Shares in branded consumer goods group PZ Cussons (PZC) gained 1.3% to 272p on Tuesday, taking their year-to-date gain to 18%, as investors welcomed a positive third quarter trading update from the Carex-to-Morning Fresh maker.
In the early stages of a multi-year turnaround devised by new CEO Jonathan Myers, PZ Cussons reported sales and profit growth in all regions in Q3, flagged a further drop in net debt and assured it is on track to generate annual pre-tax profits in line with the market’s £63 million-to-£64 million forecast range.
‘MUST WIN BRANDS’ HAVE MOMENTUM
One of Shares’ key stock selections for 2021, PZ Cussons' sales grew by 4.7% to £145.3 million during the quarter ended 27 February.
This renewed momentum behind the business was maintained despite the quarter ending with the anniversary of the pandemic, which drove a spike in demand for hand wash brand Carex and Morning Fresh washing up liquid.
‘The encouraging growth was broad-based,’ explained Myers, ‘with all regions delivering top and bottom-line growth, enabling the group to deliver operating margins ahead of Q3 last year, while continuing to increase investment behind our Must Win Brands and new strategic capabilities.’
Sales from the Must Win Brands - namely Carex, St. Tropez, Sanctuary Spa, Premier, Joy, Cussons Baby, Morning Fresh and Original Source - grew by an impressive 12% in the quarter, showing the stronger ability of these brands to succeed.
Carex in the UK and Morning Fresh in Australia and Nigeria performed strongly amid elevated demand for hygiene due to the pandemic, yet PZ Cussons proved it is much more than a Covid play as other Must Win Brands including Sanctuary Spa, Original Source and Cussons Baby put up strong performances.
Relative to the first half, growth in Europe and America was slightly tempered by the beauty category, but PZ Cussons’ beauty brands including Sanctuary Spa and St. Tropez should benefit from the release of pent-up demand as lockdowns ease.
‘Looking ahead,’ said Myers, ‘we will continue to proactively navigate the volatility of the pandemic, the competitive landscape and commodity cost headwinds, but at the same time remain focused on executing the initial phase of our new strategy - Building Brands for Life, Today and for Future Generations.’
