Dec 6 PZ Cussons Plc, the maker of
Imperial Leather soaps, said it expected to report a higher
first-half profit, but was concerned about business in its key
The British soap and shampoo maker said profit was likely to
be about 10 percent higher, driven by an improvement in the
profitability of its Australian business and a strong
performance in the United Kingdom.
Revenue during the six months to Nov. 30 was broadly flat
due to difficult trading conditions in its key Nigerian market.
The company said continued social unrest in the north,
severe floods and the removal of a fuel subsidy earlier this
year impacted sales in Nigeria. However, it said margins had
improved, helped by lower raw material costs.
Nigeria, Africa's most populous country, has been rocked by
unrelenting violent religious clashes and the removal of an $8
billion fuel subsidy in January that led to an eight-day
"We would not expect market forecasts to change, but note
that results of PZ Cussons are H2 (second half) loaded, and
Nigeria remains a risk factor," Numis Securities analyst Charles
Pick said in a note to clients and cut his rating on the stock
to "reduce" from "hold".
PZ Cussons, which specialises in home-care, personal care
and beauty care products, gets about 40 percent of its revenue
"The outlook still remains clouded by uncertainty in Nigeria
relating to ongoing unrest in the north and potential changes to
fuel subsidies in the new year," Panmure Gordon analyst Damian
However, McNeela added that the company was starting to see
benefits of lower raw material costs and its supply chain
optimisation efforts, and raised his price target on the stock
to 335 pence from 315 pence.
Core brands such as Imperial Leather, Carex and Original
Source had performed well in the UK in the first half, the
PZ Cussons said that it had taken measures to improve the
performance of its Australian business. However, trading
conditions in Australia remained challenging.
The company had said in July that retailers in Australia had
devoted greater shelf space to private labels, hurting PZ
Cussons' volumes and margins in the home-care business.
The company is expected to announce half-year results on
Jan. 29, 2013.
Shares in the company were trading down slightly at 358.4
pence at 0930 GMT on the London Stock Exchange.