PZ Cussons Nigeria’s Profit Collapses as Dollar Shortage Bites
PZ Cussons Nigeria Plc’s full-year profit more than halved as the soap-maker battled a scarcity of foreign exchange, soaring inflation and weaker consumer demand. Net income fell 53 percent in the 12 months ending May 31 to 2.13 billion Naira ($6.63 million), the Lagos-based company said in a statement published on the Nigerian Stock Exchange website. Revenue dropped 4.9 percent to 69.5 billion Naira.
“The business environment for the fast-moving consumer goods sector was extremely challenging,” Chairman Kolawole Jamodu said in the statement. Operating conditions were tough largely because of the global slump in the price of oil, on which Nigeria’s government depends for about 70 percent of revenue, and a shortage of dollars to pay for imports, he said.
Nigeria has been battered by the plunge in crude prices which have fallen more than 50 percent over the past two years, while capital controls imposed to stem the fall of the naira sent foreign investors fleeing. The International Monetary Fund forecasts the economy will shrink 1.8 percent this year, the first contraction since at least 1991. The inflation rate rose to 16.5 percent in June, the highest in almost 11 years.
The shares of PZ Cussons Nigeria, which is majority-owned by the Manchester, U.K.-based soap-maker, have fallen 39 percent in the past year. That compares with an 9 percent drop for the Nigerian stock exchange’s benchmark index.
The central bank’s decision to ease capital controls and devalue the naira on June 20 should improve conditions, Jamodu said. The currency has lost 39 percent of its value against the dollar since it was floated.
“The challenges still exist in the economy, however, we are optimistic that the flexible exchange rate policy introduced in June 2016 will result in improved prospects,” he said.