PZ Cussons, the multinational consumer goods company and parent company of PZ Cussons Nigeria, has announced plans to sell either part or all of its African subsidiaries to interested buyers. This move comes as the company aims to reduce its exposure to the fluctuating Nigerian naira, which has devalued by 70% over the past year, significantly impacting its financial performance.
In its preliminary results for the year ending May 31, 2024, published on its website, PZ Cussons revealed that its board had received multiple expressions of interest in the sale of its African business.
The company noted, “Over the last 12 months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges.” It added that it had taken the first steps to refocus its portfolio to remain competitive and maximize shareholder value.
The depreciation of the naira has heavily affected PZ Cussons’ Nigerian subsidiaries. The company reported a foreign exchange loss of £107.5 million, stemming from the translation and settlement of USD-denominated liabilities in its Nigerian operations. These losses were directly tied to the naira’s significant drop between May 2023 and May 2024.
Amid these challenges, PZ Cussons has seen better fortunes in its UK Personal Care business, which reported a double-digit revenue growth in the past year.
Commenting on the potential sale of its African businesses, PZ Cussons stated, “We have received a number of expressions of interest for our African business,” noting that the quality of its brands and operations could lead to a partial or full sale.
In recent months, PZ Cussons has faced scrutiny over its operations in Nigeria. Earlier in 2023, the company expressed interest in buying out the remaining 26.73% minority shares in its Nigerian subsidiary. However, this attempt was blocked by the Securities and Exchange Commission (SEC), which rejected the proposed offer price of N21 per unit.
The company, which holds a 73.27% stake in PZ Cussons Nigeria Plc, has faced ongoing financial difficulties. It recorded a N94.78 billion loss in the third quarter of 2023/24, following a N74.14 billion loss in the previous quarter. The Nigerian subsidiary remains in a negative net asset position, with liabilities exceeding assets by N46.42 billion as the depreciation of the naira continues to strain its financials.
