Naira depreciation prompted sale of our subsidiaries – PZ Cussons

PZ Cussons Plc, the parent company of PZ Cussons Nigeria, has said the depreciation of the Naira is the major reason it has concluded plans to sell its African subsidiaries.

Jonathan Myers, PZ Cussons’ Chief Executive Officer, who spoke while reviewing the company’s ‘Results for the year ended 31 May 2024’, said Nigerians are experiencing unprecedented levels of inflation and economic hardship, adding that the depreciation of the naira has had a major impact on the company’s financials.

PZ Cussons stated in the operational year results that it is thinking about selling all or part of the company, adding that this would lessen the company’s vulnerability to naira swings. The consumer products maker claims that the board has been approached by many parties regarding the sale of its African company.

On the impact of the naira devaluation, PZ Cussons said a foreign exchange loss of £107.5 million “primarily arose from the translation and settlement of USD denominated liabilities in our Nigerian subsidiaries and is wholly the result of the devaluation of the Naira, which fell by 70% from 31 May 2023 to 31 May 2024”.

The company stated: “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.

“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.”

In his remark, Myers said: “The period was marked by a 70% devaluation of the Nigerian Naira, which has had significant implications on our reported financials.

“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.”