PZ Cussons PLC's (LSE:PZC) share price fell after it highlighted the potential impact on revenue and profits from the devaluation of the naira in Nigeria.
The maker of Carex and St Tropez explained that every 10% devaluation in the Naira is estimated to result in a £23mln reduction in revenue, £3mln reduction in adjusted operating profit, and a 0.5p reduction in adjusted earnings per share.
The company said it welcomed moves in Nigeria to liberalise the foreign exchange regime although it said the resulting devaluation of the naira would result in a one-off hit.
“Management believes that the group will be well placed to withstand any macro-economic volatility in Nigeria given our market position and the significant improvement in the profitability of our business there in recent years,” the company added.
Analysts at Shore Capital described the naira devaluation as "a sting in the tail," adding that they would place their financial 2024 forecasts "under review for a downward revision to reflect the devaluation and management guidance."
The broker also placed its 'hold' rating for PZ Cussons stock under review.
For the current financial year, PZ Cussons forecast adjusted pre-tax profit for the year to May 31, 2023, of at least £70mln, reflecting a particularly strong fourth quarter performance in Africa, above a company compiled consensus of £68.4mln.
Like-for-like revenue in the financial fourth quarter grew 6.7%, resulting in annual growth of 6.1%.
Group revenue for the year is forecast to be around £655mln with like-for-like growth in each geographic region in the fourth quarter.
PZ Cussons shares fell 5.0% to 166.69p.