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(Alliance News) - Consumer goods firm PZ Cussons said Thursday that challenging market conditions in some of its geographies led to a decline in first half revenue and operating profit, as it also announced the departure of long-standing chief executive.
In Europe & the Americas, whilst Imperial Leather soap and shower gel brand Original Source continued to grow market share, continuing consumer uncertainty and "well-documented challenges" in the UK high street hit revenue and profit.
Revenue in Africa declined due to weakness in its mass market Home and Personal Care brands offsetting strong growth in Electricals. Profitability, meanwhile, struggled amid consumer pricing pressure.
"A stronger second half is expected subject to no further worsening of the economic and trading environments across our key geographies. Full-year revenue and adjusted profit before tax is expected to be modestly below the prior year on a like-for-like basis," said PZ Cussons.
Chief Executive Alex Kanellis will step down at the end of January. Kanellis has been CEO of PZ Cussons since 2006, and has overseen "significant development" at the company, it said. A search for his successor has started, and the process should be completed in the first half of 2020.
"During his 13 year tenure as chief executive officer, Alex has led numerous initiatives which have shaped the business, including the acquisition of the brands which now underpin the group's growth and future potential. The group is now ready to move onto the next chapter under new leadership and we are confident that the opportunities to return to profitable growth are significant," said Chair Caroline Silver, who will become executive chair from February 1.
PZ Cussons shares were down 2.2% in early trade Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.2% at 7,233.52
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Hang Seng: up 1.3% at 26,983.18
Nikkei 225: closed up 0.1% at 23,424.81
DJIA: closed up 29.58 points, 0.1%, at 27,911.30
S&P 500: closed up 0.3% at 3,141.63
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GBP: up at USD1.3220 (USD1.3177)
EUR: up at USD1.1137 (USD1.1088)
Gold: up at USD1,473.59 per ounce (USD1,471.82)
Oil (Brent): up at USD63.94 a barrel (USD63.02)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
UK general election polling day
1100 GMT Ireland consumer price index
1000 CET Germany Ifo economic forecast winter report
1000 CET France IEA oil market report
1100 CET EU industrial production
1200 CET France OECD quarterly national accounts G20 GDP growth
1345 CET EU ECB interest rate decision
1430 CET EU press conference with ECB President Christine Lagarde
0830 EST US producer price index
0830 EST US initial jobless claims
0945 EST US Bloomberg consumer comfort index
1030 EST US EIA weekly natural gas storage report
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Polling stations have opened across the UK for the third general election since 2015. Polling stations are open from 7am to 10pm, with results expected from the early hours of Friday. Prime Minister Boris Johnson, who gambled his premiership by triggering the vote, has sought to focus on his pledge to "get Brexit done" throughout the campaign. Labour leader Jeremy Corbyn, his rival in the race to Number 10, has instead tried to highlight his party's credentials on the health service and other domestic issues. Johnson is expected to cast his vote in Westminster early Thursday morning while Corbyn will vote in Islington. The polls have narrowed in the final week of what has largely been a tame campaign – with few gaffes and many stage-managed visits. Currency markets will be awaiting the first exit poll results at 2200 GMT Thursday.
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Expectations that UK house sales will increase in the coming year are at their strongest level since 2017, surveyors have reported. Political uncertainty has been stifling the housing market – but transactions and prices in the housing market are expected to pick up in the coming 12 months, the Royal Institution of Chartered Surveyors said. The market has been on hold, pending the outcome of Thursday's General Election, with demand from prospective buyers, new instructions to sell, and sales all dwindling in November, according to Rics' latest report.
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The US Federal Reserve kept its key lending rate unchanged on Wednesday but said it will turn its sights to low inflation and developments in the world economy. That was a signal that central bankers, who have repeatedly pledged to change course if needed, are monitoring the global slowdown and persistent absence of price pressures, which could open the door to further rate moves. At its final meeting of 2019, the Fed's policy-setting Federal Open Market Committee left the benchmark interest rate in the target range of 1.5-1.75%, as expected, where it has been since the third rate cut of the year in October. The vote this time was unanimous, following several meetings where one or more FOMC members dissented.
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The US House of Representatives passed a USD738 billion defence spending bill on Wednesday that includes the approval of sanctions against two Russian natural gas pipeline projects meant to carry Russian gas to Germany and Turkey. Sanctions on the projects are likely to strain tensions with Germany and Turkey. The US argues that pipelines will make Europe dependent on Russian energy, posing a national security threat. According to the bill, the Nord Stream 2 pipeline - a massive energy project that will transport Russian fuel through the Baltic Sea and into Germany - is a "tool of coercion and political leverage" that would weaken US ties to Germany and Europe. The bill imposes sanctions on vessels engaged in pipe-laying for the two projects - Nord Stream 2 and Turkstream - or foreign persons that assist the vessels.
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German inflation was as forecast in November, with the annual rate stable on the month before, official data showed. The consumer price index for November rose 1.1% year-on-year, while prices were down 0.8% on the previous month. These readings confirmed the provisional result, and the annual rate was in line with that seen in October. On a monthly basis, prices had risen 0.1% in October. The harmonised index of consumer prices - calculated for the European Central Bank - was up 1.2% year-on-year but down 0.8% on the previous month. These readings were both in line with provisional figures.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES EASYJET PRICE TARGET TO 1540 (1150) PENCE - 'HOLD'
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DEUTSCHE BANK RAISES RYANAIR TO 'BUY' (HOLD) - PRICE TARGET 16.5 (13.5) EUR
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JPMORGAN RAISES SYNTHOMER TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 300 (375) PENCE
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COMPANIES - FTSE 100
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Ocado said its joint venture with Marks & Spencer saw sales growth over the past 13 weeks. For the period to December 1, Ocado Retail revenue was up 11% to GBP429.1 million, with average orders up 10% and the average order size stable at GBP104.9. Ocado said it has completed its range review, confirming that M&S has substitutes at the same price or lower, and of the same quality or better, for the majority of products currently supplied by Waitrose. "I am pleased to report further progress in bringing the Ocado offer to an ever increasing number of customers in the UK. Another strong quarter for customer orders means that we remain the fastest growing grocer in the country. The collaboration between M&S and Ocado Group is working well," said Ocado Retail Chief Executive Melanie Smith.
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COMPANIES - FTSE 250
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Dixons Carphone said it had a "robust" first half as its loss narrowed. Revenue for the 26 weeks to October 26 totalled GBP4.71 billion, down from GBP4.89 billion a year ago. However, the company narrowed its pretax loss to GBP86 million from GBP440 million a year ago, after taking just GBP110 million in adjusting items for the recent period versus GBP500 million a year ago. Adjusted pretax profit of GBP24 million was sharply lower than the GBP60 million recorded a year prior. As previously guided, this is expected to be around GBP210 million for the full-year. Like-for-like sales fell 1% in the period, dragged down by UK & Ireland mobile, down 10%. "We're on track to deliver what we promised this year, and with our longer-term transformation. In a tough UK Electricals market, we've gained significant share...Mobile is challenging as expected. As promised, this will be the trough year for Mobile losses, and it will be break-even by 2022," said Chief Executive Alex Baldock.
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Outsourcing firm Serco said it has seen strong revenue growth in 2019, particularly in the second half, with profit for the full year expected to show a solid increase. Revenue for 2019 is expected to grow around 14% to GBP3.2 billion, comprising 7% organic growth and 5% from acquisitions, with 2% coming from currency benefits. Underlying trading profit is forecast to grow by 30% to around GBP120 million. In the previous year, revenue had totalled GBP2.8 billion and underlying trading profit GBP93 million. This momentum is set to continue in 2020, with revenue expected around GBP3.4 billion to GBP3.5 billion, and underlying trading profit to increase around 20% to GBP145 million.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Superdry reported a swing to interim loss as revenue slipped amid a "year of reset". Revenue was down 11% to GBP369.1 million in the six months to October 26, while the company swung to a pretax loss of GBP4.2 million from a GBP26.4 million profit a year ago. The fall in sales reflected an expected "year of reset" as the clothing retailer addresses legacy issues. The decline in retail sales moderated over the half, with second quarter store revenue stronger than the first three months as "key initiatives" were implemented. Superdry has seen an "encouraging" early start to third-quarter peak trading, with the strongest online Black Friday day ever, it said.
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COMPANIES - INTERNATIONAL
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Workers at Fiat Chrysler Automobiles in the US approved a new labour contract on Wednesday that includes a USD9,000 signing bonus, completing a volatile season of contract negotiations among Detroit's "Big Three". The United Auto Workers announced that the 2019 collective bargaining agreement won 71% of the vote. Besides the signing bonus, the agreement includes wage increases, a commitment of USD4.5 billion in new plant investment, a pathway to permanent work status for temporary workers and limits on out-of-pocket health care costs, the UAW said. Ford and General Motors have already ratified their accords with the union – GM only after a paralyzing 40-day strike.
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Thursday's Shareholder Meetings
Gfinity
Zinc Media
Fidelity Special Values
Botswana Diamonds
Ashoka India
Lok'nStore Group
Orchard Funding
Bacanora Lithium
Volution Group
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By Tom Waite; thomaslwaite@alliancenews.com
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