April 25, 2024

PZ to exit Africa citing sales plunge in Nigeria


By Yinka Kolawole, with agency report

PZ Cussons Plc, yesterday, said it has commenced a strategic review of its business in Africa, with a consideration of exiting the continent, partly driven by economic challenges in Nigeria such as naira devaluation and inflation, which has significantly impacted the company’s sales and operations, resulting in a 48 percent sales plunge.

Jonathan Myers, CEO of PZ Cussons, emphasized the importance of looking towards the future while respecting the company’s past, indicating that the review’s outcomes could include changes in ownership.

Myers added: “The macro-economic challenges and complexities associated with operating in Nigeria are significant and there is much more to do to unlock the full potential of the business.”

“As such, we have undertaken a strategic review of our brands and geographies and have embarked on plans to transform our portfolio, refocusing on where the business can be most competitive.”

PZ further stated: “In addition to the challenges of the significant exposure to Nigeria, the group is too complex for its size, with financial and human resources spread too thinly to generate consistent returns.”

“This means its competitive advantages have been constrained in comparison to those of both larger multinational companies and some focused, smaller ones.”

“We have to have an eye on the future as well as a respect for the past. There could be many permutations of the outcome, which could include a change in ownership. We’re going to be objective and not emotional in how we make this decision,” he stated.

Myers confirmed that the group had received a number of unsolicited approaches over the previous months and years.

“Nothing is ruled out, we see a number of tranches of potential value, whether that is to us or someone else, but we have not put the ‘for sale’ sign up,” he added.

The British consumer goods group was set up in Sierra Leone 140 years ago and now gets almost 30 percent of its sales from Africa, even after a 48 percent decline over the past year. It has annual sales of around $622 million, spread across many locations and product lines, including Europe, the Americas and the Asia-Pacific region.

PZ Cussons is one of a number of consumer goods groups that have been reassessing their options in Nigeria as a result of long-running foreign exchange shortages in the country, which have made it harder for multinationals to repatriate their earnings.

Other consumer goods and healthcare groups have had to scale back operations in the country. Unilever stopped manufacturing homecare and skin-cleansing products, a key plank of its Nigeria sales, a year ago. GSK’s Nigeria affiliate also scaled back its business last year, shutting down the distribution of its own medicines and switching to third-party Nigerian companies.

Germany’s Bayer and French giant Sanofi, which makes polio vaccines, have followed suit.