In a reversal of fortune Imperial Leather maker PZ Cussons said it was the developed markets that scrubbed up well in half-year figures, rather than the emerging markets.
The firm, which is something of an anomaly from a bygone era, said Europe had delivered strong performance, but the shares fell 1.6p to 314.2p, dragged down problems in Nigeria.
British soap and shampoo maker PZ Cussons Plc said its first-half operating profit fell 4 percent, hurt by tough trading conditions in Nigeria and a devaluation of the currency Naira.
Cussons, said a potential further volatility in the currency and the upcoming presidential elections in its core market Nigeria could be key contributing factors for the full year.
Nigeria is the company’s biggest market, though it also sells in Ghana and Kenya. Africa accounted for about 42 percent of Cussons’ revenue in the year ended May 31
The Manchester-based toiletries manufacturer that counts St Tropez – the biggest name in self-tanning – among its stable, along with Carex handwash, Original Source shower gels and Charles Worthington hair products, started life at a trading post in Sierra Leone as far back as in 1884.
And it is in Nigeria where it sells fridges, detergent and food that it has suffered most. In a trading update operating profits were 4pc down for the half-year but analysts believe the dividend is safe because of its wide geographical spread, and diverse product mix.
This has historically insulated it from any one problem. But geopolitical issues in its key Nigerian market look set to rumble on.
Darren Shirley, an analyst at broker Shore Capital said: ‘Trading has been adversely impacted by number of factors, primarily the ongoing unrest in the North of the country and the weakening currency.
‘In addition, the outbreak of Ebola in the region has hit cross-border trade. The bulk of the pressure has been in the North with, we believe, sales down 7-8 per cent and fierce competition also taking margins down.’
PZ Cussons controls 42 per cent of the baby care market in Nigeria and makes the leading brand of fridge, a requirement for keeping its food products fresh.
It controls 30 per cent of the market for fridges and 40 per cent for freezers and it wants 60 per cent of group sales to eventually come from emerging markets.
But this does make the stock volatile. Nicola Mallard, an analyst at broker Investec, warns there could be further currency fluctuations because of presidential elections due to take place in February.
But she said: ‘We anticipate that the group will look to its strong balance sheet and confidence in the medium-term outlook when assessing dividend policy.’
*From Mail Online and Reuters