PZ Cussons to sell African subsidiaries over naira instablity
PZ Cussons Plc, the parent company of PZ Cussons Nigeria, says the company is planning to sell its African subsidiaries.
In its ‘Results for the year ended 31 May 2024,’ published on Wednesday, PZ Cussons said the company is looking at partial or full sale.
PZ Cussons said the sale will reduce the company’s exposure to naira fluctuations.
According to the consumer goods manufacturer, the board has received multiple interests in the sale of its African business.
“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,” PZ Cussons said.
“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.”
‘NIGERIANS ARE FACING UNPRECEDENTED ECONOMIC DIFFICULTIES’
Jonathan Myers, PZ Cussons’ chief executive officer (CEO), said Nigerians are facing unprecedented inflation and economic difficulties.
Myers said the naira devaluation has also significantly impacted the company’s financials.
“The period was marked by a 70% devaluation of the Nigerian Naira, which has had significant implications on our reported financials,” he said.
“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.”
Commenting 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”.
In April, Myers said the company was reviewing its brands and geographies over macroeconomic challenges and complexities in Nigeria.
He spoke a month after the Securities and Exchange Commission (SEC) rejected PZ Cussons’ request to acquire the shares of minority shareholders in PZ Cussons Nigeria Limited, its Nigerian subsidiary.
In September 2023, PZ Cussons had shown interest in buying the remaining 26.73 percent minority shares in its Nigerian subsidiary, at a price of N21 per unit.
As of May 31, PZ Cussons holds a 73.27 percent stake in the Nigerian subsidiary, which represents 2.90 billion shares, worth N45.53 billion as of September 18.
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