PZ Cussons Nigeria Reports N96.4 Billion Net Loss, Faces N47.2 Billion Negative Equity Amid Financial Struggles
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PZ Cussons Nigeria has reported a net loss of N96.4 billion for the fiscal year ending May 31, 2024, as detailed in its latest unaudited financial statements. This substantial loss has resulted in a negative equity of N47.2 billion at the fiscal year’s end, highlighting the severe financial difficulties faced by the consumer goods company.
Financial Metrics and Performance
Despite generating a revenue of N152.2 billion, a 33.5% increase from the previous year’s N114 billion, PZ Cussons Nigeria has been grappling with multiple macroeconomic challenges. High interest rates, exchange rate depreciation, and rampant inflation have significantly impacted the company’s margins.
The company reported a gross profit of N60.6 billion, marking an 84% increase from N32.95 billion in the previous fiscal year. However, this achievement was overshadowed by an enormous exchange loss of N158 billion, leading to a negative operating margin. Consequently, the operating loss for the fiscal year amounted to N111.5 billion.
Further financial strain was evident as the group posted a pre-tax loss of N109 billion, a stark contrast to the N20.46 billion pre-tax profit recorded in the 2022/2023 fiscal year. After benefiting from a tax credit of N12.5 billion due to its losses, the net loss stood at N96.4 billion, down from the N13.3 billion profit after tax reported in the previous year.
Key Financial Highlights (FY 2024 vs FY 2023)
- Revenue: N152.2 billion (+34% YoY)
- Cost of Sales: N91.6 billion (+13% YoY)
- Gross Profit: N60.6 billion (+84% YoY)
- Administrative Expenses: N1.3 billion (-84% YoY)
- Exchange Loss: N158 billion (+3090% YoY)
- Operating Loss: N111.5 billion (-1456% YoY)
- Net Interest Income: N2.2 billion (-55% YoY)
- Pre-Tax Loss: N109 billion (-632% YoY)
- Net Loss: N96.4 billion (-772% YoY)
- Total Assets: N137.6 billion (-17% YoY)
Commentary and Cash Flow Analysis
The reported net loss has eradicated the company’s N34.5 billion retained earnings, leading to retained losses of N53.6 billion by the end of the fiscal year. This financial setback has driven PZ Cussons Nigeria into a negative equity position of N47.2 billion, prompting considerations to delist from the Nigerian Exchange (NGX).
The company’s net cash declined sharply to N32.7 billion, a 68% drop from N101.6 billion at the end of the previous fiscal year. This decline was primarily due to an N87.3 billion negative cash flow from operating activities.
Borrowings from the parent company, PZ Cussons (Holding) Limited, surged to N59.8 billion by the end of the fiscal year, up from N18.7 billion the previous year. This increase is largely attributed to a $40.26 million non-interest loan facility provided in June 2022, with an FX revaluation adjustment contributing an additional N41.1 billion.
Delisting Plans and Shareholder Reactions
In September 2023, PZ Cussons (Holding) Limited announced plans to acquire the remaining 26.73% shareholding of PZ Cussons Nigeria and delist the company from the NGX. An initial offer price of N21 per share was rejected by some shareholders, who deemed it unfair. In response, the offer was raised to N23 per share in November. However, in March 2024, the Securities and Exchange Commission (SEC) declined the request to delist, a decision welcomed by some minority shareholders.
Following the SEC’s decision, the holding company announced intentions to review its Nigerian operations to “reduce risk and maximize shareholder value.”
PZ Cussons Nigeria continues to navigate a challenging economic environment, with its future strategies closely watched by stakeholders and market analysts.
