Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Neptune's Mark Martin slips on PZ Cussons slide

Neptune's Mark Martin slips on PZ Cussons slide
 

Shares in PZ Cussons (PZC) have slumped to the bottom of the FTSE 250 as the soap and shampoo maker warned on profits amid weaker sales in the UK and Nigeria.

The shares were down 15.4% to 234.2p on the news, but off from a nine-year low of 199.7p hit at the start of trading.

PZ Cussons said that 2018 profits would 'fall short of expectations' and come in between £80 million and £85 million, below expectations of up to £100 million.

The company said that UK sales continued to be hampered by 'consumer caution across all retail channels caused by economic uncertainty and inflation out-stripping wage growth'.

The group has also been hit by the devaluation of the Naira currency in Nigeria, its largest market.

'Following the significant cost inflation of recent years, the Nigerian consumer's discretionary income remains under pressure with subdued buying levels,' it said.

Today's profit warning follows January's disappointing half-year results, with the shares down 29% since then.

Today's news represents a blow to Neptune UK Mid Cap manager Mark Martin, who holds 4.8% of his £548 million fund in the stock. 

Dominic St George and Jon Asante, managers of the £36.3 million Stewart Investors Worldwide Equity fund, are also high-conviction backers, with a 2.3% position.

'A company like PZ Cussons lives or dies by the strength of its brands,' said Russ Mould, investment director at AJ Bell.

'To get the market back on side management will need to demonstrate the recent troubles are temporary rather than a reflection of the fading appeal of its products.'

Mike van Dulken, head of research at Accendo Markets, highlighted the company's efforts to reduce expenditure.

'A cost cutting review has been announced, focusing on less packaging and fewer, simpler but bigger projects? But will this be enough?' he asked.

PZ Cussons' woes also weighed on other consumer staples companies, with shares in Reckitt Benckiser (RB) down 1.2% at £55.82.

Hikma Pharmaceuticals (HIK) was another big mover, up 14% at £10.59 and jumping to the top of the mid-cap index after a string of broker upgrades.

Jefferies analyst Jane Vane-Tempest upgraded the pharmaceuticals group to 'hold' from 'underperform' and hiked her target price from 895p to 997p.

'We believe that our stress case to further downside is now unlikely and also that sentiment is now skewed to the upside,' she said.

'Despite challenging industry fundamentals persisting into 2018, we believe guidance gives a floor to expectations.'

Citigroup meanwhile raised its rating to 'buy', while analysts at Morgan Stanley, HSBC and JPMorgan all raised their target prices.

The FTSE 100 meanwhile rose nine points to 7,141, although Hammerson (HMSO) was a big faller, down 5.7% at 430.6p after analysts at Credit Suisse cut their rating on the retail landlord to 'neutral' from 'outperform' and slashed their target price to 460p from 605p.

Among 'small-cap' stocks, Sportech (ROD) rose 12.5% to 42.2p as the pools betting company recovered some ground from yesterday's heavy sell-off.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Mark Martin
Mark Martin
149/157 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 12.04%
Dominic St. George
Dominic St. George
458/609 in Equity - Global (Performance over 1 year) Average Total Return: 5.03%
Jonathan Asante
Jonathan Asante
43/240 in Equity - Global Emerging Markets (Performance over 3 years) Average Total Return: 47.22%
Citywire TV
Play Wealthify's Pearce: how online DFMs can build trust

Wealthify's Pearce: how online DFMs can build trust

In this video Cardiff-based Wealthify founder Michelle Pearce also discusses online DFM suitability failings and not being London-centric.

1 Comment Play Citywire Scotland: how wealth managers use new tech

Citywire Scotland: how wealth managers use new tech

We caught up with a few wealth managers at our annual event in Gleneagles to find out what technological innovations they are employing across their businesses.

1 Comment Play CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

Do not miss the first two minutes of this film as Richard Buxton shares how he has been challenged by a client for owning shares in a certain company.

Read More
Your Business: Cover Star Club

Profile: why this Brewin manager went solo before hitting 30

1 Comment Profile: why this Brewin manager went solo before hitting 30

More and more wealth managers are striking out alone, but few have the bottle to attempt this in their 20s

Wealth Manager on Twitter