By Tunde Osho
PZ Cussons Plc, the British maker of a wide range of consumer products and parent company of PZ Cussons Nigeria Plc, issued a profit warning on Thursday ahead of the release of its full year results in May 2018.
The group, which trades across the world, including Nigeria, its biggest market, said that pre-tax profit will come in lower than expected in the £80m-£85m range.
The diversified consumer goods company said that it experienced slower sales in its UK Washing and Bathing division due to consumer economic uncertainty and “inflation out-stripping wage growth”.
In Nigeria, the company is facing weak sales due to significant cost inflation of recent years which has put the consumer’s discretionary income under pressure. As a result, inventory levels in the trade remain high leading to intense competition, particularly in its milk segment, resulting in lower volumes, prices and margins.
In light of the challenges, the company said it has drawn up plans to re-assess the structure of the group’s operating model to further reduce the overhead base; review its product cost with a focus on areas such as packaging reduction; review the group’s Nigerian milk business with an objective of returning it to profitability; and re-prioritisation of the group’s new product pipeline to focus on fewer bigger projects requiring lower levels of complexity.
PZ Cussons manufactures a host of milk products in Nigeria under the Nutricima beverages unit. They include Nunu milk powder, evaporated and ready-to-drink yoghurt; Coast and Olympic milk powder and evaporated milk respectively and Yo powdered yoghurt drink and a ready-to-drink yoghurt range.