PZ Cussons issues profit warning

PZ Cussons, the Imperial Leather soap maker, has warned the impact of economic and social tensions in its largest market of Nigeria would be significant, resulting in overall performance being some way below expectations.

The firm said two key issues that were adversely affecting performance had continued since it last updated the markets in January.

Social instability in the North of the country had continued with sales rates in some Northern states being affected by local disruption and uncertainty, Cussons said.

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At the same time, the removal of the fuel duty subsidy in January has led to lower consumer disposable income, higher transport costs and port disruption which have adversely affected sales and costs during the period, it added.

It added that overall trading during the period in all markets, except Nigeria, had been in line with management expectations, including a "robust" performance in the UK.

Cussons announced a number of changes to its supply chain model to cut back on costs.

It will close its manufacturing facilities in Australia and outsource supply to third parties, as well as reviewing and restructuring its manufacturing facilities in Poland.

It also intends to close its manufacturing facilities in Ghana, with supply being moved to third parties as well as to the group's Nigerian facilities.

The total cash cost of these initiatives will be approximately £19m for redundancy and other associated items, with a payback expected within three years, the firm said.

There would be a further non-cash charge of approximately £20m for asset write downs, it added.