A leading industry analyst has that the latest results from PZ Cussons are an indication of the efforts being made by recently-appointed CEO Jonathan Myers to "clean up the mess" left behind by predecessors.
Russ Mould of AJ Bell was commenting following the publication of the Imperial Leather owner's half-year results this week, in which it reported a 14.6% increase in revenue from continuing operations (at constant currency), while adjusted profit before tax was up 18.7%.
“The latest update from consumer goods firm PZ Cussons suggests recently appointed chief executive Jonathan Myers’ strategy is already starting to bear fruit," Mould wrote in a briefing note.
“What Myers is attempting isn’t rocket science. He’s simply trying to clean up the mess left by several predecessors by focusing investment on key brands like Carex, the UK’s number one hand wash; Imperial Leather soap-to-shower gel; and tanning product St Tropez."
As Mould noted, the COVID-19 crisis has boosted demand for hygiene products, and the trend towards strict hygiene and regular hand washing is likely to remain a legacy of the pandemic long after the virus subsides.
“Despite this boost, and the double-digit increase in first half revenue it helped deliver, it has not all been plain sailing. Like many businesses, PZ Cussons has incurred coronavirus-linked costs.
“These extra costs and the uncertain environment help explain why the dividend is unchanged despite a material improvement in the balance sheet.
“A big challenge for the company in recent years has been the poor performance of its Nigerian business. It has regularly racked up losses thanks to the devaluation of the naira currency, in-country turmoil and a volatile supply chain."
According to Mould, CEO Myers "clearly believes the prize in Nigeria and Africa more widely is still worth chasing", but this might go against the former Kellogg's executives efforts to 'simplify' the business.
"[He] has completed stage one of a review of basics like its portfolio of products, route to market and organisational structure," Mould said.
“The demographic and economic developments in Nigeria suggests there is significant long-term potential but the same could have been said at any point in the last five or 10 years and it has not be delivered on yet.”
Myers was appointed chief executive of PZ Cussons in May 2020, following the departure of Alex Kanellis. As well as Kellogg's, he also worked at Avon Products, where he held the role of chief operating officer.
Announcing that the company had seen 'renewed momentum' in the first half of its financial year, Myers noted this week, "Our focus in the first half of this year has been to deliver a fast start for the business, with emphasis on profitable revenue growth as well as maintaining our strong balance sheet discipline.
"We saw this as essential to reset both in terms of organisational pace and agility to adapt to changing consumer and shopper habits."
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