PZ Cussons reports first quarter loss after tax of N1.59bn

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PZ Cussons Nigeria Plc has announced N1.59 billion loss after tax, 470.6 per cent below N472.9 million in prior quarter of 2015. Despite increased revenue and N4.7 billion loss to foreign exchange, PZ Cussons Nigeria Plc has announced its worst results in recent quarters with N2.4 billion loss before tax in first quarter unaudited financial statements for the period ended August 30, 2016.

The consumer products group, in its unaudited financial statement filed to Nigerian Stock Exchange (NSE) said its loss before tax dropped by 544.6 per cent from N546.8 million recorded in first quarter of 2015. According to the company, the unstable foreign exchange cost the company N4.7 billion in the period under review as against N14.97 million foreign exchange gain recorded in first quarter of 2015.

However, the company reported 12 per cent increase in revenue from N14.95 billion to N16.7 billion in first quarter of 2016. PZ parent company in the UK stated in a recently released trading statement that the company performance across its businesses during the period was robust.

FBNQuest Research said, although gross margin expanded by 693 basis points y/y to 34.5 per cent, signalling that the company strategy of sourcing key inputs locally is likely paying off, the N2.4 billion loss before tax was as a result of a foreign exchange loss of N4.7 billion during the quarter.

Though there seems to be some improvement in accessing foreign exchange a challenge for PZ in recent times in Nigeria, the naira has continued to depreciate both at the interbank and parallel markets. We suspect the foreign exchange loss arose from foreign exchange -denominated account payables.

The balance rose to N33.9billion in Q1 2017 from N25.7billion as of end of financial year 2016. We shall seek further clarification from management. The after tax loss was however reduced to -N1.4billion because of a tax credit of N845million and a positive minority interest contribution of N149million.

On a quarterly basis, sales declined by -11.2 per cent q/q, while gross margin expanded by 1,267basis points q/q. Other than the foreign exchange loss, an 11.8per cent q/q rise in operating expenses and a -24.7per cent q/q decline in other operating income also contributed to the pre-tax loss vs. PBT of N1 billion in Q4 2016 (end-May), the company explained.

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