PZ Cussons moves to halt declining fortunes

By AYOOLA OLAOLUWA

In a desperate move to turn around the dwindling fortunes of PZ Cussons Nigeria Plc, the management of the company has introduced several far-reaching measures, including the disposal of several of its non-profitable divisions. Established in Nigeria in 1879, some 121 years ago, the company for several years bestrode the nation’s industrial and consumer landscape like a colossus.
Its products, like Elephant Detergent, Robb Ointment, Joy soap, Venus cream, Imperial Leather and Premier toilet soaps were household names in many Nigerian homes, hotels and businesses in the 60s and 90s. With the birth of the new millennium, PZ added other prominent products such as Mamardor and Devon Kings vegetable oil, Morning Fresh, Nunu, Olympic and Yo milk and Thermacool and other household electrical products.
These products were rivalled only by Omo Washing Powder, Sunlight Detergent, Lux toilet soap, Close Up, among several other products produced by a rival firm, Lever Brothers, now Unilever Nigeria.
However, from the beginning of 2000, the influence of the once-dominant company began to shrink owing largely to several factors, including stiff competitions from imported and locally made goods, as well as the deteriorating economic conditions in the country.
As inflation continued to ravage disposable income and push up the cost of production, consumers’ preference for cheaper imported goods jumped. To worsen matter was the entrance of shrewd businessmen from the Middle East and Asia who embraced mostly unconventional means of doing business to gain market share.
Also responsible is poor infrastructures and porous borders. While epileptic power supply and deplorable transport system is pushing up cost and taking the top brand products out of the reach of average Nigerians, the flooding of the nation’s markets with cheap and untaxed goods by smugglers has provided Nigerians with a much cheaper source of products.
This development, BH findings revealed, contributed to a downturn in PZ Cussons sales and profit margins. For several years now, the company has been recording declining fortunes, with shareholders not getting tangible returns on their Investments. In 2019, its parent company, PZ Cussons Group UK, blamed poor results on its Africa operations, especially Nigeria. The company named the milk category as the most hit by the economic problems.
In 2019 PZ Cussons Nigeria profit declined by 40%. During the period under review, the company recorded N74.3 billion revenue down from N80.5 billion recorded in 2018. This represents a 7.7% decline. Profit before tax stood was at N1.9 billion for the year as against N2.3 billion recorded in 2018. This represents a 16% decline.
Profit after tax for the year stood at N1.2 billion as against N1.9 billion recorded in 2018. This represents a 40% decrease. Earnings per share stood at 0.25 in 2019 as against 0.46 in 2018, representing a 45.7% decrease. In the 2017-18 financial period, its top lines (sales) declined by 15.88 per cent to N15.89 billion.
Meanwhile, concerned about the declining fortunes of the company and the need to halt it, the owners have introduced several measures. One of them is the recent restructuring of its management board. In June, it announced the appointment of Mr Panagiotis Katsis as its new chief executive officer from July 1st 2010, following the exit of its former helmsman, Christos Giannopoulos.
Earlier in March 2019, the Chief Finance Officer CFO) of the company, Pedro Barreto, resigned his appointment. In his stead, a new CFO, Zuber Momoniat, a South African, came into effective from 1st April 2020. A source in the firm told BH that Barreto, an Italian who was named CFO in February 2018 was forced to resign barely a year after his appointment owing to non-performance.
According to the source, Momoniat, a certified chartered accountant with over 17 years of experience in account reconciliation, budgeting, internal controls, forecasting, and financial planning, is expected to turn around the fortunes of the company. He started his career in audit at PwC and later SABMiller in different countries across various units of finance for 12 years.
Also in September 2018, another director, Alexander Goma, resigned his appointment. Industry watchers believe that the newly injected blood should provide a much-needed tonic for the company’s comeback.
In another move aimed at giving the company a lifeline, the new management decided to simplify its business in Nigeria by selling off some of its brands. One of such is Nutricima, its loss-making milk business division. Nutricima’s major product portfolio includes milk and yoghurt-based drinks such as Nunu, Yo, and Olympic.
Before the decision to sell, PZ Cussons had earlier in 2014 written off $27.6m against its Nutricima milk business and Australian yoghurt and granola brand. PZ Cussons had bought-out Glanbia’s 50% stake in Nutricima for £21m in cash, having formed the venture in 2003.
The information available to BH indicates that discussions between PZ Cussons Nigeria and FrieslandCampina Wamco Nigeria are in the advanced state on the sale of Nutricima Limited. To complete the deal, the Board of Directors of PZ Cussons Nigeria has scheduled an Extraordinary General Meeting (EGM) of shareholders later in July where shareholders are expected to approve the divestment.
According to a copy of the notice obtained by our correspondent, shareholders are expected to approve and consent to the role of PZ Cussons Nigeria as “the property seller of the factory premises of Nutricima, in furtherance of the proposed sale of the business and assets of Nutricima Limited to FrieslandCampina Wamco Nigeria Plc and FrieslandCampina Nederland B.V.
“The transaction includes the sale and transfers to FrieslandCampina Wamco Nigeria Plc of that portion of land measuring 67,733.235 square metres situate within Plot 20A Ikorodu Industrial Scheme in Ikorodu, Lagos State, carved out from the property covered by Certificate of Occupancy No. 6/6/1998E issued by the Lagos State Government on June 28, 1998, and has been registered as Number six at Page six in Volume 1998E in the Lands Registry of the Lagos State Government, along with rights and investment interests in the buildings and improvements.”
Also, shareholders are expected to empower the Board of PZ Cussons concerning such other acts, arrangements and roles by the company, made for the divestment under the transaction documents, notably, the assets purchase agreement dated March 13, this year and the property transfer agreement, executed, amongst others, between the company, Nutricima, FrieslandCampina Wamco and FrieslandCampina Nederland B.V. subject to the procurement of regulatory approvals for the transaction.
The resolutions also included authorisation of the transfer to and vesting in the company of rights and investment interests in the buildings and improvements within the factory premises as earlier approved. Shareholders are expected to mandate the Board of Directors to execute the asset purchase agreement, the property transfer agreements, others to which the company is a party.
PZ Nigeria in a statement made available to BH said the proposed sale is in line with the group’s focus scale and accelerate strategy to streamline its focus on core personal care and beauty products.