For the 42nd year in a row, PZ Cussons increased its full year dividend, despite revenues and profits being dragged down by the major currency devaluation in Nigeria, its largest business.
These challenges are expected to continue in the new year, the company cautioned, as further weakening in exchange rates
in the west African country, Australia and Indonesia is seeing imported inflation affecting margins as well as consumer disposable income.
In Nigeria, a recent tightening in foreign currency restrictions is also putting additional pressure on the exchange rate.
As largely expected, revenue of £819.1m in the year to 31 May was down 4.9% at the statutory level but up 0.7% if currency fluctuations are ignored and up 2.3% on a like-for-like (LFL) basis.
Operating profits before exceptional items of £114.4m fell 1.7% on a reported level, but rose 1.8% at constant currencies and 2.7% on a LFL basis.
After accounting for exceptional items, which mainly include restructuring and acquisition costs, profits before tax fell 32.1% on a reported basis to £108.8m, versus consensus of £109.6m. Adjusted basic earnings per share were almost flat at 17.94p, but up 3.5% at constant currencies and 4.5% LFL. After exceptional items, EPS fell 42.1%.
The total dividend per share was hiked 3.1% to 8.00p, in line with forecasts.
Net debt grew to £157.4m from £29.4m a year before, but was still only 1.2 times EBITDA at the year-end.
The FTSE 250 company's largest market Nigeria was hit by trading disruption in the north of the country, the Ebola outbreak, presidential elections and a significant currency devaluation, yet progress was made in growing underlying revenue and operating profit 2.3% and 2.7% respectively, with market share held or grown in core categories.
Overall, the company hailed 2015 as "a year of excellent progress in evolving the group's portfolio" and in Europe, the UK washing and bathing division has performed well thanks to an exciting innovation pipeline, with a good performance in the beauty division particularly across the St Tropez and Sanctuary brands.
In Asia, while profitability suffered at the Australian home and personal care business due to the challenging retail environment, the newly acquired five:am food brands have performed extremely well, while Indonesia saw another year of increased revenue.
Despite the foreign exchange
challenges, the group said the strength of its new product pipeline together with the strategic initiatives completed during the year leaves it well placed.
Forecasts trimmed but analysts see positives
This was a solid result in some challenging conditions, said analyst Nicola Mallard at Investec, with underlying growth just short of 3%, showing that the group is continuing to build its business organically, with acquisitions upgrading the quality of earnings, moving into higher value areas of food.
She added that for 2016 she expects some reported progress on current currency rates, though Cussons will surely encounter further forex headwinds.
"Given the fragility of the Nigerian economy, there remains a risk of a further devaluation from here too. Applying current rates to our forecasts, and some prudence around underlying growth in Africa, reduces our full year 2016 expected PBT from £115m to £113.5m."
Shore Capital's Darren Shirley said he expected £111.6m for 2016, with the unofficial currency market pointing to a naira-dollar exchange rate
of 220-230 - a further 10-15% potential devaluation.
"In the medium term we continue to believe that PZC can deliver strong sales growth, through innovation and brand support to already market-leading positions in UK personal wash, Nigerian HPC and electrical markets, and Indonesian baby care, coupled with the potential in beauty and Australia food and nutrition," he said.
Shirley also see margin support from the ongoing supply chain rationalisation and SAP implementation but noted that the short-term cycle of modest downgrades, mostly out of the company's control, was affecting his stance on the shares.