British soapmaker Cussons spooks investors with currency hit
By Neil Maidment
LONDON (Reuters) - British soap and shampoo maker PZ Cussons said its first-half performance was hurt by weak emerging market currencies that showed no signs of improving, prompting a fall in its shares as some analysts cut their full-year forecasts.
Cussons, the maker of Imperial Leather soaps, nevertheless posted a 7.9 percent rise in pretax profit to 47.6 million pounds for the six months to November 30 - in line with expectations - on sales up 4.1 percent to 431.8 million.
But it said that performance was affected by weak Asian exchange rates, particularly the Australian dollar and Indonesian rupiah, which shaved 2 percent off revenue growth. It added that while trading had been in line since the end of the first half, emerging market currencies remained under pressure.
The group, whose largest market is Nigeria, made around 22 percent of its revenue in Asia in 2013.
The firm's shares fell 2.5 percent to 386.3 pence at 1152 GMT, against a broadly flat FTSE 250 index, with analysts noting that broker Panmure Gordon trimmed full-year forecasts.
"Given the building currency headwinds, we are cutting our full-year pretax profit forecast from 119.1 million pounds to 116.5 million pounds," analysts said in a note.
PZ Cussons said that despite "challenging markets" it saw good prospects for continued growth, supported by a focus on new and improved product ranges in order to grow sales.
It raised its interim dividend by 7.7 percent to 2.53 pence.
NEW BRANDS
A new product push underpinned sales growth in the group's core markets and the appointment of Kate Moss as its St Tropez brand ambassador had boosted sales of the tanning products "probably 10 percent more than they would have been", according to Chief Financial Officer Brandon Leigh.
Leigh said new and relaunched products - such as its Imperial Leather Foamburst shower range and Carex handwash - had proved effective in attracting squeezed consumers into making purchases and seeing off increasing competition.
The UK market in particular had put in a "robust" performance, Cussons said, while in Nigeria, which makes up 90 percent of its sales in Africa, growth was improving across all segments.
The group said it expected to expand its Australian baby food business Rafferty's Garden, bought last year for 42.2 million pounds, into New Zealand in the first half of 2014, and into some Asian cities during the second half.
The company also said it anticipated a decision from regulators on whether to sanction the 46.6 million pound sale of its Polish home care business to Henkel within the next month.
($1 = 0.6090 British pounds)
(Editing by Sophie Walker)
