Pz Cussons Plc · LSE:PZC
Pz Cussons — H1 FY24 Earnings Presentation
30 slides from Pz Cussons's earnings presentation, Jan 7, 2024
Slide 1: 2024 Half Year Results
2024 HALF YEAR RESULTS 7 FEBRUARY 2024
Slide 2: Agenda
AGENDA Introduction Financial review Strategic update Summary Q&A 2
Slide 3: Key Messages
KEY MESSAGES BUILDING A HIGHER GROWTH, HIGHER MARGIN, SIMPLER AND MORE SUSTAINABLE BUSINESS 1 2 3 4 Underlying strategic Managing Nigeria Addressing Beauty Confident in long- progress volatility challenges head on term opportunities The turnaround in UK Our interventions have Measures are already in
Slide 4: Financial Review
FINANCIAL REVIEW SARAH POLLARD - CHIEF FINANCIAL OFFICER FOR EVERYONE, FOR LIFE, FOR GOOD. 4
Slide 5: Summary Financials
SUMMARY FINANCIALS REPORTED RESULTS ARE MATERIALLY IMPACTED BY THE NAIRA DEVALUATION £m unless otherwise stated H1 FY24 H1 FY23 17.8% (£59.8m) reported revenue decline of which £52.9m attributable to Revenue 277.1 336.9 Naira devaluation LFL revenue growth (%) 2.2% 6.1% Nine consecutive quarters of
Slide 6: Summary Financials
SUMMARY FINANCIALS REPORTED RESULTS ARE MATERIALLY IMPACTED BY THE NAIRA DEVALUATION £m0unless otherwise stated H1 FY24 H1 FY23 £m unless otherwise stated17.8% (£59.8m) reported revenue H1decline FY24 FY23 FY24 of which £52.9m attributable to Naira Revenue 277.1 336.9 Operating profit devaluation 30
Slide 7: Group Revenue
GROUP REVENUE CONSTANT CURRENCY REVENUE GROWTH DRIVEN BY GROWTH IN AFRICA AND UK PERSONAL CARE Price/mix growth of 7.0% LFL +2.2% Volume (4.8)% 272.6 (1.9) (5.3) 13.5 (1.8) 277.1 FX1 (64.3) UK Personal Care and Closure of in-house Beauty fragrance business Childs Farm H1 FY23 revenue Europe & Americ
Slide 8: Operating Profit
OPERATING PROFIT GROWTH IN OPERATING PROFIT AND MARGIN ACROSS EACH REGION Gross margin improvement: 17% constant currency growth 4.1 (3.8) (7.1) 1.5 2.7 33.2 30.6 Re-allocation and UK Personal Care ANZ gross profit Wilmar Joint investment in growth partially offset by Indo Venture Translational cent
Slide 9: Segmental Performance: Europe and the Americas
SEGMENTAL PERFORMANCE: EUROPE AND THE AMERICAS STRONG MARGIN GROWTH DRIVEN BY UK PERSONAL CARE PARTIALLY OFFSET BY A DECLINE IN BEAUTY REVENUE £m unless otherwise stated H1 FY24 H1 FY23 Growth in UK Personal Care and Childs Revenue 97.2 99.5 Farm partially offset by decline in Beauty LFL revenue gro
Slide 10: Segmental Performance: APAC
SEGMENTAL PERFORMANCE: APAC CONTINUED STRONG MARGIN GROWTH DRIVEN BY ANZ £m unless otherwise stated H1 FY24 H1 FY23 ANZ: Continued growth driven by Morning Fresh and Radiant Revenue 88.8 102.2 Indonesia: Revenue decline due to decline in consumer LFL revenue growth (6.0)% 7.5% spend and competitiven
Slide 11: Segmental Performance: Africa
SEGMENTAL PERFORMANCE: AFRICA STRONG LFL REVENUE GROWTH WITH MARGINS SUPPORTED BY WILMAR JOINT VENTURE £m unless otherwise stated H1 FY24 H1 FY23 Revenue 90.8 133.2 31.8% reported decline due to Naira devaluation LFL revenue growth 17.4% 15.6% Price/mix driven. Mid-single digit Operating profit 13.7
Slide 12: Cash Flow and Net Debt
CASH FLOW AND NET DEBT IMPROVING GROSS DEBT TRENDS DUE TO CASH GENERATION AND REPATRIATION FROM NIGERIA 1 June 2023 H1 FY24 free cash flow 2 December 2023 £m unless otherwise stated Reported FX Constant FX2 Total cash 256.4 150.5 (22.4) 128.1 Gross debt (251.2) (251.2) 25.9 (225.3) £25.9m reduction
Slide 13: FY24 Outlook
FY24 OUTLOOK “At our FY23 full year results in September, we noted that the Nigerian macroeconomic environment, and the currency particularly, would be the key determinant of FY24 results. Since then, we have experienced further depreciation of the Naira, with the official rate falling more than 30%
Slide 14: Strategic Update
STRATEGIC UPDATE JONATHAN MYERS - CHIEF EXECUTIVE OFFICER Imperial Leather pack shot image created using Artificial Intelligence platform Midjourney and based on key search terms and product fragrances to improve online shopping experience for consumers.
Slide 15: Our Strategy in Summary
OUR STRATEGY IN SUMMARY BUILD SERVE REDUCE DEVELOP GROW BRANDS CONSUMERS COMPLEXITY PEOPLE SUSTAINABLY Introduction Financial review Strategic update Summary 15
Slide 16: A Reminder of Our Priorities for FY24
A REMINDER OF OUR PRIORITES FOR FY24 WE ARE DELIVERING AGAINST THE FY24 PRIORITIES WE ESTABLISHED IN SEPTEMBER 1 Further simplifying and strengthening Nigeria 2 Returning the UK to sustainable, profitable growth 3 Driving further expansion from the core 4 Continuing to transform capabilities Introdu
Slide 17: Our FY24 Priorities: Nigeria
#1 NIGERIA OUR FY24 PRIORITIES: NIGERIA WE ARE STRENGTHENING OUR UNDERLYING BRAND POSITIONING IN NIGERIA Driving awareness and Driving new usage occasions Increasing distribution penetration ‘De-seasonalising’ Stella Recruiting the next Total stores under direct to build demand outside generation of
Slide 18: Our FY24 Priorities: UK
#2 UK OUR FY24 PRIORITIES: UK TURNAROUND IN PERFORMANCE DRIVEN BY BUILDING BACK EXECUTIONAL CAPABILITIES RE-BUILDING THE BASICS H1 FY24 PERFORMANCE1 Marketing Innovation Total UK Personal Care portfolio value All brands in share and and comms share has improved significantly in FY243 revenue growth
Slide 19: Diagnosing the Recent Underperformance in Beauty
DIAGNOSING THE RECENT UNDERPERFORMANCE IN BEAUTY BRAND EQUITY IN OUR BEAUTY PORTFOLIO REMAINS STRONG BUT INNOVATION AND EXECUTION HAS BEEN UNSATISFACTORY 39% Highly attractive Multiple awards market share1 distribution throughout FY24 #1 #1 for Spontaneous Awareness2 ‘improved wellbeing/self-care’ 8
Slide 20: Addressing the Beauty Challenges
ADDRESSING THE BEAUTY CHALLENGES TWO ORGANISATIONAL CHANGES TO ADDRESS UNDER-PERFORMANCE IN BEAUTY AND STRENGTHEN GROUP-WIDE BRAND-BUILDING Combining Personal Care and Beauty …and strengthening Group-wide brand- 1 2 Business Units to simplify the UK… building and growth capabilities UK PERSONAL CARE
Slide 21: Our FY24 Priorities: Expanding Beyond the Core
#3 EXPANSION OUR FY24 PRIORITIES: EXPANDING BEYOND THE CORE CONTINUED SUCCESS IN GROWING OUR BRANDS INTERNATIONALLY In partnership with 100+ reviews, 1m+ reach From 5 mega influencers + 54 macro/micro Over 200 4-5 star reviews across the range influencers within 3 months of launch Growth in Expansio
Slide 22: Our FY24 Priorities: Capabilities
#4 CAPABILITIES OUR FY24 PRIORITIES: CAPABILITIES REVENUE GROWTH MANAGEMENT HAS BEEN FOCUSED ON UK PERSONAL CARE AND WILL BENEFIT OTHER MARKETS OVER TIME UK PERSONAL CARE Investing in RGM muscle… …while optimising in-year performance RGM ‘toolkit’ launched in UK: • Standardisation of best practice O
Slide 23: Summary
SUMMARY FOR EVERYONE, FOR LIFE, FOR GOOD. 23
Slide 24: Key Messages
KEY MESSAGES BUILDING A HIGHER GROWTH, HIGHER MARGIN, SIMPLER AND MORE SUSTAINABLE BUSINESS 1 2 3 4 Underlying strategic Managing Nigeria Addressing Beauty Confident in long- progress volatility challenges head on term opportunities The turnaround in UK Our interventions have Measures are already in
Slide 25: Q&A
Q&A FOR EVERYONE, FOR LIFE, FOR GOOD. 25
Slide 26: Appendix
APPENDIX FOR EVERYONE, FOR LIFE, FOR GOOD. 26
Slide 27: Foreign Exchange Analysis
FOREIGN EXCHANGE ANALYSIS £m % FY23 revenue H1 FY24 H1 FY23 % change Revenue impact (£m) GBP 27% 1.00 1.00 - - NGN 35% 915 509 (44)% (52.9) AUD 14% 1.92 1.74 (9)% (4.3) IDR 11% 19,161 17,780 (7)% (3.1) USD 7% 1.25 1.18 (6)% (0.9) Other 6% - - (3.1) Total 100% (64.3) 27 Table shows the impact of tran
Slide 28: Cash Flow and Net Debt
CASH FLOW AND NET DEBT £m 20.0 (13.2) (15.6) 4.8 FY23 Net (debt) / cash1 5.7 H1 FY24 net cash flow (4.8)2 FX and other3 (97.6) H1 FY24 Net (debt) / cash1 (96.7) £m EBITDA 39.7 Adjusting items (5.5) (0.8) (4.8) Working capital (4.6) Capex (2.4) Other (7.2) Free Cash flow 20.0 Loan repayment Free cash
Slide 29: Historic NGN/GBP Rates
HISTORIC NGN/GBP RATES 31 January 0 FY23: 536 H1 FY24: 915 20241: 1,234 H1 FY23: 509 500 1000 1500 31 January 2000 2024 closing rate: 1,852 1 June 2022 1 September 2022 1 December 2022 1 March 2023 1 June 2023 1 September 2023 1 December 2023 29 Rates shown are NGN/GBP rates used to translate the P&
Slide 30: Glossary
GLOSSARY Term Definition APM Alternative performance measure Adjusted earnings per share Earnings per share from continuing operations adjusted for the impact of adjusting items Brand Investment An operating cost related to our investment in brands (previously 'Media & Consumer') Adjusted operating