PZ Cussons Plc plans to sell its African business, including a 73.27% stake in PZ Cussons Nigeria, to reduce exposure to naira fluctuations. The company cites significant financial losses due to the Nigerian naira's 70% devaluation, which has severely impacted earnings and operational costs in the region.
British consumer goods giant PZ Cussons Plc, the parent company of PZ Cussons Nigeria, has announced its intention to sell its African business, citing economic instability and the devaluation of the Nigerian naira. In its financial report for the year ending May 31, 2024, the company revealed plans for a partial or full sale of its African operations.
The move is seen as an effort to reduce the company’s exposure to the fluctuating value of the naira, which has severely impacted its financial performance. The company reported a 70% devaluation of the Nigerian naira during the period, leading to a foreign exchange loss of £107.5 million. This loss was primarily attributed to the translation and settlement of U.S. dollar-denominated liabilities held by PZ Cussons' Nigerian subsidiaries.
Jonathan Myers, the CEO of PZ Cussons, acknowledged the tough economic conditions Nigerians are currently facing, including unprecedented inflation. He noted that the company has been working to mitigate the effects of the naira's devaluation while continuing to serve its Nigerian customers.
The sale, if finalized, will significantly reduce the company’s risk related to naira fluctuations. PZ Cussons is already exploring potential transactions after receiving multiple expressions of interest. Any proceeds from the sale are expected to be used to reduce the company's gross borrowings.
PZ Cussons holds a 73.27% stake in its Nigerian subsidiary, which is valued at N45.53 billion as of September 2024.
