PZ Cussons has warned of lower annual profit as it cut its interim dividend, pressured by the devaluation of the Nigerian currency, sending shares in the soap maker to a 15-year low.
PZ Cussons expects an adjusted operating profit of £55 million (€64.35 million) to £60 million (€70.2 million) for the year to 31 May, down from £73.3 million (€85.74 million) last year.
Analysts as of last September expected an operating profit of £61.5 million (€71.8 million) to £68.2 million (€79.89 million), according to a company-provided consensus.
'Most Significant Challenge'
"The most significant challenge we have faced by far has been the devaluation of the Nigerian naira, which is today around 70% weaker than a year ago, representing the biggest drop in the currency's history," CEO Jonathan Myers said in a statement.
The naira exchange rate plunged to a record low against the dollar on the official market last Tuesday, sinking well below black market levels.
PZ Cussons, which counts Nigeria as one of its four major markets, said it aimed to conclude talks with minority shareholders of PZ Cussons Nigeria to take the business private by the end of the financial year.
The Manchester-based company announced an interim dividend of 1.5 pence (€0.0175) per share, down from 2.67 pence (€0.0313) a year earlier.
'Consumer goods firm PZ Cussons is constantly beset by problems with its Nigerian business, linked to the political instability in the country. The recent devaluation of the naira has seen that story play out once again and must be severely testing shareholders’ patience at this juncture, particularly given the savage cut to the dividend,' AJ Bell said in a comment.
'The decision to take full control of the Nigerian arm last year is now cast in a far less favourable light and questions may now be asked about the long-term future of this part of the business within the group. Nigeria has been a big contributor to PZ Cussons’ growth but its unpredictability has been a thorn in the side of the business for some time,' it noted.
News by Reuters, additional reporting by ESM.