PZ Cussons posts over N46b loss, shows signs of insolvency

PZ CUSSONS Nigeria Plc has reported a loss after tax of N46.08 billion and an unfavourable financial position as the company’s total liabilities exceed total assets.

The negative performances were revealed in the company’s 2023/2024 second quarter (Q2) financial statements released to the investing public on Thursday, February 8.

The negative financial position showed signs that the company was heading for bankruptcy, a state of asset deficiency, and financial distress. As such, analysts said the company might default on its obligations to creditors.

In the review quarter, PZ Cussons Nigeria disclosed a financial position of total assets of N154.81 billion and total liabilities of N177.98 billion, resulting in a negative shareholders equity of N23.17 billion.

Findings by The ICIR show that PZ Cussons Nigeria went into excess borrowing as total borrowings more than doubled by 146.63 per cent to N59.22 billion in Q2 2023/2024 compared to N24.01 billion in Q2 2022/2023.

“Borrowing relates to a loan received from the ultimate parent company – PZ Cussons(Holding) Limited, UK, in July 2022 based on an agreement signed in June 2022. The facility amount is $40.26 million, and it is non-interest-bearing.

“The Company is involved in trade financing arrangements with some local banks where the banks agree to pay amounts to foreign vendors in respect of invoices owed by the company and receive settlement from the company at a later date,” PZ Cussons said.

PZ Cussons Nigeria also reported negative performances on its profit lines. The company’s operating loss widened by 4,313.79 per cent to N48.68 billion in Q2 2023/2024 from N1.10 billion in Q2 2022/2023.

It reported a loss before tax of N45.88 billion and a loss after tax of N46.08 billion in the Q2 2023/2024 financial period.

Findings by The ICIR indicate that the operating loss resulted from a N52.41 billion foreign exchange loss the company reported in the review period as against N2.02 billion in the corresponding quarter.

On the contrary, the company posted a profit before tax of N6.49 billion and a profit after tax of N5.71 billion in the corresponding period (Q2 2022/2023).

The Head of Financial Institutions Rating at Agusto&Co, Ayokunle Olubunmi, said of the developments, “The negative performance of PZ Cussons reveals why the company is leaving the Nigerian market.

“As it stands, it means the company has to recapitalise and re-strategise.”

The ICIR reported that PZ Cussons was on a smooth exit from the Nigerian stock market.

    Its parent company, PZ Cussons (Holdings) Limited United Kingdom, had offered N21 per unit of shares to buy out minority shareholders under a “scheme of arrangement” in line with section 715 of the Companies and Allied Matters Act, No.3 of 2020 (as amended) and other applicable rules and regulations.

    The ICIR also reported that consumer goods and other manufacturing companies with international presence were exiting the Nigerian market.

    On April 4, 2023, Unilever Nigeria Plc announced its exit after about 100 years of operations in Nigeria.  

    GlaxoSmithKline (GSK), a British multinational pharmaceutical group, also indicated its exit on August 4, 2023, after 51 years of operation.

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