PZ Cussons Nigeria Plc has made a comeback to profitability, posting a ₦10.07 billion profit after tax; however, the company remains in a debt obligation with negative net assets, which puts its financial position at risk.
A review of the company’s audited financial statements for the year ended May 31, 2025, shows PZ Cussons remains in debt with negative net assets of N17.34 billion.
Negative net assets occur when a company’s total liabilities exceed its total assets, wiping out shareholders’ funds.
It indicates potential financial distress or balance sheet insolvency, as analysts say the situation can hinder the company’s ability to secure financing and scale, often requiring strategies like asset revaluation or debt restructuring to improve its financial health.
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A breakdown of PZ Cussons’ financial position shows that its total liabilities grew to N186.24 billion in May 2025 from N184.57 billion in May 2024, but its total assets grew to N168.90 billion from N157.06 billion.
This left the company with negative equity or net debt of ₦17.34 billion in the current year under review.
Shareholders’ apprehension
Pinnacle Daily reports that shareholders of PZ Cussons had, in November 2024, at the company’s 76th Annual General Meeting (AGM), called on PZ Cussons to be transparent and accountable in its operations.
They highlighted raised concerns regarding PZ Cussons’ proposal to increase its director remuneration to N326.59 million for the financial year ending May 31, 2025, besides sitting allowance.
They further expressed displeasure over the company’s sale of some of its assets.
In February this year, at the company’s Facts Behind the Figures Presentation at the Nigerian Exchange Limited (NGX) house in Lagos, shareholders urged the PZ Cussons management to show accountability and return to profitability after reconsidering plans to remain listed on the Nigerian stock exchange.
Dip in FX loses buoyed profitability.
PZ Cussons, a personal care and household product maker, reported a ₦10.07 billion profit for the year under review from a loss of ₦90.3 billion in 2024.
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A line-by-line analysis of the report shows that its revenue grew to N212.63 billion, up from N152.25 billion in 2024, but higher input costs, reflecting Nigeria’s inflation environment, brought the gross profit to improve slightly to N57.71 billion from N54.13 billion in 2024.
Its foreign exchange (FX) loss dropped sharply to N7.78 billion from N157.92 billion in 2024.
This line item was the company’s biggest challenge last year, following the unification of the FX rate in 2023, which triggered a sharp devaluation of the naira.
The policy shift saw the naira depreciate from about N450 to a dollar to nearly N1,500 in the official market, forcing most companies to revalue their dollar-denominated obligations and swelling their losses.
Liquidity challenge persists
A further review of the financial statements indicates that PZ Cussons is having short-term solvency issues.
While its net debt improved to N30.6 billion from N60.19 billion, supported by higher cash balances of N40.66 billion, up from N28.87 billion, its borrowings remained elevated at N71.27 billion from N89.06 billion, mostly owed to its parent company, PZ Cussons Holdings, United Kingdom.
Analysts say that if a company’s cash and cash equivalents are lower than its borrowings, the company has insufficient liquid assets to cover its short-term debt, which signifies a sign of potential liquidity problems and short-term solvency issues.
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Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
