The storm may be finally abating for shareholders of PZ Cussons Nigeria as the consumer goods firm bucked the negative trend in the economy and turned a profit in its most recent quarter.
Despite the unprecedented headwinds caused by the coronavirus pandemic that dislocated the demand and supply side of the market, PZ Cussons posted net income of N820.93 million in the six months ended November 2020 from a loss of N1.58 billion the previous year.
Revenue was up 10.10 percent to N37.37 billion in the period under review even amid weak consumer purchasing power.
The maker of Imperial leather Soap and other products, through cost reduction strategy, made money from core operations as it posted operating profit of N2 billion in the period under review from a loss position of N1.50 billion the previous year.
Digging into the financial statement of the company shows the bottom line (profit) got a boost from an N1.82 billion other income, which represents proceeds from sale of factory premises at Ikorodu, Lagos State.
The company said the property, whose sale was approved at its annual general meeting, was sold to dairy and foods company, FrieslandCampina Wamco Nigeria Plc.
Gross profit surged by 75.30 percent to N10.15 billion, which means that the company has enough money left-after deducting production- to cover administrative/distribution expenses and exceptional items.
The company has utilized the resources of its owners in generating higher profit while contemporaneously turning each Naira invested in sales into a robust bottom line (profit).
Gross profit margins increased to 27.16 percent as at November 2020, from 17.05 percent the previous year, the largest expansion among firms covered by MoneyCentral.
With this impressive performance, PZ Cussons Nigeria is no longer the problem child of its London parent company who had been blaming the overall Group disappointing results on the Nigerian operations.
However, the company operates in a difficult business environment and analysts are pessimistic about rapid economic recovery.
Deteriorating consumer income, foreign exchange scarcity, decrepit infrastructure, and a weak currency remains an existential threat to operators in the industry.
Nigeria’s gross domestic product shrank 3.6 percent in the three months through September from a year earlier as a lockdown to contain the Covid-19 outbreak, lower oil prices and rampant dollar shortage weighed on output.
The International Monetary Fund (IMF) forecasts that the Nigerian economy would witness a deeper contraction of 5.4 percent and not the 3.4 percent it projected in April 2020. But the global lender expects Nigeria’s economy to rebound by 2.6 percent in 2021.