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PZ shares rise despite decline in half-year profit

By on February 3, 2015

The shares of P.Z Cussons Nigeria Plc appreciated by 18.6 per cent last week despite the bear run recorded in the stock market last week. The market closed negatively as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell by 0.84 per cent. However, PZ Industries  was among the price gainers that escaped the bears’ grip. The equities closed as the second highest price gainer, rising from N25.00 to N29.64 per share.

The gain came against expectation that the decline in six months financial results of the company ended   November 30, 2014.   PZ posted a revenue of N31.659 billion in 2014, a decline from N32.46 billion recorded in the corresponding period of 2013.

Profit after tax fell 37 per cent from N2.317 billion to N1.441 billion.
PZ UK, the parent company of PZ Nigeria said the decline in sales and profits in Nigeria were mainly due to difficult trading conditions, insecurity in the North and the naira devaluation.

“These factors continue to offset meaningful growth in the south of the country, especially in the electrical goods business and food segment joint ventures. Sequentially, sales, PBT and PAT were all up 11 per cent quarter on quarter (q/q), 23 per cent q/q and 29 per cent q/q respectively. The q/q trend was mainly due to seasonality effects and as such is not surprising,” analysts at FBN Capital Limited said.

According to the analysts, compared with their  estimates, sales missed by -6 per cent; PBT and PAT also missed by 32 per cent and 35 per cent  respectively.

“The numbers also track behind consensus PBT and PAT estimates of N7.2 billion and N5.0 billion. On our published estimates, PZ shares are trading on a 2015E P/E multiple of 21.6x for 7.6 per cent   earnings per share growth in 2016E. After shedding 33 per cent in 2014, PZ shares have outperformed the NSE ASI gaining 6.3 per cent so far this year. We believe this recent appreciation is as a result of the market assuming the shares have sufficiently sold off, however, on the back of these numbers we expect a negative reaction from the market,” the analysts said.

 

[ThisDay]