PZ Cussons Plc

Good morning all and thank you for joining us on today's PZ Cousins full year results. My name is Drew and I'll be the operator on the call today. During the call, we will have an audio Q&A session following the prepared remarks. If you would like to ask a question, please press star followed by one on your telephone keypad and to withdraw your question, it's star followed by two. With that, it's my pleasure to hand over to Jonathan Myers to begin. Please go ahead when you're ready.

Thank you very much, Drew, and good morning, everyone, and thank you for dialing into our results presentation for the year ended 31st of May, 2025. For those of you who can see the slides we're presenting this morning, it's worth calling out a successful example of our brand-building activities in the last year on the slide in front of you. Original source advertising on a London bus as part of our Nature Hits Different campaign. I'll have some more detail on this later, but suffice to say for now that the activity helped deliver another year of growth for the brand in F125. Turning to the agenda then for this morning, I will start with a brief introduction before handing over to Sarah to take us through a review of the financial. I'll then provide a broader update on strategic progress and performance before moving to a summary and a chance for you to ask any questions. Note on this slide, too, an example of how we've been building brands over the past year. This one, driving trial and customs baby, specifically the Telon Oil, launched last year, as shoppers browse a specialist baby storage carton. Our Telon Oil has now reached 10% household penetration in urban Indonesia and is growing market share. So, moving to our main messages for this morning, we are making progress against our strategy. Our four priority markets delivered a strong performance. We have good momentum in the core of our business. The UK delivered a strong improvement in profitability, fueled by revenue growth and gross margin expansion. Indonesia ended the year with its fifth consecutive quarter of revenue growth, with a healthy mix of high single-digit revenue and volume growth for the year. We continued to gain market share in Australia on each of our top three brands and grew operating profit overall. But we were still battling against the softer consumer backdrop holding back our revenue. Finally, our Nigerian business demonstrated its resilience, continuing to perform well in a high-inflation environment. Meanwhile, we have also made progress pushing change through the business, strengthening our brand-building capabilities, driving better integration of our marketing and R&D teams, and extending our planning horizons to enable greater focus on sufficiency and quality of our multi-year innovation plans. Since the close of our financial year, we announced the sale by joint venture partner, Walmart International, in line with the objectives of the strategic review we announced in April 2024 to streamline and simplify our portfolio. It was also after careful consideration of alternative value creation options that we announced the decision to retain CentroPay, setting a new strategic direction with a new partner in the U.S. and a dedicated operating model within PBED to deal with. While I appreciate you will naturally have questions on our wider African business, all I'm able to say today is that we are continuing to progress our strategic review and will, of course, provide an update when we do have something to say. Finally, we are working hard on reducing costs and unlocking value in the business, whether that's through reducing discretionary spend, tackling our structural cost base, or the sale of surplus non-operating assets. I'll cover more on this later. So overall, we know there is more work to be done and that we have not yet delivered all that we set out to achieve. But there has been good progress to date, particularly the underlying momentum in the core of the business. Now, we are focused on delivering our strategic actions and operational improvements to evolve Peter Cousins into a business with a more focused portfolio and stronger brands, delivering sustainable, profitable growth. And with that, I'll hand over to Sarah to take us through the funding process.

Thanks, Jonathan, and good morning, everyone. I'm going to share a summary of our FY25 full-year results, walk you through the key movements at a group level, then by segment, and finish with current trading and guidance for the year ahead. As Jonathan mentioned, we've seen momentum across most of our portfolio, with a particularly strong performance in the UK and Indonesia. Group revenue declined by 14 million pounds to $514 million, with a $47 million reduction attributable to the Naira, which, while more stable in FY25, was nearly 40% weaker on average versus sterling than in FY24. Life-to-life revenue growth, calculated on a constant currency basis, was 8%, driven by pricing in Nigeria. Excluding Africa, life-to-life revenue growth was flat. Adjusted operating profit was 55 million pounds, down 6%, with adjusted operating profit margin lower by 30 basis points at 10.7%. However, as you can see from the bottom of the slide, excluding from each year's figures the contribution of BZ Wilmar, the sale of which we announced in June, group adjusted operating profit margin would have increased by 30 basis points. On a statutory basis, operating profit was £21 million, compared to a loss of £84 million in FY24, which was primarily attributable to forex translation and US dollar denominated liability losses in our Nigerian subsidiaries following the currency devaluation of June 2023. And we have since significantly reduced our exposure to any future NIMA shock, as we have made good progress in extinguishing historical liabilities and repatriating service cash. We maintain a flat net interest charge in the year. With a higher adjusted effective tax rate, more indicative of a higher rate going forward, adjusted FY25 earnings per share declined ahead of operating profits, down 8.5%. The board is proposing a final dividend of 2.1 pence per share, taking the total for the year to 3.6 pence, the same level as the prior year. Pre-cash flow was 42 million pounds, up slightly due to an improvement in working capital, partially offset by the reduction in operating profits. Net debt increased slightly to 112 million pounds, with a net debt to EBITDA ratio of 1.7 times. However, taking into account the proceeds from the sale of our Wilmar joint venture, which is expected to complete in the final quarter of calendar 2025, our pro forma ratio would have been 1.1 times. Turning now to the financial performance details, and firstly, revenue. To aid comparability, the first bar showed the impact of adjusting the FX translation, presenting NY24 revenues at FY25 exchange rates. The breakdown of the adverse £55 million impact is, as usual, provided in the appendix. On this like-for-like currency basis, revenue increased 8% in the UK and Indonesia. and Jonathan will come on to the brown drivers of that revenue growth later. We again took pricing in Africa, with multiple increases throughout the year to offset double-digit inflation in Nigeria. Jonathan will also outline the steps we're taking to turn around Central Haven. Now to operating profits. As I mentioned, our overall adjusted operating profit margin decreased by 30 basis points, to 10.7%. We've shown this chart excluding Wilmar, given this represents the more accurate basis for future profitability. Lower in absolute sterling terms, but more cash-like and sustainable in nature, versus an equity-accounted share in a non-core, lower-margin joint venture. On a constant currency basis, Group gross profit margin was lower in the year, reflecting the adverse mixed impact of strong revenue growth in Nigeria, where gross margins are structurally lower. This was more than offset by a 220 basis point reduction in FEMBA HEMS. Around half of this represents structural cash savings relevant to our going forward business. Also included within this number is a reduction in amortization, to reflect the business decision to extend the useful economic life of our SAP software now that the manufacturer's support period will run for longer, allowing us to extract a higher return from that IT asset. Marketing investment was broadly unchanged as a percentage of revenue, while the impact of forex translation had an overall adverse 70 basis point impact on margins. So let me now provide some more detail on the performance of each of our regional reporting segments. Looking first at Europe and America, where we saw growth in both like-for-like revenue and operating volume. Revenue grew 0.6% driven by price mixed growth and with a very small overall volume decline. Growth in our main UK brands was offset by a challenging Santa Fe performance, without which Europe and America's revenue growth would have been 2.4%. Adjusted operating profit was up £4 million, with a margin increase of 230 basis points. Driven by tight cost control and the full-year impact of the integration of the UK personal care and beauty businesses, as well as ongoing revenue growth management, and the Product Margin Improvement Initiative. This more than offset the £3 million impact from the introduction in the UK of extended producer responsibility plans, a new cost which we will seek to mitigate over time through, among other things, a review of our entire packaging portfolio. Turning now to Asia-Pac, where like-to-like revenue was flat. Continued momentum in Indonesia was offset by a decline in ANZ. All our core customs baby segments drove volume-led growth in Indonesia, and ANZ saw market share gains in all three major brands, despite the softer macro environment there. Both markets improved their profitability with higher gross margins and lower ONAs. This, though, was offset by a reduction in profitability in some small Asian markets and lower profits in our business manufacturing non-grounded soap noodles. Overall, adjusted operating profit reduced by 3 million pounds with a margin decline of 150 basis points. Revenue in Africa declined by 7% due to the depreciation of the nylon. The 35% like-for-like revenue growth reflects 20 rounds of price increases, and inflation in Nigeria remained elevated at over 30% for much of the year. Whilst volumes declined 12% as a result of those price increases. This was mitigated somewhat by further route to market improvements that Jonathan will describe. We've seen our Nigerian business return to volume as well as price-led revenue growth. so far this FY26 financial year. Electricals revenue was £47 million, up over 30% on a like-for-like basis. Adjusted active operating profit margin improved by 250 basis points, or excluding people at Wilmar, it increased by 450 basis points. The operating profit numbers shown here are excluding a £9 million benefit that the Africa region reported in FY24 related to intra-group debt forgiveness, the cost of which was shown in last year's central cost line and which had a net nil impact to overall group operating profits. And I note it to explain that the Africa segmental results presented here are both comparable year-on-year and representative of underlying operations. So finally then, our central cost line, which equated to 30.5 million pounds in FY25, and which was, on a reported basis, down slightly versus FY24. However, we have also made the corresponding Nigerian debt forgiveness adjustment here to ensure comparability. And as such, central costs increased 6.8 million pounds in FY25. This was split between underlying cost increases and investments in group-wide capabilities attributable to the performance of business units, but best housed at the corporate center for maximum return, and so reported them. For example, the shifting of some marketing and some R&D roles to sit central. As we'll come on to, we see this number falling considerably over the next 12 months, given the cost savings we're announcing today. So moving now to cash flow and net debt. Total pre-cash flow was £42.3 million compared to £41.6 million in the prior year, reflecting an improvement in working capital offset by lower profits. Net debt was £112 million compared to £115.3 million last year, representing a net debt to EBITDA ratio of 1.7 times, which, as mentioned earlier, will then see a significant reduction following the completion of the Wilmar sale. The group also continues to have no surplus cash held in Nigeria following our successful repatriation efforts. As we said in the statement this morning, trading year to date has been in line with our expectations. Group like-for-like revenue to the end of September is expected to be up around 10%. Strong revenue growth in Asia-Pac is made up of Indonesia hosting its sixth consecutive quarter of growth, plus ANZ also being one. Africa is showing encouraging volume momentum. Europe and Americas is down 2% or up 2%. excluding Santa Fe. And we expect Europe and America to continue to strengthen across October and November, which would see us back to overall revenue growth there in half month. In terms of profit guidance, we expect group adjusted operating profits to be between 48 and 53 million pounds. And this figure strips out any contribution from normal which is now treated as an asset sold for sale in accounting terms, and so its profit contribution in FY26 will be reported as part of the disposal calculations. Captured within the guidance are cost savings of between 5 and 10 million pounds, some of which will be reinvested in the business, subject to clear return criteria. Net debt will fall significantly in FY26 to less than one times EBITDA. We expect cash proceeds of between £15 and £20 million from the ongoing programme to sell surplus non-operating assets, of which we have received £8 million so far this current financial year. We're expecting to receive proceeds of approximately £47 million before the end of the calendar year, from the sale of our worldwide joint venture. Jonathan will talk a little more about the cost savings and the ongoing asset sales proceeds in a little detail. And so with that, I'll now hand back to him.