Despite its public repudiation of insinuations that it may soon be exiting the Nigerian market, PZ Cussons, a leading player in the Consumer Goods sector of the Nigerian economy, is finding it difficult getting its audience to believe it.
Since the story broke at the end of the year that the global multinational conglomerate with tentacles in Africa, Asia, Europe, Australia and North America, may be considering pulling out of the Nigerian market on account of ‘difficult operating conditions,’ the spokespersons of the firm which has operated in Nigeria in the past 120 years have not rested.
In a chat with Business Hallmark, Tahir Mohammed, General Manager, External and Regulatory Affairs at PZ Cussons Nigeria, insisted (for the umpteenth time) that there was actually no truth in the rumour:
‘It is not true. We are here and remaining here. Yu can send your people around. Let them go to our production centres at Aba and Ikorodu. All of our factories are working. Our plants are open. We have been here for years. And we are remaining here. We are not going anywhere.’
Mohammed’s distress on the subject is understandable. But so also are the concerns of Nigerians. A decade ago, the long established dominant tyre manufacturer in the country, Dunlop Plc seemed to be a permanent fixture on the Nigerian business firmament. It had been a pioneer its field and an old hand at that, having been listed on the Nigerian Stock Exchange in 1961. Not so today. And its exit had actually begun as a rumour – that was equally repudiated! But then it shortly after its 2008 AGM began to scale down its operations. Six months later it closed shop.
But Mohammed has additional reasons why his organisation should be believed over its insistence that there is no Dunlop fate for it:
‘The PZ Nigeria business is extremely very important to the group. It is the biggest in Africa and is most treasured. To spin it then would therefore be like cutting your face to spite your nose. That would not be a wise thing to do and we cannot do it.’
For good measure, Mohammed is not the only PZ Cussons Nigeria official who is responding to the rumour. Indeed, his defence of the brand is a restatement, and an elaboration upon an earlier official note from the company in response to the exit rumour.
In that correspondence which was entitled ‘PZ Cussons is not leaving Nigeria’ and signed by Christos Giannopoulos, Chief Executive Officer, CEO, PZ Cussons Nigeria PLC, the firm had stated:
“It has come to our notice that a headline is circulating within social media claiming that ‘PZ Cussons is leaving Nigeria as a result of the tough condition’. This headline is totally false and misleading and creates the impression that PZ has decided to leave Nigeria.”
Bringing perspective to the matter, Giannopoulos tried to put the ‘contentious statement’ that the PZ Cussons Group had filed at the London Stock Exchange and which was the primary fuel for the speculative reports that followed in better light:’
“The trading statement issued to the London Stock Exchange was clear on our continued operations in Nigeria: ‘Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market.”
He also made another point to further confirm the company’s firm commitment to continuing to do business in Nigeria:
“This year 2019, we are celebrating 120 years of PZ Cussons making life better and adding value to Nigerians. In our 120 years of doing business in Nigeria, we have faced different conditions and come out stronger at the end.
“We confirm to our consumers, customers, employees, business partners and stakeholders that Nigeria still remains a market of interest for us and have made no plans to leave Nigeria. Our factories in Ikorodu, Aba and all our distribution centres around the country are operational and will continue to be,” the statement from the CEO concluded.
But if PZ Cussons is not preparing to exit the Nigerian market, what exactly has been its body language in recent times as to suggest to those who got that impression in the first place that this could indeed be what was going on.
Without as much as giving away anything concrete on this, Mohammed says:
‘Of course streamlining product lines is a normal thing in a business of our type. As you know, there are issues of product life cycles and it is incumbent on organisations then to constantly review product performance and make adjustments as is necessary.’
But is it that simple?
Business Hallmark checks confirm that the Greece and British-originating manufacturer of family, healthcare, wellness and consumer goods and products has like many other businesses operating in the country been contending with the negative economic headwinds that has been the lot of the national economy in recent years.
This much was attested to by PZ Cussons Nigeria Chairman, Kolawole Jamodu in his remarks contained in the 2018 Annual Report of the firm. And it is also the same scenario that was captured in PZ Cusson’s Group half-year report that was published on the London Stock Exchange on January 29 and in which comments were made linking the state of performance with the weak state of its affair in the Nigerian market. Of critical note is the point made that the overall economic conditions in the country had led to low consumer disposable income and therefore impacted on the company’s capacity to post even better operational results.
A glimpse into the numbers would add flesh to this position. In the 2018 business year, total revenue was only able to grow from the 2017 position of N78.2billion to N80.55billion, representing a 3 per cent growth. Beyond this point however, a closer look at some of the other numbers would give a possible hint as to why players at the Group level may not be feeling very pleased with the contribution of the Nigerian business to its bottom line as evidenced in the LSE statement.
On this score, it is appropriate to note that Operating Profit dropped from N13.2billion in 2017 to N8.2billion in 2018 while final dividend equally declined from 50kobo to 15 kobo.
Another significant but equally not-very-impressive posting had to do with the Profit before Tax position which dropped from N4.8billion in 2017 to N2.3billion in 2018. Similarly the workforce shrank from 1,587 employees to 1,318 employees.
However, in a world where people yet invest for real accruable gains, about the most critical touchy point for group stakeholders may reside in the fact that the ‘profit attributable to equity holders of parent company’ in the 2018 financial year had also dropped to N1.8b from the N3.3billion that they had received in 2017, representing a 44 per cent shave!
Irrespective of this seeming state of unease, the tone from the Board and Management of PZ Cussons Nigeria is that they are most determined to soldier on.
While not discountenancing the economic conditions within which it is operating the company is therefore reaffirming that it has simply not, and would not take any decision to exit the market at this point in time.
‘We have been in Nigeria for a long time and experienced different seasons and cycles. We have had good times and not too good times. And it is our intention to continue to weather the storms,’ Mohammed said.
This is in line with the view of his CEO who says: “We will be celebrating120 years of making life better and adding value to Nigeria this year. In our 120 years of doing business in Nigeria, we have faced different conditions and come out stronger at the end of each phase,” it said.
The PZ brand was established in 1884 when the duo of George Paterson and George Zochonis set up a trading post first in Sierra Leone to trade in goods between West Africa and the UK.
After 15 years of working the route, Paterson and Zochonis opened its first branch office in Nigeria and grew it over time into a massive operation that would later become the flagship market and operation of the organisation. It was from here that the business was to grow astronomically and expand into other parts of Africa, Europe, Asia, Australia and North America.
Local manufacturing operations of the company in Nigeria began shortly after the Second World War with the opening of PZ’s first soap factory in the country in 1948.
By 1953, PZ took its operations a notch higher when it listed on the London Stock Exchange. It then went on in the next decade and a half to also set up a manufacturing base in Ghana.
With the oil boom providing even more fillip for the emergent Nigerian middle class to engage more vigorously in the patronage of consumer household goods in the decade of the 1970s, PZ rode on this opening to immerse itself in the detergent and refrigerator market. It was also at this time that it acquired the Greek food business Minerva, the UK company Cussons, and added the leading household soap brand, Imperial Leather to its products repertoire.
Not done, it moved on in the 1980s and 1990s to purchase its first soap factory in Kenya while also establishing operations in Thailand, Indonesia and Poland.
More recently, the company has continues to explore openings in the business to supplement and beef up its global operations, including carrying out an upgrade of its personal and homecare manufacturing plants in Africa’s most populous nation.
In 2002, Paterson Zochonis Plc was renamed PZ Cussons Plc.
Still on the products arena, in 2003, PZ Cussons began the manufacturing of the now popular milk product, Nutricima. This was via a joint venture with Glanbia Plc and the immediate goal was to supply evaporated milk and milk powder in Nigeria.
In 2010, it established PZ Wilmer, a joint venture with Wilmar International, building a palm oil refinery in Nigeria and establishing a food ingredients business.
To be sure, PZ Cussons Nigeria has a most impressive range of products in the market.
In the electricals segment, it has the Haier Thermocool refrigerators, generators and TEC.
The company is also associated with fast-moving consumer goods, FMCGs, spread across many of the basic market categories. They include popular home and personal care products (chiefly detergents, creams, fragrances and soaps) such as Morning Fresh, Imperial leather, Canoe, Zip, Premier Cool, Joy, Elephant, Venus Gold, Carex and the Cussons Baby range.
In the Food and Nutrition arena, PZ Cussons is engaged in the manufacture and sale of products such as the cooking oils, Devon King’s and Mamador, and the milk and yoghurt-based beverages, Coast, Nunu, Nutricima, Olympic and YO!
To achieve its objectives, PZ Cussons has continued to be engaged in network deals such as its partnership with Wilmar International Ltd, Glanbia Plc and Haier. It has also established the Coolworld retail outlets from where it vends electrical products and other white home accessories such as generators, refrigerators, microwave and washing machines.
Other principal markets where PZ Cussons plays include East Africa where it has a Commercial and Manufacturing base in Nairobi, Kenya; Asia, where it operates in the Home Care, Food and Nutrition and Personal Care segments in Indonesia, Thailand, Australia, New Zealand; as well as the Middle East market that is serviced from Dubai.
In all of the global range however, Africa, being the original homeland of PZ, continues to occupy a pride of place.
Other than the Nigerian and East African markets, there is also the West African market that is operated from out of Ghana.
Corporate and Public buy-in
To its credit, PZ Cussons has continued to ensure over the years that it would be a market-driven corporate player in many of its operating markets. Accordingly, it is listed on the London Stock Exchange, the Nigerian Stock Exchange and the Ghana Stock Exchange.
In Greece, the focus is on the food business while the company equally maintains its operations in Poland as part of its European operations.
This is in addition to the UK which in addition to having and sustaining a century-old heritage of products delivery is also home to the PZ Cussons Global Headquarters in Manchester. On its part, the firm’s presence in North America is focused on the PZ Cussons Beauty range.
So would PZ be leaving Nigeria? Well that is up to the organisation. But even at that, one challenge would be to determine what the group stands to gain or lose in the long-run should its decision be to quit? Added to this would then be the point that should quitting be the preferred choice, would its corresponding Nigerian promoters rise to the occasion and buy it out or would it fall into the hands of one of its competitors?
As posited by Mohammed, one point in favour of PZ Cussons remaining in Nigeria is that the country yet hosts PZ Cusson’s largest and most diverse single market the world over. This is because unlike its operations in countries like Greece where it is primarily engaged with niche food products, in Nigeria, the portfolio spans Personal Care, Home Care, Food and Nutrition and Electricals. Further, having been in the country for 120 years and employing almost 3500 people at its peak moments, the firm’s roots in the country are indeed quite solid. But then these are not the only factors at play. And so we wait.