Friday, December 28, 2018 03:10 PM / NSE
with additional note from FBNQuest
FBNQuest – Initial Reaction
Implications: We expect a neutral reaction by the market. Indeed, we believe Q2 results should already be priced in, following the Q2 trading update provided by parent company a few weeks ago. Q2 sales of N19.2bn fell -14% y/y and -21% q/q. As expected, weak market conditions continue to weigh on topline performance. Additionally, a 608bps gross margin contraction y/y weighed on profits during the quarter.
Positives: PZ posted a net fx gain of N143m, reversing a net fx loss of -N779m in Q2 2018. Q2 Net interest income of N44m compares with –N229m net interest expense in Q2 2018
Negatives: All key line items worsened y/y. Compared with our estimates, while sales missed our N20.0bn forecast by 4%, PBT significantly outperformed due to the fx gain posted compared with our -N667m fx loss estimate.
Year-to-date, PZ shares have shed -44% which compares with a -19% decline by the broad market.
We rate the stock Underperform. Our estimates are under review.
PZ Cussons Nigeria Q2 2019 (end-Nov) results vs. FBNQuest Capital Research estimates (N millions)
Source: NSE, FBNQuest Capital Research estimates