Emmanuel Ochayi
PZ Cussons, renowned for its brands like Carex and Imperial Leather, announced £88.2 million loss stemming from the devaluation of the Nigerian naira.
Jonathan Myers, the Chief Executive Officer, expressed grave concern, emphasizing the unprecedented 70% drop in the currency’s value over the past year.
Join our WhatsApp Channel“The most significant challenge we have faced by far has been the devaluation of the Nigerian naira, which is today around 70 per cent weaker than a year ago, representing the biggest drop in the currency’s history,” stated Myers.
This announcement was coupled with a profit warning to shareholders, signaling a cut in the interim dividend by nearly half. Myers justified this action as a “prudent step” in light of the company’s financial performance, highlighting the decision to reduce the half-year payout to just 1.5 pence per share, down from 2.67p previously.
“The devaluation of the Nigerian naira has had a significant impact on our financial results and comparisons to the prior year. The foreign exchange loss in the period was £88.2m and was wholly the result of the devaluation of the naira,” Myers added.
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The repercussions were evident in the company’s financials, with a reported operating loss of £89.7 million, primarily attributed to foreign exchange losses.
Furthermore, revenue witnessed a decline of 17.8%, amounting to £59.8 million, with £52.9 million attributable to the naira devaluation.
Despite proactive measures to mitigate volatility, including adjusting forecasted full-year operating profits to a range of £55-60 million for the fiscal year ending May 31, 2024, PZ Cussons remains apprehensive about future uncertainties.
The reliance on the Nigerian market, representing 35% of revenue and 22% of net assets for FY 2023, underscores the profound impact of the naira’s devaluation on the company’s financial health.
As PZ Cussons navigates through these turbulent waters, the broader implications of currency fluctuations on multinational corporations operating in Nigeria come under scrutiny. With the Central Bank of Nigeria striving to address economic challenges, the business landscape remains volatile, leaving companies like PZ Cussons at the mercy of exchange rate dynamics.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
