PZ Cussons Nigeria Plc: Cut to 2016e PAT; Rating Stuck as Before, Unchanged

Proshare

 

Friday, February 05, 2016 04:29 PM / Cordros Capital
 

 

This analysis relates to PZ Cussons Nigeria Plc (PZ) released results for the period ended 30 November 2015 – i.e. Q2-15/16 and 6M-15/16 – published last week.

 

Following the result, we have cut our 2016 PAT estimate by 12% to N3.8 billion (-16% y/y), implying a third consecutive year of earnings contraction.

 

The cut acknowledges the continued challenges in the sales environment, amidst subsisting cost pressure (with the company's total production cost being about 95% exposed to the USD).

Management stated that whilst revenue and margins in the Branded Consumer Goods (BCG) division have been somewhat resilient (as prices were adjusted to offset the impact of the NGN devaluation), the White Goods (WG) division – largely affected by the ongoing squeeze on disposable income – continues to drag. 
 

While highlighting the challenges faced by its Nigerian subsidiary in the first half of the 2015/16 year, PZ Cussons Holdings Limited UK - in its December 2015 Trading Update – guided to a likely continued deterioration in the second half, especially in the WG division.

 

 

Kindly find the full equity report here.

 

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