Consumer goods group PZ Cussons has cut its full-year dividend to invest in expanding hand sanitiser production and take advantage of booming demand during the pandemic.
Jonathan Myers, who took over as chief executive in May, said that the group’s hygiene business had new opportunities to increase production and expand ranges, including its Carex hand sanitiser brand, to meet consumer needs. Demand for liquid soap and sanitiser “spiked” in April and May, he said, and was likely to stay high as long as the health crisis continues.
However, shares in the group fell as much as 7 per cent on Wednesday after it published its results, announced it would cut its full-year dividend from 8.28p a share last year to 5.80p a share and warned of an uncertain outlook.
The group’s chief financial officer said the company was following other FTSE groups that have reduced their dividend to more “sustainable” levels during the crisis.
The pandemic has had a mixed impact on the business. Sales of Carex liquid soaps and hand sanitising gel helped offset weaker demand for its Imperial Leather soap and Original Source shower gels.
Poor performance in Nigeria — Cusson’s Africa business, which also includes Ghana and Kenya, account for almost a third of its sales — was another factor that dragged adjusted pre-tax profit in the year ending in May down 14.3 per cent to £62m.
“We saw extraordinary outperformance for Carex in the final quarter tempered with very difficult conditions in beauty, both as a result of the coronavirus pandemic,” said Caroline Silver, chair of the group.
Strong sales of Carex in the UK helped boost results in the first three months of the financial year to the end of August. Revenue for the group grew 19 per cent to £158.1m compared with the same period a year earlier.
The company noted however that: “The environment continues to remain volatile in our markets with adverse economic headwinds in the UK, Nigeria, Australia and Indonesia . . . Competition remains strong in addition to Covid-19 related risk of volatility in our supply chain.”
About 37 per cent of the FTSE 250 company’s revenues come from Europe and the US. The Asia Pacific region accounts for the rest.
Mr Myers said that he was focused on how retail habits would change over the coming months as the impact of the pandemic continues to be felt.
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