place.
The 2024 financial statement released in London on Wednesday showed net profit went down to 39.7 per cent after a 57 per cent slide in the naira against the Pounds sterling during the review period.
PZ Cussons holds a 73.3 per cent stake in its Nigerian unit. The Nigerian division reported its first annual loss (N76 billion) in years, in August, following a surge of 3,000 per cent in foreign exchange loss
“Our FY24 reported results fell short of our initial expectations, primarily due to the macroeconomic developments in Nigeria which, as we indicated last year, would significantly affect our results,” the group disclosed in its earnings report.
“The 70% currency devaluation over the course of the financial year has, therefore, caused a significant impact not only on our local business but also on the profitability and financial position of the Group.”
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While commenting on the effect of the naira devaluation, PZ Cussons said a foreign exchange loss of £107.5m “primarily arose from the translation and settlement of USD denominated liabilities in our Nigerian subsidiaries and is wholly the result of the devaluation of the naira, which fell by 70 per cent from May 31, 2023 to May 31, 2024”.
In April, the Chief Executive Officer, PZ Cussons, Jonathan Myers, said the company was reviewing its brands and geographies over macroeconomic challenges and complexities in Nigeria.
He spoke a month after the Securities and Exchange Commission rejected PZ Cussons’ request to acquire the shares of minority shareholders in PZ Cussons Nigeria Limited, its Nigerian subsidiary.
As of May 31, PZ Cussons holds a 73.27 per cent stake in the Nigerian subsidiary, which represents 2.90bn shares, worth N45.53bn as of September 18.
The Nigerian subsidiary of the company has continued to struggle, as it posted a N94.78bn loss in the third quarter of 2023/24 compared to the N11.213bn gain it had in the corresponding period in 2022.
The firm suffered a N74.14bn loss in Q2. PZ Cusson remained in a negative net asset position, as liabilities surpassed assets by N46.420bn on the back of naira depreciation.
