Soap manufacturer PZ Cussons has initiated the process of repatriating funds to its holding company in the United Kingdom in recent weeks, as disclosed in a trading statement leading up to its Annual General Meeting (AGM) scheduled for today. The FMCG giant has indicated that this repatriation, coupled with robust underlying free cash flow, is anticipated to lead to a reduction of approximately £20 million in Group gross debt since May 31, 2023.
According to the company, its current naira cash balance stands at an estimated £80-100 million, and it foresees returning £30-50 million before the conclusion of the 2024 financial year, assuming the prevailing economic conditions persist. The statement reads, “Based on prevailing rates, the current Naira cash balance is equivalent to c. £80-100 million. Assuming current market conditions persist, the Group aims to repatriate a further £30-50 million of cash by the end of FY24.”
Despite acknowledging the challenges posed by the unavailability of US dollars for its daily operations, PZ Cussons has implemented operational and corporate strategies to mitigate the impact on its day-to-day functions.
Addressing growth projections, the company expressed optimism about witnessing growth in both gross and operating margins for the year, even in the face of rising inflation in Nigeria. It highlighted that most of its brands have either maintained or increased market share, with no significant alteration in volume trends in recent weeks. The firm expects to achieve an enhancement in both gross and operating profit margins in the first half of the year, despite the prevailing high levels of inflation.
Background:
Foreign companies operating in Nigeria have faced challenges repatriating profits or capital due to the scarcity of US dollars in the Central Bank of Nigeria, resulting in a substantial backlog running into billions of USD. Infostride News previously reported that the trapped funds for international airline operators in Nigeria amounted to $812.2 million, marking the highest such accumulation globally.
The Governor of the apex bank, during his senate screening, emphasized that the immediate priority of the new team would be to clear the backlog of FX owed to businesses, estimating the figure to be around $7 billion. In November, Infostride News reported the commencement of the clearance of the FX backlog by the country’s lender of last resort.
PZ Cussons’ move to repatriate funds signals a positive development for foreign companies navigating the challenges of repatriation in the Nigerian market. The company’s proactive steps, coupled with its growth expectations, underscore its commitment to addressing operational hurdles and maximizing opportunities in the evolving economic landscape.
Support InfoStride News' Credible Journalism: Only credible journalism can guarantee a fair, accountable and transparent society, including democracy and government. It involves a lot of efforts and money. We need your support. Click here to Donate