PZ Cussons considers exiting Africa amid declining sales in Nigeria

There are indications that PZ Cussons Plc, a British soap maker, may withdraw from Africa after experiencing a significant decline in sales, particularly in its Nigerian operation.

PZ Cussons has initiated a review of its Africa business, signaling a potential pivot away from the region where it was founded to focus on its remaining business lines and pay down debt.

The company, which was established in Sierra Leone 140 years ago, currently derives almost 30 per cent of its sales from Africa. However, sales in the region have declined by 48 per cent over the past year. With annual sales of around £500 million ($622 million), PZ Cussons operates across multiple geographies and product lines, including Europe, the Americas, and the Asia-Pacific region.

Jonathan Myers, the chief executive officer, stated, “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 are going to be objective and not emotional in how we make this decision.”

The company’s shares rose five per cent on April 24, 2024, but have decreased by 50 per cent over the past 12 months.

As part of its strategic realignment, PZ Cussons also plans to divest its fake tan brand, St. Tropez, which it acquired in 2010. The company believes that significant long-term growth potential remains in the US and new markets, estimating the brand’s value at £100 million.

Myers highlighted that the company will focus on branded items for babies, as well as beauty and hygiene products. He cited the recent acquisition of Childs Farm, which manufactures toiletries for babies with sensitive skin, as an example.

Priority markets for PZ Cussons moving forward include the UK, Australia, New Zealand, and Indonesia.

Following a strategic review, the board concluded that the company is too complex for its size, with financial and human resources spread too thinly to generate consistent returns.

In Nigeria, where PZ Cussons sells a range of products including Morning Fresh dishwashing liquid, refrigerators, and cooking oil, sales were negatively impacted by the devaluation of the naira and inflation. Regulators rejected PZ Cussons’s application to buy out the remaining 27 per cent of its Nigerian arm due to an unfair offer price of N23 per share.