PZC (PZ Cussons) issued a trading update today, causing the market to fall 20.2% to 222.2p as of writing.
The killer statement was:
At the time of our interim results announcement in January, we reported that performance in the first half of the year had been constrained by trading conditions in the UK and Nigeria, and that delivery of the full year result would be dependent on trading conditions in those markets for the balance of year.
It is now apparent that profit for the full year will fall short of expectations and the board anticipates that profit before tax will be in the range of £80 million – £85 million.
This is a share where I did not dodge a bullet! I bought the share in Dec 2015 at 319p. I figured it for a long term buy and hold, and thought that its quality justified its fairly lofty valuation. However, subsequent trading performance fell below what the valuation would support.
The announcement in Jan was basically your tip-off to bail out. Unfortunately, I ignored the warning, figuring it was “for the long term”.
I have decided to follow my rule of bailing out of a share that drops 10% in a day on a poor trading statement, and sold at 230p.
A painful experience.
Stay safe out there.