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PZ Cussons Sees Performance in Line with Expectations for Early 2014

Posted: April 10, 2014

PZ Cussons Plc issued an interim management statement that covers the period of January 22, 2014 to April 9, 2014. Via the statement, the company’s board is pleased to announce the overall performance of PZ Cussons during the period has been in line with management expectations, and the financial position of the company remains strong with cash generation during the period also meeting expectations.

For the trading update in Europe, PZ Cussons reported, for its washing and bathing division in the U.K., Imperial Leather, Carex and Original Source performed well, driven by a significant renovation and innovation program. The product portfolios continue to be optimized both for the big four supermarkets, as well as further increasing distribution in other channels. Also, the Cussons Mum & Me range, launched almost two years ago, has been refined to focus on the successful top-selling products and has been complemented by products for toddlers and young children under the Little Explorers sub-brand. In the beauty division, consumer demand for St. Tropez continues to grow boosted by Kate Moss as brand ambassador. And the Sanctuary, Charles Worthington and Fudge brands have performed well in the U.K., and new overseas distribution will begin before the end of the financial year. Also, performance in Greece continues to show some improvement as the economy begins to stabilize.

For its Asia region, the company reported that, while profitability in Australia has been affected by the weaker Australian dollar, the core brands of Morning Fresh and Radiant performed well with the re-listing of the Duo mid-priced detergent brand also achieved in the period. Rafferty's Garden also has seen a number of new product launches and the international expansion will begin to be executed before the end of the calendar year. Continued positive momentum in Indonesia has delivered another period of revenue growth although a weaker rupiah has impacted profits. Growth has been achieved across both the baby care and non-baby care portfolios, as well as continued progress being made with distribution in other South East Asian territories. Overall, trading in the smaller territories of Thailand and the Middle East has been broadly in line with expectations.

Reporting on its Africa division, PZ Cussons found that, in Nigeria, unrest in the north of the country has continued with some disruption in the period. Economically, interest rates have been maintained at a high level reducing liquidity in the trade while the naira has come under pressure ahead of a change in the central bank governor in June. In personal care and home care, growth was achieved in the value add portfolio driven by a significant brand renovation program, while commodity products have had to trade in an extremely competitive environment. Good growth has been achieved in the electricals business as well as in Nutricima, the nutritional beverage JV with Glanbia. And the palm oil joint venture with Wilmar has performed very well with the refinery already operating toward capacity and ahead of expectations. Good growth has been achieved in the consumer brands of Mamador and Devon Kings with the balance of output sold business to business. Also, profitability in Ghana has been impacted by the significant weakening in the cedi. Kenya has performed well and in line with expectations.

In its outlook, PZ Cussons reported performance for the full year continues to be in line with expectations, despite trading conditions in most markets remaining challenging with a competitive trade environment in developed markets and weakening currencies adding to the cost base of both consumers and businesses in emerging markets. Some raw material input costs have also shown an upward trend. Looking ahead, the company is focused on a dynamic and fast brand renovation and innovation program, an ongoing cost reduction program, and the successful delivery of new areas of growth such as Rafferty's Garden and the Wilmar joint venture. These initiatives will help counter the ongoing macro challenges and the reduction in profits from Poland as a result of the home care sale. The company’s balance sheet remains strong and well placed to pursue new areas of growth.