Why PZ Cussons is exiting Nigeria’s market: Need for comprehensive reforms in Nigeria’s business environment?
By Seun Johnson
After several decades of business operations, PZ Cussons Plc, a household name renowned for producing consumer goods and healthcare products such as Imperial Leather, soaps, detergents, milk, powdered milk, olive oil, and several others, has announced its decision to exit the Nigerian market.
The British multinational has been in existence for over 120 years, employing more than 3,500 people in its factories across the country.
Despite its deep roots and years of operation, the company has concluded plans to pull the plug not only on Nigeria but also on the entire African continent. Africa accounts for about 28.7% of the group’s revenue, with Nigeria being its largest and most diverse single market.
PZ Cussons’ decision to exit the country is driven by economic challenges such as naira devaluation and hyperinflation, which have significantly impacted its sales and operations, resulting in a 48% sales decline.
According to its preliminary financial report for the year ending May 31, 2024, PZ Cussons disclosed that the naira had lost 70% of its value, which significantly affected the company’s financial performance in Nigeria. As a result, the board has received multiple expressions of interest from potential buyers for its African businesses, recognizing the value of the company’s established brands across the continent.
“Over the last 12 months, we have made operational progress and delivered on our strategic goals despite macroeconomic challenges.
“The 70% devaluation of the naira has had a significant effect on our financial results. We are working hard to mitigate this impact while continuing to serve Nigerian consumers facing unprecedented inflation and economic hardship,” the report reads in part.
Despite challenges in Nigeria, PZ Cussons reported strong performance in its UK personal care business, with double-digit revenue growth for the year. This growth contrasts with the company’s losses in Nigeria, where its subsidiary, PZ Cussons Nigeria Plc, recorded a ₦94.78 billion loss in Q3 2023/24, following a ₦74.14 billion loss in Q2, driven largely by naira depreciation.
In April, PZ Cussons CEO Jonathan Myers stated that the company was reviewing its brands and geographical focus due to the complex economic situation in Nigeria. This review came barely a month after the Securities and Exchange Commission rejected the company’s request to acquire the shares of minority shareholders in its Nigerian subsidiary, PZ Cussons Nigeria Limited.
In September 2023, PZ Cussons expressed interest in purchasing the remaining 26.73% minority shares of its Nigerian unit at ₦21 per share. As of May 31, the company held a 73.27% stake in the subsidiary, representing 2.90 billion shares valued at ₦45.53 billion.
The company also reported a foreign exchange loss of £107.5 million due to the naira’s devaluation, which led to substantial losses in its Nigerian operations. Despite these setbacks, PZ Cussons remains optimistic about its long-term prospects, stating that it aims to streamline its portfolio to focus on stronger brands and sustainable, profitable growth.
While its exit from Nigeria signifies the end of a century-long business journey, it highlights the growing challenges faced by multinational companies operating in volatile economies. This departure underscores the need for comprehensive reforms in Nigeria’s business environment, which would not only attract foreign investment but also retain it.
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