PZ Cussons Sells African Units as Naira Struggles

Naira Woes Force PZ Cussons' Africa Sale

“The Group is currently engaged in a process to sell its St Tropez brand and is exploring potential transactions that could lead to a partial or...

PZ Cussons to sell African subsidiaries amid naira instability, citing £107.5m foreign exchange loss. CEO Jonathan Myers reassesses brand portfolio and geographic presence due to Nigeria's macroeconomic challenges.

PZ Cussons Plc, the UK-based parent company of PZ Cussons Nigeria, unveiled plans to divest its African subsidiaries in its financial report for the year ended May 31, 2024, released on September 18. The company is exploring strategic options, including partial or complete sale of its African operations.

The decision to sell its African business aims to mitigate PZ Cussons' exposure to currency fluctuations, particularly the volatility of the Nigerian naira. Additionally, the company disclosed that its board has received multiple expressions of interest from potential buyers regarding the acquisition of its African assets.

“The Group is currently engaged in a process to sell its St Tropez brand and is exploring potential transactions that could lead to a partial or full sale of its Africa business, having received a number of expressions of interest,” PZ Cussons said.

“A partial or full sale of the Group's Africa business could materially reduce the Group's exposure to fluctuations in the Naira exchange rate.

“The Board has committed to using any proceeds from these transactions to first reduce gross borrowings, and consequently the level of the Group's net interest cost.”

PZ Cussons CEO Jonathan Myers cited Nigeria's economic woes, including inflation and naira devaluation, as key factors affecting the company's financial performance.

“The period was marked by a 70 percent devaluation of the Nigerian Naira, which has had significant implications on our reported financials,” he said.

“We have worked hard to mitigate the impact of this on the Group, while continuing to serve Nigerian consumers who are facing unprecedented inflation and economic difficulties.”

PZ Cussons disclosed a significant foreign exchange loss of £107.5 million, primarily driven by the translation and settlement of USD-denominated liabilities within its Nigerian subsidiaries. This substantial loss resulted from the naira's drastic 70% depreciation between May 31, 2023, and May 31, 2024.

The company's financial woes were further compounded by macroeconomic challenges and operational complexities in Nigeria. In response, CEO Jonathan Myers announced a comprehensive review of PZ Cussons' brand portfolio and geographic footprint in April. This strategic reassessment followed the Securities and Exchange Commission's (SEC) rejection of the company's proposal to acquire the remaining stake in PZ Cussons Nigeria Limited.

PZ Cussons attempted to consolidate its ownership of its Nigerian subsidiary by offering to buy the remaining 26.73% minority shares for N21 per share in September 2023.

Currently, PZ Cussons holds a 73.27% stake, equivalent to 2.90 billion shares, in its Nigerian subsidiary, with a market value of N45.53 billion as of September 18.