British soap maker PZ Cussons warned it was likely to report disappointing full year profits, pointing to political upheaval in Nigeria, challenging trading conditions in Australia and high raw materials costs.
The maker of Imperial Leather soap reported an 11.7% drop in first half pre-tax profit and said full-year results would be towards the bottom end of current market expectations.
It had already issued a profit warning in December as pressure on consumers compounded the pain of high raw materials costs and adverse moves in exchange rates.
PZ Cussons said it was monitoring social and economic tensions in Nigeria closely after gun and bomb attacks by Islamist insurgents in the northern city of Kano last week killed at least 186 people. Nigeria, Africa's most populous country and PZ Cussons' biggest single market, accounts for around 30-40% of the group's total revenue.
This month's removal of an $8 billion petrol subsidy by the Nigerian government as part of economic reforms also resulted in a costly eight-day national strike that paralysed Africa's second biggest economy and the worsening violence has prompted some to question whether Nigeria is sliding into civil war.
The company, which also makes Carex hand soap and recently bought the Fudge haircare brand, said profit before tax in the six months to November fell to £39.3m sterling from £44.5m a year earlier as higher costs helped undermine a 10.5% rise in revenue to £414m.
PZ Cussons chairman Richard Harvey said the company anticipated difficult trading in some markets for the rest of the year. "In particular, we are closely monitoring the current economic and social tensions in Nigeria which may further impact the year-end outturn," Harvey said in a statement.
"Overall, we anticipate that results for the full year will be towards the bottom end of the range of current expectations," he added.
Trading conditions in Australia, Thailand and the Middle East remained challenging, the company said, leading to lower profits at its Asia division. The company said its balance sheet remained strong, however, and that it had the appetite to pursue other deals following its acquisition of Fudge for £25.5m.
