PZ Cussons Nigeria reports first annual loss in years amid naira depreciation

PZ Cussons Nigeria posted its first annual loss since 2020 in the financial year ended 31 May 2024, according to its audited accounts released on Friday.

Details showed that loss after tax rose to N76 billion and foreign currency obligations soared to a record.

The Nigerian operation of the Manchester-based British consumer goods manufacturer PZ Cussons Plc took a hit from a surge of more than 3,000 per cent in its foreign exchange loss from N5 billion to N157.9 billion within the review period.

Nigeria is PZ Cussons’ biggest and most diverse single market, according to the company’s website.

The huge foreign exchange loss further compounds the financial difficulty of the maker of widely-used homecare and body care products like Morning Fresh, Canoe and Premier Cool, which fell into a negative asset position in the second quarter, when its shareholders’ fund turned negative at N23.2 billion.

That figure went 18.7 per cent higher in the period under review.

PZ Cussons Nigeria relies heavily on imports for its raw materials, and transactions with international trade partners, some of which it is indebted to. This increased its current liabilities to N119.3 billion from N94.7 billion a year earlier.

The decision by Nigeria’s monetary authorities to weaken the naira two times between last June and this January in order to bring the official exchange rate to parity with street rates and attract foreign investors caused the local currency to fall by around 70 per cent against the dollar.

The slide in the rate of converting naira to dollar up the payables of PZ Cussons Nigeria, which generates its revenue in naira but pays for most of its trade obligations in foreign currencies.

What it owes trade partners and which needs to be settled as soon as possible stands at N90.6 billion up from N79.9 billion a year ago.

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PwC, the independent auditor, was silent about commenting on the company’s financial position and did not raise any key audit issue in the financial report even though it is not yet clear what steps the company is taking to turn its negative asset position into positive.

“We have determined that there are no key audit matters to communicate in our report,” PwC said.

In March, the deal to fully take over PZ Cussons Nigeria by its parent company collapsed after British investors offered to buy the shares of minority stockholders at a price lower than the market price.

Revenue for the period climbed to N152.2 billion, one third higher than that of 2023. The company received a tax credit of N32.2 billion in contrast to last year when it incurred a tax liability of N6.1 billion.