Dec 15 (Lagos) - Yesterday,
PZ Cussons Nigeria (
PZ ) reported Q2 2018 (end-Nov) results. While sales of N 22.2 billion grew 42% y/y, PBT and PAT were up 73% y/y and 110% y/y to N 1.1 bn and N 62 8million respectively.
Gross margin expansion of +172bps y/y to 28.5% and the top-line growth delivered during the period more than offset negatives coming through from a double-digit y/y rise in operating expenses and an fx-related loss of N779m, leading to the PBT growth.
Fx loss compares to a loss of –N1.8bn in Q1 2017 (end-Aug). Following the Q1 results, management had guided to more fx-related losses during this financial year on account of fx-denominated account payables.
PZ has now delivered top-line growth for 5 consecutive quarters since Q1 2017. This confirms views of
analysts at FBN Quest in Ikoyi that management may have found a winning formula for its product price-volume mix.
Sequentially, PBT of N1.1bn compares with a loss before tax of –N181m. Sales growth of 18% q/q and a relatively smaller fx loss in Q2 more than offset negatives from a gross margin contraction of -321bps q/q.
Additionally, operating expenses grew by low single digits q/q. Compared with our estimates, sales beat by 19%, while PBT came in ahead by c.28%. The major drivers of the variance were a stronger-than-expected top-line growth and a positive surprise on the fx-related loss line.
On an annualized basis, H1 2018 sales and PBT are tracking well behind consensus FY 2018 estimates of N 85.6 billion and N 9.7 bn respectively. Hence, we expect downward revisions to these estimates.
PZ shares have gained 55.2% ytd (vs 41.2% ytd for the ASI).
Analysts at FBN Quest in Ikoyi rate the
PZ stock Under perform. Their estimates are under review.
reporting for easykobo.com on Friday, Dec 15 2017 from Lagos, Nigeria
Source - analysts at FBN Quest in Ikoyi