- Like-for-like sales growth accelerates
- Final dividend increased by 5%
- Medium-term sales and margin targets raised
Personal care group PZ Cussons (PZC) delivered a solid trading update for the year to May, including a small increase in the dividend, and raised its medium-term revenue growth and margin targets.
The shares advanced 1p to 196p against a soft market as investors awaited the latest rate hike by the Bank of England.
TURNAROUND COMPLETE
Considering the challenging conditions of the last 12 months and a strong performance the previous year, the firm still managed to eke out a 2.9% increase in like-for-like sales to £593 million.
Momentum has been improving steadily quarter by quarter with the March to May period seeing 7.1% like-for-like growth thanks to higher prices and a better product mix with only limited signs of an impact on volumes.
The company continues to invest in its core Must-Win Brands, with seven out of eight categories reporting organic growth, while at the same time it is streamlining its portfolio through the sale of non-core assets including some residential properties.
‘PZ Cussons has delivered a resilient performance over the past year through our strategy to invest in our brands, focusing on the core categories of Hygiene, Baby and Beauty, while significantly raising the bar on the way we operate’, said chief executive Jonathan Myers.
‘We have made good progress in addressing the legacy issues in our business and are now moving from Turnaround to Transformation’, he added.
RAISING THE BAR
Trading so far this financial year has been positive with organic sales up 6.7% driven by a continued improvement in prices and product mix.
Despite the ongoing challenges of cost inflation and weak consumer spending, the firm still expects results for the coming year to meet market expectations.
However, longer-term it sees organic sales growth in mid-single digits, exceeding its previous target, while the adjusted operating profit margin is seen rising to mid-teens against 11.5% last year.
Reflecting the board’s confidence in the outlook, the full year dividend has been raised by 5.1% to 6.4p which on top of the interim payment of 2.67p means a total payout of just over 9p per share, putting the stock on a yield of 4.6%.
