Imperial Leather soap firm PZ Cussons PLC (LON:PZC) was the biggest FTSE 250 faller first thing after it posted a drop in first-half profits, hit by tough trading conditions in Australia, although its struggling Africa business saw some improvement.
In early morning trading, PZ Cussons shares were down 8%, or 27.1p to 309.4p.
The personal care and home products maker said its pretax profits dropped over 37% to £24.9mln for the six months to November 30, down from £40.0mln at the same stage a year earlier.
The figures included an £15.3mln exceptional charge relating to foreign exchange losses in Nigeria following the devaluation of the country’s currency, the naira.
PZ Cussons noted that liquidity in Nigeria remains "poor" as the exchange rate against the US dollar continues to weaken, but said its "diverse brand portfolio" is working well with product offerings at all price points catering for "a consumer under significant inflationary pressure".
The group’s chairwoman Caroline Silver said: "In Nigeria, consumers are faced with an almost doubling of costs for everything they have to buy and in this environment they turn strongly to brands that they know, love and trust.”
In the Asia division, PZ Cussons said it suffered tough trading conditions in Australia across all categories, but added that it hopes to improve performance in the second half with new product launches.
UK robust …
In Europe, PZ Cussons said it experienced a "robust" performance in the UK washing and bathing division thanks to new product launches in a challenging trading environment.
The company added that it plans "various mitigating actions" across the UK to counter higher costs resulting from the depreciation of sterling following the UK's vote to leave the European Union in June.
Silver said: "The strength and breadth of the group's product portfolio has allowed us to hold or grow the share of our brands in our main markets and product categories.
“We intend to reinforce this in the second half of the financial year with a number of major launches and relaunches taking place.”
She added that the group’s performance since the period-end has been in line with expectations.
Recovery hopes …
In a note to clients, Investec Securities analyst Nicola Mallard said: “A solid 1H, with improved profits from Africa and maintained profits in Europe but lower returns reported in the fiercely competitive Australian market.
“The group hopes to recover some lost ground in Asia in 2H, but the full year outcome still has some reliance on the (2H weighted) African division.”
Investec repeated a ‘buy’ rating and 394p share target price on PZ Cussons.