PZ Cussons issues profit warning

'Imperial Leather' soap maker PZ Cussons has warned that overall profit in the six months to the end of November will come in below expectations.

The firm said high raw material costs and adverse exchange rate movement had continued to impact margins in the first half of the year.

It has also been hit by severe weather in Thailand and social unrest in the Middle East.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Trading conditions in Australia, and in the smaller markets of Greece, Thailand and the Middle East, had been "challenging", it said.

The firm's UK washing and bathing division experienced good revenue growth in the first half despite worsening consumer confidence.

But continued high levels of promotional activity in the retailers and high raw material prices had put some pressure on margins.

It was a similar story on Australia where the company said revenue and profit were lower than the previous period due to competitive trading conditions in the retailers and high raw material costs.

Trading in the Middle East had been affected by social and political unrest, while supply from Thailand was affected by the recent floods although the situation was returning to normal.

In Nigeria Cussons said the effect of higher cost of stock together with longer port clearance times had lead to higher inventory levels as the territory entered peak trading season.

"The trading environment will continue to be difficult given increasing pressures on consumer spending power in all markets, continued high levels of promotional activity in developed markets and the UK in particular, and ongoing high level of input costs," the firm said.

"Our strong financial position will enable us to invest in attractive medium term growth opportunities in our core markets in Europe, Asia and Africa," it added.

The firm's interim results for the half year to 30 November 2011 will be announced on Tuesday 24th January 2012.