- PZ Cussons Plc plans to sell its Nigerian and other African subsidiaries over 70 per cent naira depreciation
- The parent company had requested to buy out the remaining shares of the subsidiary and delist from the Nigerian Exchange
- PZ Cussons Nigeria has continued to suffer losses and currently has a negative net asset position
PZ Cussons Plc, the parent company of PZ Cussons Nigeria, plans to sell its Nigerian and other African subsidiaries due to the naira devaluation.
In its preliminary results for the year ended May 31, 2024, published on its website, the company said its business in Nigeria is confronted with fluctuations in the foreign exchange market with the naira ending the first half (H1) of the year as one of the worst-perfoming currencies.
In H1 2024, the currency depreciated to 40 per cent, a figure PZ Cussons says has increased to 70 per cent depreciation.
In contrast, the company said revenue in its UK Personal Care business has significantly improved to a year of profitable, double-digit revenue growth.
It said, “Over the last 12 months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges.
“At the same time, we have taken the important first steps to transform our business and maximise shareholder value, by refocusing our portfolio on where we can be most competitive.
“The period was marked by a 70 per cent devaluation of the Nigerian naira, which has had significant implications on our reported financials. We have worked hard to mitigate the impact of this on the group while continuing to serve Nigerian consumers who are facing unprecedented inflation and economic difficulties.”
It added that a foreign exchange loss of £107.5 million “primarily arose from the translation and settlement of USD denominated liabilities in our Nigerian subsidiaries and is wholly the result of the devaluation of the naira, which fell by 70 per cent from May 31, 2023, to May 31, 2024.”
‘There are huge interests for our African business’
The company noted that it has received multiple interests concerning the partial or full sale of its African business, which it said reflects the company’s potential.
It said, “The favourable trends of the second half of FY24 have continued into the new financial year. We are progressing with our plans to sell St. Tropez and have received a number of expressions of interest for our African business and the potential of our brands and people, which could lead to a partial or full sale.
“Against this backdrop, we remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth.”
Parent company’s request to buy out Nigerian subsidiary was rejected by SEC
Recall that in September 2023, PZ Cussons had requested to buy out the minority-held 26.73 per cent shares in its Nigerian subsidiary, PZ Cussons Nigeria, at a N21 per unit price and delist from the Nigerian Stock Exchange (NSE).
The company said the aim was to salvage the subsidiary from the losses suffered due to the naira depreciation in Nigeria.
However, the Securities and Exchange Commission (SEC) declined the Multinational's ‘No Objection’ request in March 2024.
Reacting to the SEC's rejection of the company’s request, the Chief Executive Officer of PZ Cussons, Jonathan Myers, said the company was reviewing its brands and geographies over macroeconomic challenges and complexities in Nigeria.
The parent body of PZ Cussons Nigeria holds a 73.27 per cent stake in its Nigerian subsidiary as of May 31, representing 2.90 billion shares worth N45.53 billion as of September 18.
PZ Cussons Nigeria has suffered continued losses
PZ Cussons Nigeria has been struggling to stay afloat following its continued losses over the past few years. In the Q3 of the 2023/2024 financial year, the subsidiary suffered a net loss of N96.4 billion, despite a revenue increase to N152.24 billion. It is also a significant decline compared to the N11.213 billion it gained in the corresponding quarter of 2022.
The Q2 2024 also saw the company losing N74.14 billion and has remained in the negative net asset position as liabilities are more than assets by N46.420 billion.
10 companies that have exited Nigeria in the last 2 years
Meanwhile, TheRadar reported that due to economic instability in Nigeria, many businesses have exited the country, adding to the unemployment statistics and the burden of Nigerians’ daily lives.
TheRadar spotlights 10 companies that have left Nigeria in the last two years.
