PZ Cussons issues profit warning, blames poor milk sales

PZ Cussons has placed shareholders on alert of a possible reduction in profit, blaming poor sales in the UK and Nigeria.

In a statement released on Thursday, the company said a number of initiatives are underway to ensure it returns to profitable growth for the 2018 financial year.

“It is now apparent that profit for the full year will fall short of expectations and the board anticipates that profit before tax will be in the range of £80 million – £85 million,” it said.

“Following the significant cost inflation of recent years, the Nigerian consumer’s discretionary income remains under pressure with subdued buying levels. As a result, the usual peak season uplift has not occurred to the expected level.

“Consequently, inventory levels in the trade remain high leading to intense competition, most noticeably in the milk category, which in return is resulting in lower volumes, prices and margins.”

PZ Cussons said it would reassess the structure of its operating model to reduce overhead cost and products costs with a focus on packaging reduction.

“A review of the group’s milk business in Nigeria with an objective of returning it to profitability. A re-prioritisation of the group’s new product pipeline to focus on fewer, bigger projects requiring lower levels of complexity.”