Cussons first-half revenue slips to £283m

Shares of Manchester-based consumer products company PZ Cussons rose about 5% on Wednesday after it published results for the half year ended November 30, 2021, showing statutory profit before tax from continuing operations rose 8.3% to £35.1 million despite revenue from continuing operations falling 9.3% to £283.7 million.

Cussons said the revenue decline was “predominantly due to the disposal of the non-core five:am yoghurt business in Australia and normalised demand for hand hygiene products in the UK” following unprecedented demand at the peak of the pandemic.

The company said it returned to mid-single digit revenue growth in the second quarter, following a Q1 decline, and that first half revenue was up 13% on the equivalent period two years ago.

In its outlook, Cussons said that despite the backdrop of a volatile inflationary environment, with cost pressures accelerating, it expects to deliver full-year adjusted profit before tax from continuing operations within the current range of consensus estimates.

Cussons CEO Jonathan Myers said: “We have seen continued progress against both our new strategy and our pursuit of sustainable, profitable revenue growth.

“The Q1 revenue decline was driven primarily by Carex lapping unprecedented demand for Hygiene products at the peak of the COVID-19 pandemic in the prior year.

“The business returned to revenue growth in Q2 with our core Baby and Beauty categories growing revenue in the first half overall.

“Revenue from Must Win Brands, excluding Carex, grew +10% and the overall business showed strong underlying momentum when comparing the results to the equivalent period two years ago.

“Continued Price / Mix improvements helped strengthen gross margin in the first half of the year, allowing us to increase Media & Consumer investment behind our brands and maintain our operating margin.

“These results demonstrate our ability to use the strength of our brands to protect margins in the face of cost headwinds.

Beyond our financial performance, we made continued progress against our strategy: Building brands for life. Today and for future generations.

“We have introduced new talent as we continue to strengthen our Executive Leadership Team and rolled out a new set of values to underpin our drive to build a stronger performance culture.

“At the same time we remain on track to simplify our Nigeria operations, realising value through the sale of some of our residential properties, and we are strengthening our sustainability plans on our path to B-Corp certification.

“The disposals of our Food & Nutrition businesses, the Nutricima milk business in Nigeria in FY21 and the five:am yoghurt business in Australia in FY22 demonstrate our determination to optimise our portfolio, explaining the temporary complexity in our alternative performance measures.

The board has approved an interim dividend, maintained in line with the prior year, of 2.67p, reflecting our confidence in the underlying business momentum but also recognising that challenges remain for the second half.

“Commodity and freight costs show no sign of abating in the near term and we continue to anticipate cost pressures into FY23.

“Our focus is on both protecting our margins but also continuing to invest in the business, to secure future growth and build the capabilities we need to deliver against our strategy.”

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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.