PZ Cussons Reports Mixed H1 Results, Maintains FY25 Outlook
Why we think this is neutral
PZ Cussons' interim results present a mixed picture. While the company achieved solid like-for-like revenue growth of 2% in its priority markets and maintained its full-year profit expectations, it faced significant headwinds from the Nigerian Naira depreciation. The 10% reported revenue decline and 24.1% drop in profit before tax are concerning, but these are largely attributed to currency effects rather than underlying business performance. The company's strategic focus on key markets and ongoing portfolio transformation initiatives demonstrate proactive management, but the full benefits are yet to be realized. The reduction in leverage and improved free cash flow are positive indicators of financial health, balancing out some of the negative impacts from currency fluctuations.
Key Points
- Revenue declined 10.0% to £249.3 million, but like-for-like growth was 7.1%
- Adjusted operating profit decreased 11.8% to £27.0 million
- Profit before tax fell 24.1% to £19.8 million
- Free cash flow improved to £22.7 million from £20.0 million in H1 FY24
- Gross debt reduced by £14 million to £153 million
- Interim dividend maintained at 1.50p per share
- On track to meet FY25 profit expectations
- Strong performance in UK, with Sanctuary Spa revenue up double-digits
- Third consecutive quarter of revenue growth in Indonesia
- Market share gains in ANZ despite category softness
- Progressing with portfolio transformation plans for Africa business and St. Tropez brand
Summary
PZ Cussons' H1 FY25 results reveal a complex financial picture. The company reported a 10% revenue decline to £249.3 million, primarily due to the Nigerian Naira depreciation. However, it achieved solid like-for-like revenue growth of 2% in its priority markets of UK, Indonesia, and ANZ. Adjusted operating profit fell by 11.8% to £27.0 million, with margin slightly decreasing to 10.8%. Despite these challenges, PZ Cussons maintained its FY25 profit guidance, demonstrating confidence in its strategic direction. The company is progressing with its portfolio transformation, focusing on unlocking value in its Africa business and St. Tropez brand. Free cash flow improved to £22.7 million, and gross debt was reduced by £14 million, indicating strengthening financial management. The interim dividend was maintained at 1.50p per share. Looking ahead, PZ Cussons expects to benefit from its strengthened brand-building capabilities and innovation pipeline, particularly in key markets like Indonesia's baby care sector. While currency volatility remains a concern, the company's focus on operational improvements and strategic realignment suggests potential for future growth.