Equity prospects

PZ Cussons

Theo Wyld, Research Analyst

Price£2.40

52 week high-low£3.68—£2.00

Net yield3.5%

Hist / pros per15.1—16.6

Equity market cap£1,020m

PZ Cussons (PZ) is a global FMCG company, owning well-known brands such as Imperial Leather, Carex, and Original Source, to name a few. PZ holds a unique distribution franchise across its territories and is highly accomplished at operating under awkward local conditions.

PZ has long set a record of successfully distributing personal goods in business conditions where other larger operators encounter logistical and operational difficulties. The prime example of this is Nigeria, which is their largest market.

Another method they use to take on those with larger marketing and R&D budgets, such as Unilever, is constant product innovation. The constant flow of new aromas and flavours developed in their in-house perfumery keep customers interested.

The experienced management team are deft at navigating the choppy waters of troublesome emerging markets. However, there is only so much they can do in extreme economic conditions. In just the last two years the Nigerian Naira has lost almost half of its value versus the USD as political instability has been rife. Adding the fact that the devaluation is markedly worse for the unofficial exchange rate (a better proxy for what PZ and their customers actually pay/receive), it is no wonder PZ had to warn on profits in March this year.

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