Imperial Leather owner PZ Cussons (PZC) has warned anticipated pre-tax profit will be at the bottom end of its previously-guided £80m to £85m range, triggering a 5.7% fall in the shares to 219.4p.
In a trading update for the year to 31 May, the personal goods manufacturer blames cost inflation exceeding wage growth, putting pressure on consumers’ buying power in Nigeria.
PZ Cussons had issued a profit warning in March after the same issues impacted milk sales in the country.
Higher oil prices have yet to benefit Nigeria’s economy, says the company.
In a further bout of bad news, PZ Cussons’ peak season uplift has failed to materialise as its volumes, prices and margins are lower in Nigeria.
These challenging conditions are expected to continue this year due to general elections in Nigeria and Indonesia.
UK REMAINS CHALLENGING
In the UK, consumers are still shopping more cautiously amid economic uncertainty, inflation and low wage growth.
This is impacting sales and profitability in the washing and bathing division, including the Carex and Original Source brands.
It appears even new product launches, despite being well received, cannot offset falling volumes and margins.
PZ Cussons hopes to revitalise its performance by optimising its operating model and speed up new product launches, as well improving its product portfolio in Nigeria.
JP Morgan Cazenove has reduced its adjusted pre-tax profit forecasts by 3.6% to £80.2m in 2018 and by 7.8% to £84.9m in 2019.
