Olufemi Adeyemi 

PZ Cussons Plc, the parent organization of PZ Cussons Nigeria, has announced its intention to divest its African subsidiaries.

In the financial report for the year ending 31 May 2024, released on Wednesday, the company indicated that it is considering both partial and complete sales.

This strategic move aims to mitigate the company's vulnerability to fluctuations in the naira.

The consumer goods manufacturer noted that its board has received several expressions of interest regarding the sale of its African operations.

PZ Cussons stated, "The Group is currently in the process of selling its St Tropez brand and is evaluating potential transactions that may result in a partial or full divestiture of its African business, having garnered multiple interests."

Furthermore, the company emphasized that such a sale could significantly lessen its exposure to the volatility of the Naira exchange rate.

The Board has pledged to allocate any proceeds from these transactions primarily towards reducing gross borrowings, thereby lowering the Group's net interest expenses.

Jonathan Myers, the chief executive officer of PZ Cussons, stated that Nigerians are currently experiencing unprecedented levels of inflation and economic hardship.

Myers noted that the devaluation of the naira has had a considerable effect on the company’s financial performance.

“This period has seen a 70% devaluation of the Nigerian Naira, which has significantly influenced our reported financial results,” he remarked.

“We have made substantial efforts to lessen the impact of this situation on the Group while continuing to support Nigerian consumers who are grappling with extraordinary inflation and economic challenges.”

In relation to the naira’s devaluation, PZ Cussons reported a foreign exchange loss of £107.5 million, which “primarily stemmed from the translation and settlement of USD-denominated liabilities in our Nigerian subsidiaries and is entirely attributable to the naira’s devaluation, which decreased by 70% from May 31, 2023, to May 31, 2024.”

In April, Myers indicated that the company was assessing its brands and geographical presence in light of the macroeconomic challenges and complexities in Nigeria.

His comments came a month after the Securities and Exchange Commission (SEC) denied PZ Cussons’ request to purchase shares from minority shareholders in PZ Cussons Nigeria Limited, its subsidiary in Nigeria.

In September 2023, PZ Cussons expressed interest in acquiring the remaining 26.73 percent minority shares of its Nigerian subsidiary, offering a price of N21 per share.

As of May 31, PZ Cussons owned a 73.27 percent stake in the Nigerian subsidiary, equating to 2.90 billion shares valued at N45.53 billion as of September 18.