PZ announces 27.9% drop in profit

PZ Cussons Nigeria Plc has declared a profit after tax of N2.787billion for the nine months ended February 28, 2015.

The figure represents a 27.91 per cent decline when compared to the N3.866billion PAT it recorded for the corresponding period of last year.

The company’s financial statements for the period, filed with the Nigerian Stock Exchange, showed that its profit before tax fell by 22.85 per cent from N5.174billion to N3.992billion

In the same vein, its basic earnings per share also fell by 27.91 per cent.

The company had grown its revenue by 0.56 per cent from N52.594 per cent to N52.889billion.

However, a 0.99 per cent rise in cost of sales and 7.34 per cent rise in distribution, administrative and other expenses neutralised the impact.

Cost of sales rose from N38.162billion to N38.542billion, while distribution, administrative and other expenses rose from N0.641billion to N10.349billion.

The Board of Directors, PZ Cussons Nigeria, has, however, declared an interim dividend of 20k per share.

The closure date for the dividend is March 30 to 31 and the date of payment is April 7, 2015.

Commenting on the company’s financial statement, analysts at FBN Capital Research said the dividend proposal implied a dividend yield of 0.78 per cent.

Analysing the company’s third quarter performance, they said, “While sales of N21.2billion were up by five per cent year-on-year, PBT came in flattish y/y and PAT of N1.2billion declined by around 14 per cent y/y. A mild gross margin contraction of nine basis points year on year to 27 per cent and a six per cent y/y rise in operational expenditure explain the flattish PBT.

They added that a higher tax rate of 34 per cent compared with 25 per cent in the corresponding period of 2014 weighed on PAT. Sequentially, sales, PBT and PAT were all up 28 per cent quarter-on-quarter, 92 per cent q/q and 71 per cent q/q, respectively.

“The q/q trend was mainly due to seasonality effects and as such is not surprising. Compared with our estimates, sales beat by 6.2 per cent while PBT and PAT missed by -3 per cent and -14 per cent respectively. On an annualised basis, sales, PBT and PAT came in behind consensus,” they said.

They, however, noted that the year-on-year topline improvement marked a turnaround in PZ’s fortunes as it represented the first in six quarters that the firm had recorded any meaningful growth in sales.

They said, “Although we cannot draw any significant conclusions at this time, we believe the improved topline may be a signal that the company might be achieving some success in its distribution and marketing strategies.

“We await management’s comments nonetheless. As to the near-term outlook, crude palm oil prices were flat during Q3 and are down by seven per cent quarter-to-date. These factors should ordinarily have a positive impact on the company’s operations.

“However, headwinds in the form of naira depreciation and continued security challenges are likely to offset these positives. As such, we expect consensus estimates to be revised downwards.”