I came across this one by accident – I saw it on LSE as a top faller. PZ Cussons Plc is engaged in the manufacturing and distribution of soaps, detergents, toiletries, pharmaceuticals, electrical goods, edible oils, fats and spreads and nutritional products. So it was a surprise to see it drop 9.8% today.
The IMS issued today explains what the fuss is about:
Overall trading during the period in all markets, except Nigeria, has been in line with management expectations. Profitability in Nigeria has been affected by a continuation of the economic and social tensions in the country which were highlighted at the time of the interim results in January. Given the importance of Nigeria to the Group, the impact of the continuing tensions in the country will be significant, resulting in the Group’s overall performance being some way below expectations. The trading environment for the remainder of the current financial year remains challenging in most markets given continued pressures on consumer spending power, continued high levels of promotional activity in developed markets and high input costs, and the issues specific to Nigeria.
Over the last decade, revenues have grown from £440m to £820m, about 7%pa. Operating profits have grown from £46.8m to £108.1m, a rate of nearly 10% pa. EPS has grown at a rate of about 11% pa. Pretty good, and shows what can be achieved in the "personal goods" sector. It’s even sitting on net cash of £2.4m.
A PER of 20.2 still seems too high, even after a drop of nearly 10% in a day.
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