Cussons revenue tops £603m amid Carex demand

Shares of Manchester-based consumer products company PZ Cussons fell about 4% on Wednesday after it published positive results for the year ended May 31, 2021, but also provided a more cautious trading update for the first quarter of its current financial year.

Full-year revenue from continuing operations rose 2.7% to £603.3 million amid “unprecedented levels of demand for hygiene products” including the firm’s Carex brand — and adjusted profit before tax from continuing operations was up 11% to £68.6 million.

However, in the trading update, Cussons said that as expected, the demand for hygiene brands at the beginning of the Covid-19 pandemic has impacted year-on-year revenue comparisons in the first quarter of FY22.

One-year Q1 revenue fell 9%, with Carex in the UK experiencing a double-digit decline.

Cussons said business performance improved as the quarter progressed and it returned to growth in August.

Assuming no further disruption, Cussons expects to return to growth for Q2.

PZ Cussons CEO Jonathan Myers said: “FY21 represents the first year of our new strategy and the journey to turn around the business.

“With the return to top and bottom line growth on an adjusted basis and tangible progress on key elements of the strategy, we are pleased with the initial progress made while recognising that we have much more to do.

“The revenue momentum was broad-based, with all but one of our Must Win Brands and all of our regions in growth.

“We were able to demonstrate improved levels of profitability and significantly step up investments in marketing activity and commercial capabilities as we set out to be a business that builds stronger brands and serves more consumers.

“This was set against a backdrop of the Covid-19 pandemic, which saw unprecedented levels of demand for Hygiene products.

“Our brands were available for our consumers when they needed them most and we retained market leadership — both with Carex in the UK and Morning Fresh in Australia.

“We were also pleased with the strong performance of our Baby and Beauty businesses, as consumer hygiene habits start to normalise …

“The board is recommending a final dividend of 3.42p (2020: 3.13p) per share, making a total of 6.09p (2020: 5.80p) per share for the year.

“This +5% increase reflects the board’s confidence in the group’s financial resilience and future growth prospects.”

AJ Bell investment director Russ Mould said: “Reality has now hit home with a sharp fall in year-on-year sales for one of the UK’s best known hand gel products, Carex.

“To be fair, its owner PZ Cussons had a high hurdle to beat, given how the year-on-year comparative period saw an unprecedented surge in sales.

“Furthermore, last year it barely had to do any cut-price promotions to shift products as demand went through the roof, implying that profit per bottle could be less this year if it reverts to historical discounting trends.

“Fast forward to the start of its new financial year and there are pressures across the board, principally tough comparative figures to beat, significant cost inflation and ongoing disruptions to supply chains.

“The company says it should still hit earnings forecasts if life doesn’t get worse, but the sharp decline in its share price in response to the trading update would suggest that investors don’t believe it will hit those estimates.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.