Carex owner slashes profit guidance as tanning brand's US sales slump
PZ Cussons has narrowed its profit guidance following subdued demand in the US for its St Tropez tanning brand.
The healthcare products manufacturer, whose other brands include Imperial Leather and Sanctuary Spa, now anticipates recording adjusted operating profits of between £52million and £55million for the year ending May.
It previously forecast achieving up to £58million but has lowered its outlook after St. Tropez revenues in the US fell by a double-digit percentage.
The Manchester-based company's UK division also recorded an additional £2million in costs related to the Extended Producer Responsibility scheme, whereby packaging producers must pay the full cost of managing their packaging waste.
However, PZ Cussons expects to post an 8 per cent rise in annual like-for-like sales and reported turnover of around £505million.
While revenues across Europe and the Americas remained flat, PZ said it enjoyed 'good growth' in the UK.
During the second half of the year, the firm observed a return to growth in the Asia-Pacific region, thanks to a strong performance in Indonesia and higher sales in Africa amid the 'inflationary macro-economic environment in Nigeria'.
Foreign exchange headwinds over the past two years have severely hit demand for PZ Cussons's products in Nigeria, one of its largest markets.
PZ Cussons further announced that it had agreed to sell its 50 per cent stake in PZ Wilmar, a Nigerian edible oils business, to joint venture partner Wilmar International for $70million (£51million).
Founded in 2010, PZ Wilmar produces cooking oils sold under the Mamador and Devon King brand names.
The disposal follows a strategic review completed by PZ Cussons last year that concluded the group was 'too complex for its size' and had its resources' spread too thinly' to provide consistently healthy returns.
It suggested selling St. Tropez to a new owner that could help the brand achieve long-term growth in the US.
Jonathan Myers, chief executive of PZ Cussons, said: 'I am delighted to announce the sale of our stake in PZ Wilmar to our joint venture partner.
'In doing so, we are exiting a non-core category, reducing the risk associated with our presence in Nigeria, and materially strengthening our balance sheet.
'At the same time, the smooth transition of ownership offers continuity for colleagues and operations.'
PZ Cussons owns two dozen brands, such as dishwashing liquid Morning Fresh, baby food Rafferty's Garden, Carex hand gel, and Charles Worthington shampoo.
PZ Cussons shares were 1.7 per cent down at 77.2p on late Wednesday morning and have lost about 24 per cent of their value over the past year.
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