H1 FY26: Broad-based growth, higher margins and upgraded guidance
PZ Cussons has delivered a strong first half, with growth across its four lead markets and improved profitability. Like-for-like (LFL) revenue rose 9.5% with a healthy balance of price and volume, while adjusted operating profit climbed 31.9% to £35.6 million. Management has raised full-year adjusted operating profit guidance to £53-57 million, up from £50-55 million.
The strategic review is now wrapped up, the balance sheet is stronger after disposals, and the capital allocation framework is clearer. There is plenty to like here, but a few watch-outs remain, notably FX and the timing of marketing spend into H2.
Headline numbers investors should know
| Metric | H1 FY26 | H1 FY25 | Change |
|---|---|---|---|
| Revenue | £269.3 million | £249.3 million | +8.0% |
| LFL revenue growth | 9.5% | 7.1% | n/a |
| Adjusted operating profit | £35.6 million | £27.0 million | +31.9% |
| Adjusted operating margin | 13.2% | 10.8% | +240 bps |
| Adjusted profit before tax | £29.8 million | £19.8 million | +50.5% |
| Adjusted EPS | 4.37p | 3.89p | +12.3% |
| Dividend per share | 1.50p | 1.50p | Unchanged |
| Net debt | £84.3 million | £112.0 million (31 May 2025) | -£27.7 million vs YE |
Where the growth came from
Europe and the Americas – Sanctuary Spa leads the way
LFL revenue rose 1.7%, with the UK still highly competitive but several brands performing well. Sanctuary Spa delivered double-digit growth and record Christmas gifting after stronger in-store execution. Original Source and Childs Farm also grew double-digits, while Carex and Imperial Leather were up low single-digits after a strong prior year.
St.Tropez remains mixed. The US delivered a 12% revenue uplift following the Emerson partnership, but this was more than offset by declines elsewhere due to retailer overstocking. Adjusted operating profit rose to £22.7 million, and the margin improved 160 bps to 22.1%, aided by phasing marketing spend into H2.
Asia Pacific – solid LFL, FX drag and a one-off
LFL revenue was up 5.2%, though reported revenue was flat due to a weaker Indonesian Rupiah and Australian Dollar versus Sterling. Indonesia stood out with 9.4% LFL growth, helped by a successful restage of Cussons Baby and premiumisation via the Cuddle Calm range. ANZ delivered 1.7% LFL growth with share gains in Morning Fresh, Radiant and Rafferty’s Garden.
Adjusted operating profit dipped to £12.2 million, with margin down 100 bps to 13.9%, reflecting a £1.0 million VAT provision. On a statutory basis, the region benefited from £4.8 million of gains from asset disposals in Indonesia.
Africa – Nigeria drives volumes and profits
LFL revenue rose 27.7%, split between 15.0% price/mix and 12.7% volume. Reported revenue was up 30.5% helped by a stronger Naira year-on-year. Adjusted operating profit (excluding prior-year joint venture income) increased to £11.6 million, with margin up 810 bps to 14.7%.
In Nigeria, Family Care grew over 30% LFL with double-digit growth across key brands, and direct distribution expanded to more than 200,000 stores (from 171,000 at FY25). Carex, launched late last year, is on track for more than £3 million revenue in FY26 with accretive margins. Electricals revenue hit £25.3 million, up 35% LFL, cycling supply-chain headwinds in the prior period. There was also an approximate £6 million benefit from revaluing USD trading liabilities after a c.10% Naira appreciation – a non-cash tailwind to note.
Margins up despite lower gross margin
Adjusted gross margin edged down to 40.5% from 41.5%, but adjusted operating margin rose 240 bps to 13.2%. The improvement reflects tight cost control, savings delivery and marketing phasing into H2. It is a positive mix for now, but it does mean H2 will carry heavier brand investment, which could moderate margins later in the year.
Cash, debt and disposals – balance sheet trending stronger
Free cash flow came in at £23.2 million. Net debt fell to £84.3 million, down £27.7 million since 31 May 2025, helped by free cash flow and proceeds from non-operating asset sales. Net debt/EBITDA is now 1.1x on a last-12-months basis.
The group has received £48.5 million from the disposal of its 50% stake in the PZ Wilmar joint venture, with a further £3.4 million expected. Post period end, it also sold land for £9.4 million and collected £27.3 million owed by PZ Wilmar. Management expects £20-25 million of FY26 cash proceeds from surplus asset sales in total, with £15.8 million received to date.
Guidance raised and capital allocation clarified
Trading to January was in line with expectations and guidance has been lifted. The group now expects:
- Adjusted operating profit of £53-57 million (previously £50-55 million)
- Gross cost savings of around £5-10 million, with most reinvested in marketing, brand-building and people
- Net debt/EBITDA around 1.0x at year end (excluding cash in Nigeria)
The Board set out a capital allocation policy targeting net debt/EBITDA of 1.0-1.5x (excluding Nigeria cash), a progressive dividend, and bolt-on M&A in the UK and Australia considered alongside cash returns to shareholders.
Why this matters for shareholders
- Quality of growth – LFL growth of 9.5% with volume contributing, particularly in Nigeria, signals brand health and execution. Excluding Africa, LFL was 3.2% with 0.7% volume growth.
- Margin momentum – Adjusted operating margin up 240 bps despite lower gross margin suggests cost discipline is sticking. Watch Q2-to-Q4 marketing step-up, which will land in H2.
- Balance sheet resilience – Net debt is down, leverage is low, and disposals are bringing in cash. That underpins the dividend and optionality for bolt-ons.
- Portfolio focus – The Wilmar exit and tail brand simplification streamline the story. St.Tropez is early in its reset – US progress is encouraging, but rest-of-world still needs work.
Key watch-outs and moving parts
- FX headwinds – AUD and IDR weakness reduced revenue by £4.1 million year-on-year; currency remains a swing factor for H2.
- Naira sensitivity – H1 benefited from c.£6 million non-cash FX gains on USD liabilities and a more stable backdrop. Any renewed volatility would cut both ways.
- Tax rate – The adjusted effective tax rate rose to 28.2% (from 18.2%) due to geographic mix and the PZ Wilmar disposal impact. The statutory tax charge also reflects increased provisioning after an adverse court ruling for an earlier period.
- Gross margin – Down 100 bps to 40.5%. The operating margin step-up was helped by phasing of spend; sustained improvement will rely on mix, pricing discipline and efficiency.
My take: upgrades justified, execution still crucial
This is a tidy half: broad-based LFL, volume returning in Nigeria, better margins and cash coming through. The guidance lift feels earned, and the balance sheet strengthens the investment case. Brands like Sanctuary Spa, Original Source and Childs Farm are doing the heavy lifting in the UK, while Indonesia’s innovation engine continues to hum.
Risks are manageable, not absent. FX can bite, and the higher tax rate tempers EPS conversion. The marketing ramp in H2 is the right call for long-term brand equity, but it may cap near-term margin upside. Overall, the trajectory is positive, the capital priorities are sensible, and the setup into FY26 looks stronger than it has for a while.
Dates and details investors may want
- Interim dividend: 1.50p per share, payable 9 April 2026 to holders on 6 March 2026
- Adjusted operating profit guidance: £53-57 million
- Cost savings in FY26: around £5-10 million, mostly reinvested
- Expected year-end net debt/EBITDA: approximately 1.0x (excluding cash in Nigeria)
