PZ Cussons Sees FY Profits Up, Boosted By Hygiene Product Sales
PZ Cussons has reported an 11% gain in adjusted profit before tax in its most recent financial year, boosted by increased sales of hygiene products during the pandemic.
The company, which produces Imperial Leather soap, reported profit before tax of £68.6 million (€79.9 million) in the full-year period to 31 May, it said, up from £61.8 million (€71.9 million) last year.
Revenue Up Across The Board
Organic revenue grew 7.1%, to £603.3 million (€702.4 million), with the business seeing sales up in 'all geographic regions', as well as in its core categories of Hygiene, Baby and Beauty.
Its Must Win Brands portfolio, which includes brands such as Carex and St Tropez, saw growth of 11% in the financial year, with Carex seeing its revenue double over the past two years due to the increased size of the hand hygiene category in the UK, in which the brand is a market leader.
"FY21 represents the first year of our new strategy and the journey to turn around the business," commented Jonathan Myers, chief executive. "With the return to top and bottom line growth on an adjusted basis and tangible progress on key elements of the strategy, we are pleased with the initial progress made, while recognising that we have much more to do.
"The revenue momentum was broad-based, with all but one of our Must Win Brands and all of our regions in growth. We were able to demonstrate improved levels of profitability and significantly step up investments in marketing activity and commercial capabilities as we set out to be a business that builds stronger brands and serves more consumers."
Correct Strategy Going Forward
Myers added that he believed the group's performance over the full year indicated that its current strategy was the right one in order to drive future growth.
"We continue to work hard at executing the strategy: sustaining marketing investment behind our brands; simplifying the business; building capabilities; and evolving our culture," he added.
Along with its full-year performance, PZ Cussons also issued a first-quarter trading update, in which it saw first quarter revenue drop 9%, due to tough comparatives.
It said that its quarterly performance was up 13% compared to the same period two years ago, however, while Must Win Brands saw revenue up 23% compared to the corresponding period in 2019.
Commenting on the group's performance, Russ Mould of AJ Bell said, “A year ago, the consensus view was that COVID was so devastating to the world that it taught people the importance of washing their hands more often to reduce the spread of germs. Soap and hand gel sellers looked as if they would be sitting pretty for years ahead.
“Reality has now hit home with a sharp fall in year-on-year sales for one of the UK’s best known hand gel products, Carex. To be fair, its owner PZ Cussons had a high hurdle to beat, given how the year-on-year comparative period saw an unprecedented surge in sales.
“Fast forward to the start of its new financial year and there are pressures across the board, principally tough comparative figures to beat, significant cost inflation and ongoing disruptions to supply chains.
“The company says it should still hit earnings forecasts if life doesn’t get worse, but the sharp decline in its share price in response to the trading update would suggest that investors don’t believe it will hit those estimates.”