PZ Cussons Considers Leaving Africa Following Sharp Decline in Nigeria’s Sales

British soap maker PZ Cussons, founded in Sierra Leone 140 years ago, is considering leaving Africa after a significant sales slump in its Nigerian operations. The company’s sales in Africa, which account for almost 30% of its revenue, have fallen by 48% in the past year, leading to a strategic review of its presence on the continent. The potential exit could signal a pivot toward other markets and a focus on reducing debt, as reported by Bloomberg.

Jonathan Myers, CEO of PZ Cussons, mentioned that the company is keeping its options open for the future while respecting its historical roots in Africa. He stated that several outcomes are possible, including a change in ownership, and emphasized the need for an objective approach to the review.

Despite the sales drop, the company’s share price rose by 5% on April 24, 2024, although it remains down 50% over the past 12 months. PZ Cussons also plans to sell its fake tan brand, St. Tropez, which could be valued at around £100 million, according to Investec analyst Matthew Webb. The company aims to focus on branded items for babies, beauty, and hygiene products, exemplified by its recent acquisition of Childs Farm, a company specializing in toiletries for babies with sensitive skin.

PZ Cussons operates across various geographies, including Europe, the Americas, and the Asia-Pacific region, with a key focus on the UK, Australia, New Zealand, and Indonesia. However, its business in Nigeria has faced numerous challenges, including the devaluation of the naira, which led to a significant drop in sales in pound terms, along with increased inflation, impacting consumer purchasing power.

In March, Nigerian regulators declined PZ Cussons’s application to buy out the 27% of its Nigerian arm that it does not own, intending to delist it. The regulator deemed the offer price of N23 per share to be unfair. Following a strategic review, the company cited that it has become too complicated for its size, with “financial and human resources spread too thinly to generate consistent returns.”

The Nigerian market is facing broader challenges for both local and multinational manufacturers, including power crises, constant devaluation of the naira, forex availability issues, and stringent government policies. Other companies, such as Unilever, GlaxoSmithKline, Sanofi, and Procter & Gamble, have also announced exits or reductions in their operations in Nigeria due to similar issues. The Manufacturers Association of Nigeria’s president, Francis Meshioye, noted that the N144 billion spent on alternative energy sources by manufacturers in 2022 significantly impacted operations, adding to the pressure on international companies like PZ Cussons.