PZ Cussons Nigeria is back in the black.
For the year ended May 31, 2025, the consumer goods giant posted a pre-tax profit of N16.66 billion, reversing its 2024 FX-driven loss of N122.489 billion.
The stock has rallied, up 32% YtD this year against a 9% decline last year.
But behind the turnaround, debt remains a big problem. The company still owes about N71 billion, mostly to its UK parent, which extended a $40.26 million (N63.9 billion) non-interest loan facility in July 2022.
Even after growing its cash and cash equivalent to N40.7 billion, cutting net debt nearly by half to N30.6 billion, PZ’s equity position is still negative N15.6 billion.
That leaves its net debt-to-equity ratio at -1.96x better than last year, but still flashing red.
The company itself acknowledges this reality in the notes to its financial statements and admits tough capital choices are on the table.
To keep going strong, management says it may have to make some tough calls. According to the notes:
“Based on the above analysis, it can be ascertained that the group and company are highly geared. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
To maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets. Capital requirements are generally imposed by the majority shareholder, PZ Cussons (Holdings) Limited, United Kingdom.”
For shareholders, this means the road ahead could be bumpy.
On the cut of dividends, the company has already gone three years without paying dividends; the last was for the 2022 financial year, when N4 billion (N1.01 per share) was paid.
That dividend drought may well continue, as management signals that conserving cash is more important than rewarding investors right now.
Another option on the table is issuing new shares. This would bring in fresh capital and strengthen the balance sheet, but for existing investors, it carries a risk of dilution; your ownership slice of the company gets smaller unless you buy more shares when offered.
With the parent company already holding 73.27% of PZ Cussons Nigeria, it’s clear the parent is best positioned to take up more shares and could tighten its grip further.
The selling of assets may provide quick cash to trim debts, but the trade-off is losing some of the company’s earning power. If PZ has to sell valuable parts of its business, future growth could slow, even if the balance sheet looks better in the short term.
The selling of assets may provide quick cash to trim debts, but the trade-off is losing some of the company’s earning power. If PZ has to sell valuable parts of its business, future growth could slow, even if the balance sheet looks better in the short term.
Overall, PZ Cussons Nigeria’s recovery in 2025 has given it breathing space, but its capital structure remains stretched.
For investors, the big question is not whether the company is back in profit it is but how management and its UK parent will reshape the balance sheet.
The rally in 2025 suggests investors are willing to bet on the turnaround, but the high gearing means tough calls are coming, whether it’s more years without dividends, issuing fresh shares, or selling assets.
Each option carries trade-offs, and until the balance sheet is meaningfully repaired, the stock will trade more on hope than fundamentals.