At the conclusion of the 2024 fiscal year, PZ Cussons Plc’s unaudited financial statement revealed that the company’s balance had been compromised by more than N47 billion in negative equity capital.
The company’s cumulative loss of N53.627 billion completely destroyed PZ Cussons’s premium account and share capital, leaving the business gasping for air. The company’s equity capital was substantial in May 2023, reaching N48.360 billion at the time prior to the mid-year 2024 policy devaluation. When the government depreciated the local currency in 2024, the corporation suffered a loss.
Owing to significant foreign exchange losses on its foreign exchange-exposed balance sheet, the company’s profitability switched to loss-making. In conclusion, the strategy of Naira devaluation damaged its balance sheet.
PZ Cussons would require a huge capital injection to boost its damaged shareholder fund as its exchange rate loss widened to N158 billion from N4.953 billion in 2023 in 12 months. In its latest earnings release, PZ Cussons reported a loss of more than N96 billion after tax at the end of the fourth quarter of the financial year 2024.
Details showed that over 12 months, revenue actually grew by 34% to N152.156 billion at the end of the fourth quarter of 2024 from N113.964 billion in Q4-2023. This suggests sales were not the problem but rather its exposure to exchange rate volatility. The importation of goods is central to PZ Cussons business.
The company’s sales costs climbed to N91.561 billion in 12 months from N81.015 billion in the comparable period, up by 13% year over year. Compared growth in revenue and sales costs suggests that PZ Cussions business activities are not the problem per se.
Down the line, selling and distribution costs rose to N13.092 billion in 2024 from N11.72 billion, to support the improved activities level that generated sales growth.
The company impairment on trade receivables also reversed, which was good for its earnings performance if things were to be under normal circumstance.
PZ Cussons administrative expenses went down significantly, lower by 84% year on year from N7.881 billion to N11.279 billion. The significant decline was as a result of Group’s parent decision to write down of $11.08 million relating to global IT shared cost.
The elephant in the room was the company huge FX losses. According to its unaudited report, the company recorded operating loss of N111.543 billion in Q4-2024 from N8.22 billion recorded as profit 12 months earlier.
In the period, the company’s loss before tax obligation was about N109 billion, reversing its previous N20.5 billion pretax profit a year ago.
