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PZ Cussons is offloading self-tanning brand St Tropez and exploring a sale of its Africa business, after the devaluation of the Nigerian naira and chronic inflation on the continent eroded the group’s profitability.
The consumer goods company, whose brands include Carex soap and Imperial Leather, said on Wednesday it was “evaluating the strategic options” for its African operations, which accounted for almost 40 per cent of group revenue last year, as well as selling the tanning brand it bought in 2010.
Chief executive Jonathan Myers told the Financial Times that the company was exploring all options for its Africa division. “Nothing is ruled out,” he said, adding, “we see a number of tranches of potential value, whether that is to us or someone else.”
PZ Cussons is one of a number of consumer goods groups that have been reassessing their options in Nigeria as a result of long-running foreign exchange shortages in the country, which have made it harder for multinationals to repatriate their earnings.
Myers confirmed that the group had received a number of unsolicited approaches over the previous months and years, but said “we have not put the ‘for sale’ sign up”.
In its update PZ Cussons said it faced “challenges” owing to its “significant exposure to Nigeria”, and was “too complex for its size”, with “financial and human resources spread too thinly to generate consistent returns”.
Analysts estimate that its St Tropez brand, which it purchased for £62.5mn more than a decade ago, could be worth £100mn
Shares in the Manchester-based company were up by almost 5 per cent in morning trading on Wednesday.
The company has taken a significant hit to profits from currency movements in Africa in recent years, and last September announced plans to delist its Nigerian subsidiary. In the first three months of the year, the company reported a 23.7 per cent drop in revenues as a result of the devaluation of the naira.
In February, the company reported a 24 per cent drop in pre-tax profits for the six months to December 2, owing in part to that issue.
“We have a broader forex impact that we cannot mitigate but others can,” Myers said.
The company has also accumulated a significant debt pile as a result of its woes on the continent. The group’s gross debt was £251mn at the end of 2023. The company said this was expected fall to between £160mn and £180mn by the end of 2024.
PZ Cussons, which also owns a leading fridges and freezers business and a large cooking oil brand in Nigeria, said it had managed to repatriate approximately £35mn of cash from the country in the first 10 months of this financial year, and expected to repatriate a further £15mn to £20mn before the end of May.
Other consumer goods and healthcare groups have had to scale back operations in the country. Unilever stopped manufacturing homecare and skin-cleansing products, a key plank of its Nigeria sales, a year ago.
GSK’s Nigeria affiliate also scaled back its business last year, shutting down the distribution of its own medicines and switching to third-party Nigerian companies. Germany’s Bayer and French giant Sanofi, which makes polio vaccines, have followed suit.
