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PZ Cussons declares smaller dividend for past year and reveals strong first quarter

“We are currently in a process to examine and evolve our strategy to deliver sustainable top line growth and improved operating margin,” said CEO Jonathan Myers

PZ Cussons -
A familiar sight in 2020

PZ Cussons PLC (LON:PZC) has reported a strong first-quarter trading performance and declared a smaller, “more sustainable” dividend alongside full-year results that showed profits down by a third.

The FTSE 250-listed consumer goods group reported revenue of £587.2mln for the year to May 31, 2020, a dip of 2.6% that was blamed on a challenging Nigerian economy and a mixed impact from the coronavirus (COVID-19) pandemic on the business.

There was strong growth in Europe and the Americas, with good growth in personal care partially offset by a COVID-19 related decline for beauty products, while Imperial Leather and Original Source were hit by capacity constraints but Carex hand wash benefited from high demand in the final quarter.

Adjusted profit before tax fell 14.5% to £62mln, reflecting losses in Nigeria, lower profits in Australia, the decline in beauty and offsetting excellent results in the UK and Indonesia and a lower interest charge.

Reported profit before tax fell 32.8% to £29.3mln as there was a non-cash impairment for its five:am organic yoghurt brand and Rafferty's Garden infant food, offsetting profits on the disposal of Greek operations and Polish brands.

A full-year dividend of 5.8p, down from 8.28p a year ago, was declared “to enable a more sustainable level and provide the capacity for investment in our key brands and in new opportunities such as hygiene amid COVID-19 related uncertainty”.

In a separate trading update for the first three months of its new financial year, to August 31 2020, Cussons said revenue was up 23% amid strong demand for hygiene brands, continued strong performances in the UK and Indonesia, plus a recovery in Australia, Nigeria and beauty.

In the results statement, PZ Cussons chief executive Jonathan Myers said: “In the second quarter we plan to increase investment further in building our brands and capabilities.  We are currently in a process to examine and evolve our strategy to deliver sustainable top-line growth and improved operating margin.”

But he acknowledged that with many of the economies in which the company operates moving into recession, continuing uncertainty of the COVID-19 pandemic and a competitive market, “it remains very difficult to forecast and give guidance [but] we expect some adverse headwinds for the rest of the year following this good start”.

Quick facts: PZ Cussons

Price: 240 GBX

LSE:PZC
Market: LSE
Market Cap: £1.03 billion
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