Nigeria Shareholders Left Empty-Handed as PZ Cussons Nigeria Reports N96.4 Billion Loss and Negative Equity

PZ Cussons Nigeria reports a massive N96.4 billion loss in FY 2024, resulting in negative equity. Despite revenue growth, exchange losses, and macroeconomic challenges have severely impacted the company's finances. Delisting plans face hurdles as the parent company reviews Nigerian operations to address mounting financial pressures.

PZ Cussons Nigeria, a prominent consumer goods company, has reported staggering losses of N96.4 billion for the fiscal year ending May 31, 2024. This financial setback has resulted in a negative equity of N47.2 billion, effectively wiping out shareholders' funds.

Despite a 33.5% increase in revenue to N152.2 billion and an impressive 84% growth in gross profit, the company faced significant challenges. A substantial exchange loss of N158 billion led to a negative operating margin, resulting in an operating loss of N111.5 billion.

The company's struggles are attributed to macroeconomic headwinds, including high interest rates, currency depreciation, and soaring inflation. These factors have severely impacted PZ Cussons' profit margins and financial health.

The financial turmoil has led to a dramatic shift in the company's retained earnings, moving from N34.5 billion to a retained loss of N53.6 billion. The company's net cash declined by 68% to N32.7 billion.

Amidst these financial woes, PZ Cussons Nigeria's parent company has increased its loan to the Nigerian subsidiary, with borrowings rising to N59.8 billion. This includes a $40.26 million non-interest loan facility provided in June 2022.

The company's delisting plans from the Nigerian Exchange (NGX) have faced obstacles. After initial resistance from minority shareholders over the offer price, the Securities and Exchange Commission (SEC) declined the delisting request in March 2024.

As PZ Cussons Nigeria grapples with these financial challenges, the parent company has announced plans to review its Nigerian operations to mitigate risks and maximize shareholder value. The future of this once-thriving consumer goods company remains uncertain as it navigates through these turbulent times.

Source: Nairametrics