PZ Cussons Nigeria (PZ) has released its first quarter, Q1 2015 results, which showed that while sales of N15.0 billion was flattish , Year on Year, y/y, both Profit Before Tax, PBT and Profit After Tax , PAT declined markedly, both by 31 per cent y/y to N872 million and N555million respectively.

According to FBN Capital “This subdued performance followed the trend set in the previous quarter, when PBT declined by over 50 per cent y/y. A 9 per cent y/y rise in Operating Expenditure, OPEX to N3.2billion more than offset a 52 basis points, bssis points,bps y/y gross margin expansion.

We suspect Crude Palm Oil (CPO, a key raw material for PZ) prices which have declined by 16 per cent since June are primarily responsible for the expansion in gross margin.

However we await management comments to shed more light on this point. These numbers do not come as a surprise as PZ Cussons UK (parent) had guided to subdued numbers in its interim management statement published on September 22, 2014.