PZ Cussons H2 2025 Earnings Report

PZ Cussons EPS Results

• Actual EPS: GBX 7.34
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

PZ Cussons Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

PZ Cussons Announcement Details

• Quarter: H2 2025
• Date: 9/17/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, September 17, 2025
• Conference Call Time: 3:30AM ET

PZ Cussons (LON:PZC) manufactures, distributes, markets, and sells baby, beauty, and hygiene products in Europe, the Americas, the Asia Pacific, and Africa. The company offers toiletries, pharmaceuticals, electrical goods, edible oils, fats and spreads, nutritional products, shampoos, body washes, toothpastes, toothbrushes, skin and hair care products, food pouches, cereals, snacks, flavors, and fragrances; beauty soaps, lotions, wipes, creams, shower gels, foam-bursts, bar soaps, deodorants, bath infusions, handwashes, and conditioners; ointments; dishwashing liquids, dishwasher tablets, dishwasher gels, dishwasher capsules, rinse aids, liquid detergents, laundry soaps, and laundry solutions; and cooking and vegetable oils. It also provides refrigerators, freezers, air conditioners, washing machines, microwaves, table and standing cookers, generators, stabilizers, TVs, DVDs, and home theatres. The company sells its products under the Cussons Kids, Rafferty's Garden, Cussons Baby, St.Tropez, Sanctuary Spa, Fudge Professional, Charles Worthington, Fudge Urban, Venus for You, Carex, Imperial Leather, Original Source, Premier Cool, Joy, Childs Farm, Haier Thermocool, Morning Fresh, Bayley's of Bond Street, Canoe, Zip, Robb, Radiant, Mamador, and Devon King's brand names. The company was formerly known as Paterson Zochonis Plc and changed its name to PZ Cussons Plc in 2002. PZ Cussons plc was incorporated in 1884 and is headquartered in Manchester, the United Kingdom.

PZ Cussons H2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong performance in the four priority markets—with the UK driving profitability through revenue and gross margin expansion, Indonesia delivering its fifth consecutive quarter of growth, Australia gaining market share on its top three brands despite a soft consumer backdrop, and Nigeria demonstrating resilience in a high-inflation environment.
• Neutral Sentiment: FY25 group revenue declined £14 million to £514 million due to FX headwinds, though constant-currency revenue grew 8%; adjusted operating profit fell 6% to £55 million and margin dipped 30 bps, yet ex-Wilmar margin rose 30 bps, and net debt improved to £112 million (1.7× EBITDA).
• Positive Sentiment: Sold a 50% stake in the PZ Wilmar cooking oils joint venture to Wilmar International for $70 million, simplifying the portfolio, reducing reliance on Africa and strengthening the balance sheet.
• Neutral Sentiment: Decided to retain the St Tropez tanning brand, forming a US partnership with Emerson Group, appointing new leadership and launching a dedicated operating model to drive innovation and maximize future value.
• Positive Sentiment: FY26 guidance includes like-for-like revenue growth of c. 10% to September, adjusted operating profit of £48–53 million, net debt below 1× EBITDA, plus £5–10 million of cost savings and c. £30 million expected from non-core asset disposals.

Presentation

[Operator]

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 and A session following the prepared remarks. With that, it's my pleasure to hand over to Jonathan Myers to begin. Please go ahead when you're ready.

[Jonathan Myers, CEO & Director at PZ Cussons]

Thank you very much, Drew, and good morning, everyone, and thank you for dialing into our results presentation for the year ended 05/31/2025. For those of you that 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, it's 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 f one twenty five. Turning to the agenda then for this morning.

[Jonathan Myers, CEO & Director at PZ Cussons]

I will start with a brief introduction before handing over to Sarah to take us through a review of the financials. 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 question. 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 Telen oil launched last year as shoppers browse a specialist baby storage carton. Our Telen oil has now reached 10% household penetration in urban Indonesia and is growing market share.

[Jonathan Myers, CEO & Director at PZ Cussons]

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.

[Jonathan Myers, CEO & Director at PZ Cussons]

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 continue 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 and D teams, and extending our planning horizons to enable greater focus on sufficiency and quality of our multiyear innovation plans. Since the close of our financial year, we announced the sale of 50% stake in PWeb Wilmar to our joint venture partner, Wilmar International, in line with the objectives of the strategic review we announced in April 2024 to streamline and simplify our portfolio.

[Jonathan Myers, CEO & Director at PZ Cussons]

It was also after careful consideration of alternative value creation options that we announced the decision to retain Central Pay, setting a new strategic direction with a new partner in The US and a dedicated operating model within PZED to deliver. 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. Our work calls 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 nonoperating assets. I'll cover more on this later.

[Jonathan Myers, CEO & Director at PZ Cussons]

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. And we are focused on delivering our strategic actions and operational improvements to evolve PZ customers 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 her through the financials.

[Sarah Pollard, CFO & Director at PZ Cussons]

Thanks, Jonathan, and good morning, everyone. I'm going to share a summary of our FY twenty five full year results, walk you through the key movements at a group level, then by segments, and finish with current trading and guidance for the year ahead. As Gerald mentioned, we've seen momentum across most of our portfolio with a particularly strong performance in The UK and Indonesia. Group revenue declined by £14,000,000 to 514,000,000, with a 47,000,000 reduction attributable to the nilance, which while more stable in FY '25, was nearly 40% weaker on average versus sterling than in FY '24. Like for like revenue growth calculated on a constant currency basis was 8% driven by pricing in Nigeria.

[Sarah Pollard, CFO & Director at PZ Cussons]

Excluding Africa, like for like revenue growth was flat. Adjusted operating profit was £55,000,000, 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 Willmar, 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 £21,000,000 compared to a loss of 84,000,000 in FY twenty four, 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 shots as we have made good progress in extinguishing historical liabilities and repatriating service cash.

[Sarah Pollard, CFO & Director at PZ Cussons]

We maintained a flat net interest charge in the year. With a higher adjusted effective tax rate, more indicative of the higher rate going forward, adjusted FY '25 earnings per share declined ahead of operating profit, down 8.5%. The board is proposing a final dividend of 2.1p per share, taking the total for the year to 3.6p, the same level as the prior year. Free cash flow was £42,000,000, up slightly due to an improvement in working capital, partially offset by the reduction in operating profit. Net debt improved slightly to £112,000,000 with a net debt to EBITDA ratio of 1.7 times.

[Sarah Pollard, CFO & Director at PZ Cussons]

However, taking into account the proceeds from the sale of our Wilmar joint venture, which is expected to complete in the 2025, our pro form a ratio would have been 1.1 times. Turning now to the financial performance details and firstly, revenue. To aid comparability, the first part shows the impact of adjusting for FX translation, presenting FY twenty four revenues at FY '25 exchange rates. The breakdown of the adverse £55,000,000 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 brand drivers of that revenue growth later.

[Sarah Pollard, CFO & Director at PZ Cussons]

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 Hayburn. Now to operating profit. 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.

[Sarah Pollard, CFO & Director at PZ Cussons]

Lower in absolute sterling terms, but more cash light and sustainable in nature versus an equity accounted share in a noncore lower margin joint venture. On a constant currency basis, group gross profit margin was lower in the year, reflecting the adverse mix impact of strong revenue growth in Nigeria, where gross margins are structurally low. This was more than offset by a 220 basis point reduction in overheads. Around half of this represents structural cash savings relevant to our go 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.

[Sarah Pollard, CFO & Director at PZ Cussons]

Marketing investment was broadly unchanged as a percentage of revenue, while the impact of ForEx translation has an overall adverse 70 basis point impact on margin. So let me now provide some more detail on the performance of each of our regional reporting segments. Looking first in Europe and Americas, where we saw growth in both like for like revenue and operating profit. Revenue grew 0.6% driven by price mix growth and with a very small overall volume decline. Growth in our main UK brands was offset by a challenging Saint Tropez performance, without which Europe and Americas revenue growth must have been 2.4.

[Sarah Pollard, CFO & Director at PZ Cussons]

Adjusted operating profit was up £4,000,000 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 product margin improvement initiatives. This more than offset the £3,000,000 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 for like revenue was flat. Continued momentum in Indonesia was offset by a decline in ANZ. All our core customers' baby segments drove volume led growth in Indonesia, and AMZ saw market share gains in all three major brands despite the softer macro environment there.

[Sarah Pollard, CFO & Director at PZ Cussons]

Both markets improved their profitability with higher gross margins and lower OMAs. This, though, was offset by a reduction in profitability in some small Asian markets and lower profits in our business manufacturing non branded soap noodles. Overall, adjusted operating profit reduced by £3,000,000 with a margin decline of 150 basis points. Revenue in Africa declined by 7% due to the depreciation of an island. The 35% like for like revenue growth reflects 20 rounds of price increases, as inflation in Nigeria remained elevated at over 30% for much of the year.

[Sarah Pollard, CFO & Director at PZ Cussons]

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 FY '26 financial year. Electricals revenue was £47,000,000, up over 30% on a like for like basis. Adjusted active operating profit margin improved by 250 basis points. For excluding PZ Wilmar, it improved by four fifty basis points.

[Sarah Pollard, CFO & Director at PZ Cussons]

The operating profit numbers shown here are excluding a £9,000,000 benefit that the Africa region reported in FY twenty four related to intragroup 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 profit. And I noticed 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 £30,500,000 in f y twenty five, and which was on a reported basis down slightly versus f y twenty four. However, we have also made the corresponding Nigerian debt forgiveness adjustment here to ensure comparability.

[Sarah Pollard, CFO & Director at PZ Cussons]

And as such, central costs increased £6,800,000 in FY twenty five. This was split between underlying cost increases and investments in group wide capabilities attributable to the performance of business units, the best house that the corporate center for maximum return and so reporting them. For example, the shifting of some marketing and some r and d roles to SIP Central. As we'll come on to, we see this number falling considerably over the next twelve months, given the cost savings we're up we're announcing today. So moving now to cash flow and net debt.

[Sarah Pollard, CFO & Director at PZ Cussons]

Total free cash flow was £42,300,000 compared to £41,600,000 in the prior year, reflecting an improvement in working capital offset by lower profits. Net debt was £112,000,000 compared to 115,300,000.0 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 September is expected to be up around 10%.

[Sarah Pollard, CFO & Director at PZ Cussons]

Strong revenue growth in Asia Pac is made up of Indonesia posting its sixth consecutive quarter of growth, plus ANZ also being up. Africa is showing encouraging volume momentum. Europe and Americas is down 2% or up 2% excluding Saint Tropez. And we expect Europe and Americas to continue to strengthen across October and November, which would see us back to overall revenue growth there in half one. In terms of profit guidance, we expect group adjusted operating profit to be between 48 and £53,000,000.

[Sarah Pollard, CFO & Director at PZ Cussons]

And this figure strips out any contribution from Runmark, which is now treated as an asset held for sale in accounting terms. And so its profit contribution in FY '26 will be reported as part of the disposal calculations. Captured within the guidance are cost savings of between 5 and £10,000,000, some of which will be reinvested in the business subject to clear return criteria. Finally, net debt will fall significantly in FY '26 to less than one times EBITDA. We expect cash proceeds of between 15 and £20,000,000 from the ongoing program to sell surplus nonoperating assets, of which we have received 8,000,000 so far this current financial year.

[Sarah Pollard, CFO & Director at PZ Cussons]

We're expecting to receive proceeds of approximately £47,000,000 before the end of this coming the calendar year from the sale of our Woodenwine joint venture. Jonathan will talk a little bit more about the cost savings and long before asset sale proceeds in in a little detail. And so with that, I'll now come back to him.

[Jonathan Myers, CEO & Director at PZ Cussons]

Thanks, Sarah. So let me give a broader update on progress and performance framed around the highlights and messages I covered at the beginning of the presentation. And let's start with The UK and what was behind the strong operating profit that I mentioned earlier. Beyond the cost savings Sarah talked about, a key driver of the revenue performance has been better commercial and brand building access. Taking original source as an example, we delivered a bold marketing campaign from February through to May, firmly targeting younger consumers with an optimized mix of social media out of home and TV.

[Jonathan Myers, CEO & Director at PZ Cussons]

Leveraging our partnership, social media influencer, personality Jamie Lang. This is a good example of how we are enabling more competitive brand activation with the £2,000,000 media campaign reaching more than 15,000,000 people. Pickup in brand awareness meant original source not only achieved its highest household penetration in almost five years, but thanks to considered price and promotional optimization as well, the brand also grew gross margin. Based on the success of the first wave of Nature's Dibbon campaign, look out for the next wave of activity on original source over the next couple of months, a good example of us prioritizing brand support against activities with proven return on investment. Another way way of driving revenue on our brands is to work in partnership with the owners of other brands to engage common target consumers and drive in store activation.

[Jonathan Myers, CEO & Director at PZ Cussons]

Six months ago, we highlighted the success of Carex and its Grappolo partnership, which we have since expanded to ZOLK and Room on the Room. Notably, Carex grew revenue and gross margin in FY '25, consolidating its number one position in the hand wash market. We've also extended this type of brand partnership to Charles Fund to include a tie up with Bluie and BBC Studios. Now if you don't have young kids or don't know Bluie, one of the most popular TV shows in the world for children, and it's enabling us to secure disproportionate levels of support across retail outlets. Just take a look at this tie up with Bluie and Kellogg's at Sainsbury's as evidence.

[Jonathan Myers, CEO & Director at PZ Cussons]

So we've seen encouraging f one twenty five performance in The UK, and we look forward to more to come. Not least our plans for Christmas gifting, which is starting to hit the shelves at this very month. Turning to Indonesia and Cousins' Baby. You may remember the Child's Farm slumber time product range launch, addressing the importance of reassuring parents that their washing of baby products are giving their babies the best possible chance of a good night's sleep for the well-being of both the baby and their parents. The Cuddle Calm range takes the consumer insights and product formulation learnings from Child's Farm and applies them to Customs Baby, albeit in a very different context.

[Jonathan Myers, CEO & Director at PZ Cussons]

It's a good example of us leveraging shared baby insights across geographies and brands as we have sought to create a more integrated marketing and r and d organization. Elsewhere in our Infusion business, we continue to see phenomenal growth in ecommerce, whether that's through established platforms such as Shopee or the ongoing success of our own live streaming capability. Turning to our business in Australia and New Zealand, where we continue to see softness in category values through the year, though, reassuringly, we've seen the third signs of remuneration in the latest quarter. Against that backdrop, we continue to make market share gains on our top three brands, thanks to renewed efforts to drive better in store presence, competitive pricing and promotion, and broader distribution across retail channels. The Morning Fresh photo on the right hand side is an example of those efforts.

[Jonathan Myers, CEO & Director at PZ Cussons]

We're already the clear market leader in washing up liquid, and we are leveraging this strong position of our brand equity for winning performance and great value to help grow market share in the auto dish category. We've been using net hangers on bottles of morning fresh liquids to drive awareness and then offering hundreds of thousands of samples of auto dish tablets to drive trial. While auto dish is a highly competitive category, our position of strength in the washing up liquid market gives us a clear competitive advantage to leverage as we seek to build trial, distribution, and market share. Turning to Nigeria. Perhaps the best example of brand activation was the recent relaunch of Carrot.

[Jonathan Myers, CEO & Director at PZ Cussons]

Carrot has been available in Nigeria for some time, but has always been subscale as the product positioning has largely been taken from The UK. Thanks to good work with Nigerian consumers, our campaign, win the war against germs, means the brands now looks and feels new and relevant with clear antibacterial positioning, distinct brand assets, bold disruptive messaging, and benefiting from professional endorsement. Just like the original source of the art I gave earlier, the execution was a multifaceted campaign, digital TV, out of home advertising, and a series of in person launch events. In fact, we estimate the campaign reached a 125,000,000 people. It's early days, but signs so far are promising.

[Jonathan Myers, CEO & Director at PZ Cussons]

Carex will absolutely be one of the drivers of Nigeria's performance in FY '26. Beyond the excellent work on Carex, we have continued to strengthen our go to market presence. A key part of this, as we've mentioned before, has been the number of stores served already by us as opposed to via wholesalers. Simply put, covering the stores directly means the better retailer relationships and in store presence as we can directly influence which products turn up in which types of outfit. From covering just under 70,000 stores directly three years ago, we exceeded our target of reaching 200,000 in FY twenty twenty five, and we're now striving for even more stores in direct coverage in FY twenty twenty six.

[Jonathan Myers, CEO & Director at PZ Cussons]

A driving force in how we are seeking serve consumers better in our core categories is the strengthened brand building operating model we have adopted over the past year as the next phase in the journey to raise the bar on how effectively and consistently we build stronger brands. Many of you will remember where we started. Strong brands with good tactical plans, but more of a trading mindset and limited cohesion across the portfolio. We moved on from that in recent years, creating better alignment across the group and strengthening in year plans, but we know there's more to do. So we now have put in place a brand building setup which balances staying close to consumers in our priority markets whilst leveraging more effective integration and collaboration across those markets, meaning improved visibility of multiyear innovation and revenue growth plans in our priority market.

[Jonathan Myers, CEO & Director at PZ Cussons]

Ultimately, we are building on our strength of in year activation to add excellent multiyear innovation. Not only is this good for our consumers, it's also good for our marketing marketing teams. We've seen a seven percentage point improvement in engagement scores for the marketing function across the group. Ultimately, though, success will be measured in sustained progress on market share, revenue, profitability. Moving to portfolio transformation.

[Jonathan Myers, CEO & Director at PZ Cussons]

In June, we announced the sale of our 50% stake in pibre Wilmar, our Nigerian cooking oils business, to Wilmar International, our joint venture partner, for cash consideration of $70,000,000 This will simplify our portfolio, and as Sarah said, significantly strengthen our balance sheet. It sees us exit our noncore category and reduced group reliance on Nigeria as part of our overall efforts to rebalance the portfolio and concentrate on our core categories of hygiene, beauty, and baby. The sale also benefits in our of our wider sustainability metrics as PWMAR represents around 10% of our scope free inventory. Turning now to St. Tropez.

[Jonathan Myers, CEO & Director at PZ Cussons]

As we explained back in June, although our intention was to sell the brand, after running a comprehensive process to do so, our firm belief is that the better course of action for our shareholders is to retain it and maximize value in the coming years. There are three reasons which give us the confidence. First, it's important to remember that once it's had a challenging performance recently, Saint Tropez is regarded as an iconic brand. It established the self tan category and has for many years been the driving force behind the market. It still has great brand equity and awareness with more than 30% share of the prestige self tan beauty market in The US and envy positions on the shelves of key US beauty retailers such as Ulta and Sephora.

[Jonathan Myers, CEO & Director at PZ Cussons]

Second, the key tenet of the new direction is the partnership we have formed with the Emerson Group, a leading US based partner to many brand owners, including some of the world's largest personal care and beauty businesses. They will provide customer management, logistics services, and brand activation in The US. Saint Tropez will be integrated into Emerson's dedicated selling teams to key US retailers with initial meetings having already taken place. Not only does this partnership give us access to a strong go to market operator in The US with significant scale and expertise, it also dramatically simplifies our own operating model. We no longer have a need for our own team on the ground, more the expense of dedicated office in Africa.

[Jonathan Myers, CEO & Director at PZ Cussons]

Next, for The US, our central paper model is better, simpler, and more cost effective. Finally, we have also appointed a new executive with significant experience of the beauty category, not least from many years spent at L'Oreal, to lead the Saint Tropez business with a single-minded focus on value creation and a dedicated team coming together beneath them. Looking ahead, therefore, we're busy with the innovation plans for the 2026 season and working on celebrating the thirtieth anniversary of the launch of Saint Tropez next year. So lots more to come on Saint Tropez. Moving now to the final slide before summing up.

[Jonathan Myers, CEO & Director at PZ Cussons]

As Sarah touched on earlier, we have made progress driving cost efficiencies and identifying opportunities to unlock further pockets of value, all of it which will help to fund future growth for us. To that end, we have announced this morning that we expect to generate £5,000,000 to £10,000,000 of cost savings in FY twenty six. It's a big number at the top end of the range, but we're hard at work to deliver it. We've already developed a track record and a playbook to do this with a £3,000,000 savings in The UK business, Sarah Lynch, removing duplicated structures and operating expense. But more importantly, the organization is increasingly building a mindset of ongoing cost optimization, sometimes through significant structural interventions driven by changes in operating model, but also through the relentless and rigorous pursuit of grinding out the inefficiencies that consumers do not value and should not be expected to pay for, whether that's saving on the retendering of label production in The UK, the shifting of surfactant suppliers for our Nigerian business, or sourcing a different enzyme for our Arabian boundary brand industry.

[Jonathan Myers, CEO & Director at PZ Cussons]

We're also unlocking value from noncore or nonoperating assets, mostly in Asia and Africa. These range from high end residential property in Ghana and undeveloped land in Indonesia to empty warehouses in Nigeria that are no longer required by the business and pretty much everything in between. The market value of these assets is significant, and we estimate that after fees and taxes, we should generate net cash proceeds of around £30,000,000 from their disposal, the majority of which we'll complete during this financial year. Common across all the activities shown on this slide is a single-minded pursuit of simplification, whether processes, operations, or portfolio, and as a result, unlocking value. In summary, while there's a lot going on at PZ and still much more to do to deliver, I wanna be really clear that our day to day focus is on continuing to drive the underlying business across our priority markets.

[Jonathan Myers, CEO & Director at PZ Cussons]

We're building stronger brands in our core categories, and we're driving more competitive go to market execution in our largest markets, the combination of which means we can get more PZ products into the homes and hands of more consumers. So with that, enough of us and a chance for you to let us know your questions.

[Operator]

Thank you. We'll now start today's q and a session. If you would like to ask a question, please press Our first question today comes from Suhil Shan from Singer Capital Markets. Your line is now open. Please go ahead.

[Sahill Shan, Partner at Singer Capital Markets]

Good morning. Can you hear me? Good morning. Hello. Well done for an excellent presentation there.

[Sahill Shan, Partner at Singer Capital Markets]

Forgive me, I'm fairly new to story, but I've got a couple of questions, if that's okay. Firstly, just on the Essentra Bay brand. You've retained it and outlined a new US circuit strategy with Emerson. I suppose my question is what internal KPIs or milestones are you using to evaluate success? And how quickly should investors expect signs of recovery in the brand's p and l contribution?

[Sahill Shan, Partner at Singer Capital Markets]

So that's my first question. The second one's around capital allocation. And I think with the Walmart proceeds and asset disposals, it looks like expected to significantly reduce the net debt this year. How are you thinking about capital deployment priorities going forward around reinvestment, M and A or maybe returning capital back to shareholders?

[Jonathan Myers, CEO & Director at PZ Cussons]

Well, I'd say the first of those questions are ready to Sanjay Pai, and I'll pass over to Sarah on capital allocation. So you're absolutely right. After a very considered process, we took the call to retain the brand because we saw more potential to create future value in doing so than in selling it. We're very clear as we did that, what are the strengths and what are the challenges that we need to address? And the most broken, if I can use that phrase, part of the business was in North America where we had seen double digit declines.

[Jonathan Myers, CEO & Director at PZ Cussons]

And it's for that reason we have taken the most dramatic action of any part of the business model in North America effectively to adopt a new route to market partner and one who's very, very qualified because they're already operating with the likes of Ulta and Sephora as well as more mainstream retailers in driving both personal care but also high end beauty care. So that's a that's a sign of confidence for us that we are putting our business in the hands of a proven partner, one who we've known previously, by the way, through work together on TransPharm. So as we look to the future, that ultimately, the most important measure will be value creation, and that is indeed how we have structured our thinking and also our incentivization as we look at the team that will be leading that business. But, obviously, what really matters will be driving growth in market share, growth in in store distribution, because ultimately, it is a brand that it wins in store and online, but with sufficient social media activation and influence. And as that goes through perhaps one or two seasons, so coming to your question on how long, it's a very seasonal business.

[Jonathan Myers, CEO & Director at PZ Cussons]

The summer is all important or late spring into summer is all important. So we are working hard for '26, but we're also trying to make sure we get ahead of the game for the '27. So I would be expecting to report to you a prudent momentum as we exit next season, but more importantly, this season after once we have a longer lead time to really address some of more fundamental opportunities and challenges we see with the brand. But we're very hopeful and confident that we will see that improvement value creation of it. Tara?

[Sarah Pollard, CFO & Director at PZ Cussons]

Thanks, Jonathan. Let me let me touch on the the the capital allocation point. So so you're absolutely right to say, you know, we were very clear that the first use of any cash proceeds from the portfolio transformation would would be to reduce our level of debt. It takes us for FY '25 to a pro form a leverage ratio of 1.1 times, and then with further surplus asset disposals and ongoing cash generation in FY '26 south of one time, and that we see very much within our within our target range and the level of a level of leverage we feel comfortable with.

[Sarah Pollard, CFO & Director at PZ Cussons]

Then in terms of our broader use of of capital, it's first and foremost to drive the organic growth of the business. And, of course, as a brand building organization, that is behind r and d investments, behind marketing campaigns to drive our brands, and also CapEx, both to give us more capacity to grow volume, also automation to to make sure our product margins remain very competitive. So first and foremost, we see the highest return on our capital being in driving the organic growth in the business. We also are retaining sufficient capital to support a sustainable level of dividends. We don't have a stated policy, but but internally, we think a little bit around, you know, a targeted cover of two times, and that growing in line with the earnings going forward.

[Sarah Pollard, CFO & Director at PZ Cussons]

And then if you search this capital, I think you can see us putting towards bolt on m and a if we see opportunities that both sit very neatly within our core markets and our core categories or indeed the opportunity to acquire some additional capability to be that digital. And Charles Farm is our last such example in March 2022, and you should think about Charles Farm as being an example of something we we might do again when the time is right. And I think we would say all of those things we consider to to take precedence over surplus returns because we can do it we believe we can do it at more return by deploying the capital internally.

[Sahill Shan, Partner at Singer Capital Markets]

Super. Thank you very much. That's really helpful. Just one final one for me. It would be really appreciated.

[Sahill Shan, Partner at Singer Capital Markets]

Post these results, it would be good to catch up. Could you get the relevant IR person on your side to reach out to me, and we can take it from there? Thank you.

[Sarah Pollard, CFO & Director at PZ Cussons]

Thank you.

[Operator]

Our next question comes from Matthew Webb from Investec. Your line is now open. Please go ahead.

[Matthew Webb, Equity Analyst - Consumer Goods at Investec Group]

Good morning, everyone. I appreciate you touched on this already, but I wonder if you could just provide a bit more detail on where the 5,000,000 to £10,000,000 of targeted savings are coming from. Jonathan, I think you mentioned that $10,000,000 is quite a big number at the top end, and I would agree with that. So anything that could bring that to life would be very helpful. And then maybe also where your priorities are in terms of reinvesting a portion of those savings?

[Matthew Webb, Equity Analyst - Consumer Goods at Investec Group]

That's the first question. Second question on the EPR. I mean, I infer from the way that you've talked about that, that you've really absorbed that $3,000,000 I just wondered whether that's correct, whether there were any discussions with your customers about passing that on, at least in part. And then also, I know you mentioned that this was had prompted a review of your approach to packaging. And without sort of prejudging that review, I just wonder whether you could give any examples of some of the things you might consider there.

[Matthew Webb, Equity Analyst - Consumer Goods at Investec Group]

And then the third question is just on Indonesia. Well, Steve, I appreciate your trading has been very strong. So probably the answer is no, but I just wondered whether you'd seen any impact from the recent political unrest in that country.

[Jonathan Myers, CEO & Director at PZ Cussons]

Right. Well, I so the three good questions, Matthew. Sarah's gonna be number one, and I'll come in with the EPR and the Indonesia response for you.

[Sarah Pollard, CFO & Director at PZ Cussons]

So, Matthew, let me let me try and unpack that 5,000,000 to 10,000,000 a little bit. And and as Jonathan mentioned, you know, we're establishing, you know, a better understanding of where, you know, if you like, there might be opportunity in our overhead cost base as well as the muscle that we think we very definitely built in terms of optimizing product costs, having an FY '25 integrated our legacy UK personal care and beauty businesses. So I think in terms of, you know, where we sit today on top of that historical overhead work is recognizing that we inherited a business that needed to, you know, unashamedly invest behind capabilities. And they were both commercial to drive the business, but they were also, you know, if I use the word corporate, to to meet the PLC bar to make sure we are doing things in the right way. And we have shown both good, hard, and soft benefits from those investments over the last three to four years.

[Sarah Pollard, CFO & Director at PZ Cussons]

And we recognize we're in a position now where we can afford to to maybe, you know, unpick some of those capabilities. So we have quite a strong corporate cost base. And in some of the enabling functions, most notably, you know, very, very close to home and finance, perhaps in HR and IT, we've now reached the level of capability that we think is sufficient. So we have been looking at some of the capabilities we can take away there. That 5 or 10,000,000, we've got we've got a good line of sight to provide.

[Sarah Pollard, CFO & Director at PZ Cussons]

We're working on the additional five. It's probably split, you know, two thirds people from increasing standard control from internal promotions rather than external hires, and, yes, the net reduction in overall headcount. And then a one third is more, if you like, a little bit more tactical, be it the use of consultants, managing travel and expenses, you know, just good continuous improvement and being very cost conscious. So some central capabilities on which we think we now no longer generate a level of return, two thirds people, one third non people.

[Jonathan Myers, CEO & Director at PZ Cussons]

So if I pick up on the EPR questions, I'll come to Indonesia, Matthew. So so first of all, on EPR, I would say we, along with other manufacturers, have been getting our heads around with the implications of this tax, and we're one of the first to report just as the nature of our financial year ends, and we'll be all keenly looking to see what other people are saying as they report in the coming months as well. But I would say, exactly as you've identified, really, are two levers that we can pull as we try to deal with what is effectively a new cost in our cost structure. The first is absolutely, as part of a broader revenue growth management effort, always looking at our ongoing optimization of pricing and promotion. And sometimes that is tweaking our promotional activity where you nudge up the price per liter or the price per pack, And other times, that can be literally straightforward price increases that we are communicating to retailers and working with them as they choose how much or little of those increases they want to reflect on shelf.

[Jonathan Myers, CEO & Director at PZ Cussons]

And so that has clearly been one lever that we have been pulling, and we will continue to look at that over time. But also over time, particularly as we learn more about the exact drivers of the EPR tax and how it is applied, is how we can optimize our packaging across our portfolio, be that primary packaging or secondary packaging, to literally reduce the the weight or volume that we are using. And so, for example, over time, lightweighting of bottles or lightweighting of caps and also looking at our secondary packaging can be very important and very helpful as we learn how to more effectively optimize the EPR impact, but also continue to provide packaging that consumers find useful and usable. But, obviously, then what it's also doing is helping us on our journey to be a real good start to sustainability KPIs as well. So, you know, we're embracing the challenge, but, obviously, we're also learning exactly how the tax works along those manufacturers.

[Jonathan Myers, CEO & Director at PZ Cussons]

As for Indonesia, so just in case anyone else on the line didn't pick it up, there was some social unrest in Indonesia at the very August and the September. It was related to housing allowances for MPs, and it it rather snowballed from there. We obviously triggered our business continuity plan, put it into action. There was minimal disruption to our business. We we did actually have our people working from home, so we closed our offices for the period of about four working days.

[Jonathan Myers, CEO & Director at PZ Cussons]

Our factory continued to run, and our distributors continued to operate. The interesting insight is rather as we have seen with previous events in Indonesia, What it leads to is the shopper actually go to their local open markets, I think, market rather than a modern modern supermarket. And so we see a channel switch, and the good news is our distributors are very well placed to be able to support that switch. Distributors will carry around seven and a half weeks of inventory. So even if we were unable to get some deliveries through, they still have sufficient product in their warehouses to deliver in their localities.

[Jonathan Myers, CEO & Director at PZ Cussons]

So there's minimal disruption, nothing in q one, a little bit maybe in our p four numbers, but all of it will come back in q two.

[Matthew Webb, Equity Analyst - Consumer Goods at Investec Group]

Alright. That's all very helpful. Thank you both very much.

[Jonathan Myers, CEO & Director at PZ Cussons]

Thanks, Matthew.

[Operator]

Our next question comes from Damian McNeither from Deutsche Numis. Your line is now open. Please go ahead.

[Damian McNeela, Director at Deutsche Numis]

Thank you. Morning, Jonathan. Morning, Sarah. Two for me, please, this morning. Firstly, U.

[Damian McNeela, Director at Deutsche Numis]

K. Washington Basin seems to be growing at around about 2%. Can you provide a little bit of insight into both the consumer experience of the category and also the competitive dynamics that you're managing at the minute, please? And then the sort of the last question is around marketing spend. And I think it was held broadly flat this year.

[Damian McNeela, Director at Deutsche Numis]

What are your sort of expectations for the current year? And also, to what extent is AI being used to try and optimize your marketing spend as well, please?

[Jonathan Myers, CEO & Director at PZ Cussons]

Good morning, Damien. So I'll have a little bit on the watch and amazing category dynamics. Sarah can talk a little bit about M and C spend expectations, and and I'll then come back with AI and how that can help us optimize and drive higher return on investment. First of all, I think probably in keeping with other consumer categories in The UK retail environment, we are seeing an increasingly competitive category of washing and bathing. There's growth to be had, but still some growth in the market.

[Jonathan Myers, CEO & Director at PZ Cussons]

So it's still an exciting and interesting segment of the market to be playing in, absolutely, particularly if you've got strong brands and strong relationships with the retailers and good go to market capabilities. But there is no doubt there is a significant tranche of shoppers, not all, but a significant tranche that is seeking value. And that's where it collides a little bit with where you're asking about competitive dynamics, because we're also seeing some of our competitors, and you will be able to work out from their own comments which ones I'm talking about, who are trying to rebalance for themselves, focus on value versus volume, and and perhaps they've been chasing value too much rather than volume. So how's that manifesting itself? There's no doubt there's still an awful lot of people that are interested in shower gels that sell at a pound or less, and we need to make sure that we have pack sizes and promotional price points that absolutely deliver for that.

[Jonathan Myers, CEO & Director at PZ Cussons]

But what we're also seeing is an increasing intensity in the competitive environment on larger pack sizes, so in particular, hundred and six hundred milliliter bottles. So whereas in the past, those may have been relatively unpromoted versus the smaller circa one pound price point bottle, you're now beginning increasingly to see quite a lot of price promotion on 500 and up these bottles. So we are absolutely sharpening our pencil. We're absolutely trying to respond. It's always a little bit of a lag, as you know, in planning promotions with based on the retailers' promotional calendars.

[Jonathan Myers, CEO & Director at PZ Cussons]

But as we move through this year, we will be trying to make sure that we are responding to not just competitive pressures, but also how shoppers are evolving too. So as I say, very interesting subcategory to play in, but very competitive too.

[Sarah Pollard, CFO & Director at PZ Cussons]

Damien, let me let me address the the the MC. Sorry, Damien. You come up.

[Damian McNeela, Director at Deutsche Numis]

No. No.

[Damian McNeela, Director at Deutsche Numis]

I was just saying thank you, Sarah. So yeah. Brilliant.

[Sarah Pollard, CFO & Director at PZ Cussons]

No. Thank you, Damian. Let me let me let me talk to MMC. Let me talk to MMC then. So so you're right in terms of the FY twenty five margin bridge that we shared this morning.

[Sarah Pollard, CFO & Director at PZ Cussons]

Effectively, what we're saying is that there was no positive contribution to our margin performance in FY twenty five from Evanston. Or or the other way of putting the other way of putting that is we grew our marketing spend in line with our revenue growth, which is actually a good thing. So we probably shouldn't, in reality, color code it red. What we've not done and what and what we won't do is either set internally or guide externally to a set of prescriptive marketing spend targets, either in absolute terms or or with reference to our overall revenue because our brand portfolio is so diverse. So, you know, custom payment that Jonathan referenced being sold in wet markets through distributors in Indonesia It's a very, very different support model in terms of the levers of profitable growth than with the Saint Tropez being sold in The US.

[Sarah Pollard, CFO & Director at PZ Cussons]

So what we do do on a case by case basis is work out a level of sufficiency for each of our brands. And then with increasing scrutiny and data capability, and maybe Jonathan will will touch on that as part of the AI topic, really understanding whether that MC delivered incremental return or not. And if it doesn't move it, we're optimizing it. But I think what you should be very certain of is the overall direction of travel to underpin our brand building ambition will be a net increase in marketing investments. And if I think about the 5 to 10,000,000 of overhead cost savings that we're committing to in FY twenty six, where we talk about reinvesting a portion, marketing investment will absolutely be the number one candidate on that list for reinvestment. Then. So hopefully hopefully, that answers the question.

[Jonathan Myers, CEO & Director at PZ Cussons]

Yep. Thanks. And if I pick up on I pick up on the AI part, my flippant response to you, Damian, having only profuse, I can say 11. But what I mean by eleven is if you look at that NatureHit's different campaign on the side of the bus I talked about earlier, those very first graphics were actually AI generated. So we are trying to embrace artificial intelligence and how it can help us.

[Jonathan Myers, CEO & Director at PZ Cussons]

I'll come up with some other ways in which it helps us, but actually how it can help us in the core elements of brand building and and as as fundamental as generating the graphics, which in that particular campaign, we were able to test and modify and test and modify and then ultimately bring to market whether that was on boring old traditional TV or much more interesting and exciting social media. So that's a good example of where we have been developing campaigns using artificial intelligence. But somewhat more fundamentally, as a company, we are also spearheading the use of data analytics and artificial intelligence in how we can improve revenue, but also optimize processes and save some of the cost involved with that. So as part of forming a partnership with Microsoft on the Microsoft Adbrick platform, we have been exploring, for example, how we could more effectively use our market share data to drive market consumer insights to help us unlock opportunities for the future, but also how we can optimize our pricing promotion planning a little bit in that whole area of revenue growth management, but also some accepting some of our processes to optimize some of those, not least some of our financial forecasting process internally.

[Jonathan Myers, CEO & Director at PZ Cussons]

So we'll have more to say on that in the future. I don't want say we're just scratching the surface. It's not that we're doing nothing, but we do see that AI has an opportunity and a path to play for us in the future.

[Damian McNeela, Director at Deutsche Numis]

Okay. Very clear. Thanks very much. Jonathan, sir.

[Operator]

Thank you. With that, that concludes the q and a portion of today's call, and I'll hand back over to Jonathan Myers for some closing remarks.

[Jonathan Myers, CEO & Director at PZ Cussons]

Thank you, Drew. And thank you to everyone who's called in today and those who asked questions. Hopefully, you've got a sense of, you know, we are hard at work. There's plenty done, but we are externally on the ground. We have plenty more to do, and we have a lot to get on with.

[Jonathan Myers, CEO & Director at PZ Cussons]

So that's what we are gonna go and do, and why I'm gonna ask all of you in The UK, as you go shopping in the next few weeks and you see our Christmas gift sets on the shelves, make sure you pick one up and put it in the stocking for someone in your family, and we'll thank you next time we talk. Bye bye.

[Operator]

Thank you all for joining. That concludes today's call. You may now disconnect your

Participants

Executives

• Jonathan Myers, CEO & Director
• Sarah Pollard, CFO & Director

Analysts

• Sahill Shan, Partner at Singer Capital Markets
• Matthew Webb, Equity Analyst - Consumer Goods at Investec Group
• Damian McNeela, Director at Deutsche Numis