March 15, 2018 / 8:03 AM / 2 years ago

Soap maker PZ Cussons warns on profit, shares see worst day ever

(Reuters) - Soap and shampoo maker PZ Cussons (PZC.L) warned on full-year profit and said it would cut costs as it fights weaker sales in the UK and Nigeria, wiping out a fourth of its market value on Thursday.

PZ Cussons has been hit by the devaluation of Nigerian currency Naira, while its UK consumers have been shopping cautiously due to general cost inflation and economic uncertainty.

The company, which counts Nigeria as its biggest market and sells soaps to milk powder to electric goods in the African nation, said it would review its milk business in Nigeria with an objective of returning it to profitability.

PZ Cussons also said it would look to cut overhead base, review product costs, and re-prioritise the group’s new product pipeline to focus on fewer, bigger projects.

The company said it expected full-year profit before tax to be 80 million pounds to 85 million pounds. It reported a pretax profit, excluding items, of 88 million pounds for the year ended May 31.

PZ Cussons, whose brands include Carex and Five:Am, said that while new product launches have been well received in the UK, they have not raised sales enough to compensate for the wider volume and margin shortfall.

In Nigeria, high inventory levels have led to intense competition, most noticeably in the milk category, the company said. Africa’s largest economy is suffering its worst financial crisis in decades as a slump in oil revenues hammers public finances and the naira.

Shares of the company were down 25.2 percent at 207 pence at 0819 GMT, after touching a near nine-year low of 199.7 pence.

Reporting by Arathy S Nair in Bengaluru; Editing by Gopakumar Warrier

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