- Safiu Kehinde
PZ Cussons Plc has halted the plan to sell its African subsidiaries on account of Nigeria’s economic recovery and growth amongst other factors.
The company announced the change in decision in a statement issued on its official website on Thursday.
According to reports, PZ Cussons had in April 2024 announced plans to sell its 50% equity interest in PZ Wilmar Limited, its non-core edible oils business in Nigeria, to Wilmar International Limited, its Joint Venture partner, for a total consideration of $70 million.
The group would in September 2024, announced further plan to sell its African subsidiaries.
“The fact that the Nigerian business has, since FY22, more than doubled the number of stores which it serves directly, has been a major contributor to the business’s growth in recent years.
The company announced plan to expand into new category adjacencies, including a focus on men’s grooming and beauty, with the existing brands of Venus, Imperial Leather, and Premier.
It is also considering expansion in other African markets, which will be served from its existing footprint in Nigeria and Kenya.
“The strategy is based on the significant long-term opportunity in Africa, where population is forecast to grow by more than 900 million over the next 25 years, representing over half of total global population growth.
“Nigeria’s population alone is forecast to increase by over 100 million, further benefitting from urbanisation and rapidly growing middle classes. Recent economic and currency trends have been more favourable, supporting strong, double-digit revenue growth in our Africa business in the first half of the financial year.
“The Board is confident that PZ Cussons is well placed to succeed through leveraging local insights and its brand heritage.
“The business will continue to benefit from its scale in manufacturing and route-to-market expertise, particularly against a competitive landscape which has seen a number of multi-nationals exit the market in recent years.
“Nearly 80% of Nigeria’s revenue is generated from brands holding #1 or #2 positions in their categories.” The statement added.
However, the group, considering the historic volatility of the Nigerian business and the inherent risk associated with operating in the market, has reportedly put in place a set of operational and financial measures to reduce risk associated with any future currency volatility or business disruption.
“These largely relate to foreign exchange management and to the generation and use of cash. Adherence to these guardrails will be reviewed by the Group’s Board at all of its regular meetings.” It said.