PZ Cussons Nigeria Plc realised a profit of N5.5 billion from fixed asset disposal, which powered a group profit advance of 278 per cent to N6.4 billion in its 2022 financial year ended May.
Led by the profit from asset disposal, other income jumped by 174 per cent to N5.8 billion from the corresponding figure of N2 billion in the 2021 financial year. This is ahead of the operating income of N3 billion the company generated for the year.
The consumer goods manufacturing and marketing company has sustained an upturn in earnings for the second year, recovering from a loss of over N7 billion in its 2020 financial year. It ended the 2021 financial year with an after-tax profit of N1.7 billion.
The earnings numbers are contained in the company’s unaudited full-year earnings report for the 2021/22 operations.
Other income was equally the key driver of the profit improvement in the prior fiscal year, which rose by over 1000 per cent from N179 million to over N2 billion.
The second major revenue upturn for the company in the 2022 operations is interest income, which grew by more than three and half times to about N840 million with one-half of it generated in the final quarter.
An increase of 21 per cent in group sales revenue to over N100 billion is the third level support for the elevated revenue performance the company achieved in the year. This marks a stable growth record in sales for the company from an increase of 23 per cent recorded in the preceding financial year.
It is also a sustaining break-out from a two-year drop in turnover at the end of the 2020 financial year. The gains in sales over the past two years are the best records the company has seen in group sales performance in several years.
PZ Cussons sells a wide range of consumer products and home appliances. These include detergent, soap, cosmetics, refrigerators, and air conditioners among others.
The challenge for the company is that cost of sales grew ahead of turnover by over 27 per cent to nearly N76 billion for the year. This left no room to convert the revenue gains into profit. While sales revenue grew by N17.5 billion in the year, gross profit increased by just slightly over N1 billion.
Cost of sales claimed 76 per cent of sales revenue in 2022, increasing from 72 per cent in the prior fiscal year. Gross profit improved only moderately at 5 per cent to N24 billion, which is a marked slowdown from a 170 per cent leap in the preceding year.
Exchange loss remained huge for the company at over N4 billion for the year although lower than almost N6 billion incurred in 2021. With increases in operating expenses, the company closed the year with an operating profit of N3 billion. That represents an increase of 158 per cent over the preceding year’s figure of below N1.2 billion.
The robust increases in other income and interest earnings reinforced operating profit and powered the bottom line for the year.
PZ Cussons is reaping the advantage of a virtually debt-free balance sheet with a drop in its already insignificant finance expenses from over N71 million to N11 million. That boosted the finance income further with net finance income up almost five times to over N828 million.
This is a further improvement from a drop of 84 per cent in finance cost in 2021, which enabled the company to shift from a net finance cost to a net finance income status at the end of that year.
The company earned N1.61 per share for the 2022 financial year, a sustaining improvement from 37 kobo per share in 2021 and a loss per share of N1.82 in the 2020 financial year.
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