Nigeria is the company’s biggest single market, however the shampoo market has warned that ongoing social unrest in the country will have a ‘significant’ impact upon its’ full year results, which will be ‘some way below expectations’.
As a result, Shore Capital has downgraded its 2012F and 2013F EPS forecasts by 15 per cent and 20 per cent respectively; the third downgrade in the space of four months.
Unrest in Nigeria
“After a downgrade to forecasts at the interim results, due to the impact of the national strike in January, PZC has been forced to further lower expectations after additional challenges in both revenues and the cost base,” said the UK-based firm.
“Revenue growth has been adversely impacted by the ongoing social unrest in northern Nigeria, whilst consumer demand has been materially weakened by the removal of the fuel subsidy on 1st January 2012 – the combined effect of which has slowed sales growth from the +20 per cent organic growth delivered in H1 to a flat performance in H2 to date.”
The combined effect has led PZ Cussons to downgrade its 2011/12 African EBIT estimate by a further 37 per cent to £28m (€33m) from £44.2m.
Elsewhere on the up
Despite the troubles in Nigeria, trading in the UK is reported to be in line with expectations, with activity in the core personal wash category said to be ‘robust’ and new product launches well received despite the challenging trading conditions and ongoing high levels of promotional participation.
Beauty is reported to have ‘performed well’, also supported by new product launches, whilst the integration of Fudge (acquired in January) is reportedly on schedule.
Momentum in Indonesia has also continued at prevailing levels with both sales and profits said to be ahead in the period, whilst management reported progress in the recovery in Australia, with expectations that the group as a whole will return to profitable growth in the next financial year.