PZ Cussons confident of return to profitable growth

Imperial Leather soap maker PZ Cussons is confident of a return to profitable growth this financial year, though conditions remain difficult in its core market of Nigeria and challenging elsewhere.

In a statement covering trading since June 1st, the group revealed that unrest in the north of Nigeria has continued to affect sales rates, while consumer disposable income remains affected by the removal of part of the fuel subsidy in January. On the bright side, margins in Nigeria have improved as a result of lower raw material costs and margin improvement projects.

In the UK, trading in the washing and bathing division has been robust despite continued high levels of promotional activity in the trade. The group sees new product launches as the key to deterring consumers from trading down to own-brand products, and the next few months will see the launch of new Imperial Leather limited edition shower and bath products, and a new seasonal edition of Original Source.

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The Cussons Mum and Me range, targeted at the mother and baby market, achieved full UK distribution by the end of July, and early sales rates are encouraging following an advertising blitz in August.

In the beauty division, the poor summer weather in Europe adversely affected sales of St Tropez, but the other brands in the portfolio have performed well, the group said.

Performance in Poland has been strong while trading conditions in Greece remain difficult.

Moving on to Asia, things remain tickety-boo in Indonesia, with further growth in revenue and profitability achieved during the reporting period, but the Australian market remains challenging. The measures taken to improve the performance of the Australian business continue to be successfully implemented, the group said.

"Trading conditions in most markets remain challenging as a result of general uncertainty regarding the global economic outlook and pressures on consumer disposable income from high food and fuel prices," the firm's interim management statement said.

"The group's focus remains on new product development and further margin improvement. Raw material cost trends are expected to be favourable this year and the benefits of the supply chain optimisation project are also beginning to be seen," the statement added.

JH