25/10/2022
All the big manufacturing companies listed on the Nigerian stock exchange are struggling and grasping for breath at the moment.
From Unilever to PZ, none is spared from this brutal meltdown.
PZ that has these popular products on the market with popular brand names like Morning Fresh, Zip, Canoe, Premier, Excel, Joy, Stella, Venus, Imperial Leather, Cussons Baby, Original Source, Mamador oil, Carex. declared a profit of N6.6 billion from a revenue of N99.5 billion.
In reality, the company made a profit because they sold one of their properties in Ikoyi, which they described as non-core residential properties.
The company sold the Ikoyi property for 8.6 billion naira, and that is where their profit for this year came from and not from their core business of selling their popular products like Joy soap in the market.
When you remove the sale of the Ikoyi properties from their book,the company made a loss this year.
The company made a loss of N231 million in 2022 as against a N946 million profit made in 2021.
When you look at smaller companies in the same segment who are more nimble, they are not struggling like PZ or Unilever.
I know a friend in the personal care category like PZ.
His small factory is in Agbara, Ogun state.
My friend is cashing out and cannot even meet demand.
His only problem is the high cost of raw materials, but consumers are buying his products.
This is why I don’t understand where the struggle of PZ's is coming from.
Things are so bad for PZ Nigeria that the company is staying afloat because of the N53.4 billion bailout and inter company loan from the parent company in the UK , PZ UK.
PZ Nigeria has written down a significant part of the manufacturing plant, and equipment in this segment has been written down to zero.
When you remove the bailout, PZ is dead and dried.
For proper context, the assets of PZ in Nigeria are just worth 39 billion naira , so what this means is that even if PZ decides to close down today because of the harsh economic environment and liquidate their assets, the parent company cannot recover their N53.4 billion bailout money back because the assets can not pay back the inter-company loan.
I don’t know. Maybe the overhead and operational costs that these big guys are carrying that the small players don’t have are dragging them back or maybe the Buhari economic policies are choking them to death.
I don’t understand again.