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(Sharecast News) - PZ Cussons, the consumer products group behind brands like Carex and Imperial Leather, delivered a profit warning to shareholders on Wednesday and cut its interim dividend by nearly a half as a result of a significant slide in the Nigerian naira in the first half.
The naira is currently 70% weaker than it was a year ago, the biggest drop in the currency's history, PZ Cussons chief executive Jonathan Myers said in a statement, plummeting 30% since the end of PZ Cussons' first half on 2 December.
"As we set out in September 2023, macroeconomic developments in Nigeria would be the key determinant of the FY24 results. Whilst we continue to make good progress in managing this volatility, the further devaluation in recent weeks will inevitably impact our FY24 results," he said.
The company is now forecasting full-year adjusted operating profit at reported rates of exchange to be in the range of £55-60m for the 12 months to 31 May 2024, compared with consensus forecasts of around of £61.5-68.2m as of September. That's down from £73.3m the previous year.
Revenues in the first half slumped 17.8% or £59.8m to £277.1m, with £52.9m of that decline related solely to the devaluation of the naira. Like-for-like revenues, however, grew 2.2%.
The company has taken actions to increase prices "significantly" in Nigeria in response to the devaluation of the naira and corresponding increase in input costs, as well as increase the number of stores served.
PZ Cussons took an operating loss of £89.7m for the half, compared with a profit of £39.2m previously; but if currencies were constant it would have reported an operating profit of £30.6m, down just 7.8% on the year before.
Myers said the company was taking the "prudent step" to cut its dividend in light of the results, with half-year payout falling to just 1.5p per share, down from 2.67p previously.
