Consumer goods company, PZ Cussons Nigeria, continues to feel the heat of intense competition from smaller brands and shrinking consumer wallets as its profitability continue to tumble.
In its 2019 full-year result, revenue plummeted 8percent from N80.552bn to N74.336bn, with net profit declining 40percent to N1.2bn, from N1.9bn in the previous year.
The maker of Imperial Leather and Joy soaps saw its cost of sales jumped to N57.235bn in full-year 2019 from N56.097bn in 2018, leaving its gross profit at a meager N17.01bn in full-year 2019 from N24.45bn in 2018. Administrative expenses, however, declined to N4.132bn from N6.625bn.
Further dive into the company’ financials show that revenue from its Home Personal care products show a gory state as it sinks to N47.2bn from 58.48bn in 2018. However, its Durable Electrical appliances, saw revenue ballooned to N27.13bn from N22.069.
According to the company, aggressive competitor discounting in the milk business throughout most of the year resulted in significantly lower revenue and the business moving from an operating profit to an operating loss. It added that a full reassessment of the business model has taken place with a greater focus now being placed on consumer pack innovation.
In July, the parent company announced that a major overhaul was required to get the business back on track after writing-off £24.8m against its Nutricima milk business and its Australian brand. It added that it will now focus on personal care and beauty brands because they represent its strongest brands across the geographies that offer it the best opportunities for revenue and margin growth.
The company hinted at a slimming-down of its Nigerian operation, where the economy has suffered and disposable income has reduced, to cope with “current economic realities whilst still being ready to take advantage of future recovery”. The slimming down may involve selling off non-core brands, though it did not say which brands.
PZ Cussons has a joint venture partnership with Wilmar International aimed to develop the country’s depleted palm oil industry.
Santosh Pillai, managing director of PZ Wilmar, told BusinessDay last year that PZ Wilmar was committed to the development of palm oil industry in Nigeria, stating it had invested approximately $150 million in palm oil plantations in Cross River State alone.
PZ Cussons Nigeria manufactures a wide range of consumer products which includes electricals, personal and homecare products, and dairy brands under the Nutricima business line which includes Nunu, Olympic and Coast milk brands. The company celebrated its 120 years in Nigeria in May reaffirming its commitment to the country and economy.
