PZ Cussons suffers profits hit as UK shoppers eye discount rivals
Adjusted pre-tax profits slid 15% to £34 million for the six months ending in November.
Imperial Leather-owner PZ Cussons has seen profits suffer after Britain’s soaring inflation encouraged shoppers to swap brand name soaps for discounted rivals.
Adjusted pre-tax profits slid 15% to £34 million for the six months ending in November, driven largely by tough UK trading conditions driven as shoppers tightened their belts.
PZ Cussons, which also own St Tropez sun tan lotion and Original Source shower gel, expects profits to scrub up better in the second half of the year when it reaps the rewards of new product launches and bigger distribution.
Revenues lifted 2% to £385.4 million over the period, but investors took a dim view of the half-year update, with shares dropping more than 3% in afternoon trading on the London Stock Exchange.
British households have faced a sustained squeeze on their spending power from a jump in the cost of living and paltry wage growth, despite inflation easing to 3% in December.
In a stock market announcement, PZ Cussons said: “In the UK, consumers are shopping cautiously reflecting general cost inflation outstripping wage growth and broader economic uncertainty, resulting in lower profitability in the washing and bathing division versus the prior period.
“Product launches across Imperial Leather, Carex and Original Source brands have been well received. However, volumes remain very sensitive to price points and discounting.
“Further brand initiatives are planned for the second half with innovation for the consumer increasingly important to secure distribution and deliver stand out on shelf.”
Pre-tax profits made for brighter reading on a statutory basis, lifting 37% to £34.2 million, but reported revenues in Europe fell 4% to £129.9 million.
While margins were squeezed across Europe and Africa, Asia helped soften the blow thanks to strong trading in Australia and Indonesia.
The FTSE 250 firm said its full-year results hinged on a “successful delivery” in the UK, coupled with improved economic growth in Nigeria.