Cosmetics and soap maker PZ Cussons PLC (LON:PZC) has warned of a sharp fall in annual profit as problems persist in its all-important Nigerian market.
The FTSE 250 group, which makes Imperial Leather soap and Carex handwash, expects pre-tax profit for the year ending 31 May to be around £70.0mln – down from £80.1mln a year earlier and below analyst forecasts of £80.4mln.
READ: UK and Europe offset weak Nigerian performance for PZ Cussons
Africa, which accounts for more than a third of revenues, continues to be the problem, particularly Nigeria, where a weakening consumer backdrop has hit demand and margins – a trend which is unlikely to end any time soon.
On top of this, the company has had issues getting its products through port authorities, it thinks the disruption will cost it £5.5mln this year.
PZ Cussons told investors on Tuesday that adjusted operating profit in Africa dived by 71% in the first half of the year to £1.2mln (H1 17/18: £4.1mln).
Improved performances in Europe and Asia offset some of the fall in Africa, but group profits still fell 3.8% in the opening six months of the year to £35.4mln (H1 17/18: £36.8mln). Revenue fell 10.4% to £335.1mln.
Demand to remain subdued
“The group continues to make pleasing progress in Europe and Asia, with new product development and increased support across our key brands delivering positive momentum,” said chair Caroline Silver.
“Disappointingly, however, the macroeconomic conditions in Nigeria remain extremely challenging and continue to have a significant negative impact on overall group performance.”
She added: “We anticipate that consumer demand in all our key markets will remain subdued.”
PZ Cussons shares plunged by 11.2% to 186.1p early Tuesday.