PZ Cussons, the parent company of Imperial Leather and Carex has reported that cost inflation has added £40 million to prices in their first half annual profits, as the impact of consumer cutbacks impacted its performance.
In its first half annual results, the FMCG giant reported a £66.6 million profit, a slight drop of 2.9% from £68.6 million a year ago.
It also saw its revenues ease back from £603 million to £593 million over the year, but profits were ahead of market expectations, the group said.
The FTSE 250 listed consumer goods business stated that cost inflation hit record levels with raw material prices and delivery costs spiking, leading to an around 11% increase in the cost of sales compared to last year, which translates to roughly £40 million more.
However, the group said it was able to offset cost rises and inflation by pushing through pricing changes throughout the year.
“PZ Cussons has delivered a resilient performance over the past year, against the backdrop of challenging conditions in our markets,” PZ Cussons CEO Jonathon Myers said.
“We have achieved this through our strategy to invest in our brands, focusing on the core categories.
“While there is plenty more to do and the external environment remains challenging, we have made a good start to the current financial year and continue to see significant long-term opportunities ahead as we build towards a higher growth, higher margin, simpler and more sustainable business.”
Rising prices also had a knock-on impact on consumer spending with households facing squeezed budgets against higher living costs.
“With the UK as one of its key markets accounting for around a quarter of its sales, and energy prices and inflation remaining at unprecedented levels, PZ Cussons should still brace itself for upcoming challenges as consumers will continuously re-evaluate their spend and brand choices in the future,” GlobalData senior consumer analyst Lia Neophytou added.
“PZ Cussons has repeated its commitment to delivering value for consumers amid a challenging backdrop for input costs, which was also highlighted in its Q4 trading update where it announced its recent introduction of Cussons Creations, a new portfolio brand for value-conscious consumers.
“Clearly communicating the value for money that is being delivered across both its value and more premium innovations will help it maintain its positive growth trajectory in the upcoming quarter.”
