British consumer goods company PZ Cussons which makes products including Imperial Leather soap, is considering selling its African operations, citing adverse economic conditions on the continent.
Details
The company’s revenue has declined over the past three months, down 23.7%. The company reported the understatement of the Nigerian Naira as the cause of its decline.
What they say
The company said it has carried out “a strategic review of our brands and geographies;to focus on where it can be most competitive.
In particular, PZ’s board described its African operations as “a complex group of assets” and are “evaluating strategic options to both reduce risk and maximize shareholder value.”
It could lead to an outright sale, with a CEO Jonathan Myers saying “nothing is ruled out.”
Between the lines
Last year, PZ said it would delist its Nigerian subsidiary by paying £23 million ($29 million) to buy one 27% share held by the public.
But the Securities and Exchange Regulatory Authority of Nigeria banned the takeover move this March.
Zoom out
Rising inflation and currency depreciation over the past year have increased the cost of production in Nigeria. Inflation amounted to 33.2% on March.
PZ’s exchange rates for calculating its accounts for the financial years 2022, 2023 and 2024 were 558, 536 and 1,400 naira in the British pound respectively.
I look forward
PZ still plans to improve profitability, generate more cash and remain competitive in Nigeria by finding a way to overcome the volatility of the naira.
“The macroeconomic challenges and complexities associated with operating in Nigeria are significant and much needs to be done to unlock the full potential of the business,” CEO PZ Myers said in the company’s statement last week.
Source: Semafor
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