PZ Cussons plc

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PZ Cussons plc

PZ Cussons House, Bird Hall Lane
Stockport
SK3 0XN
United Kingdom
Telephone: + 44 161 491 8000
Fax: + 44 161 491 8191
Web site: http://www.cussons.com

Public Company
Incorporated: 1879
Employees: 11,659
Sales: £488 million ($935.5 million) (2004)
Stock Exchanges: London
Ticker Symbol: PZC
NAIC: 325611 Soap and Other Detergent Manufacturing; 311225 Fats and Oils Refining and Blending; 325412 Pharmaceutical Preparation Manufacturing; 325612 Polish and Other Sanitation Good Manufacturing; 325620 Toilet Preparation Manufacturing; 335222 Household Refrigerator and Home and Farm Freezer Manufacturing

PZ Cussons plc is a leading manufacturer and distributor of a variety of products, especially soaps and other personal care items, including shampoo, baby powder, and the like. These are marketed under PZ Cussons's flagship Imperial Leather brand and others, including Original Source and Carex. The company also manufactures refrigerators and other white goods, including freezers and air conditioners; detergents and cleansers; feminine hygiene products; olive oil; packaging materials; and even pharmaceuticals. In 2003, PZ Cussons formed a joint venture with Ireland's Glanbia to supply evaporated milk and milk powder in Nigeria. The company also acquired U.K. hair care brand Charles Worthington in 2005. Although based in Manchester, PZ Cussons has long been controlled by the founding Zochonis family, from Greece, and has carved a niche for itself by focusing on various markets in Africa, especially Nigeria, Ghana, Cameroon, and East Africa. The company's African operations continued to represent some 26 percent of its annual sales. Europe, especially the United Kingdom, is the group's largest market, at 43 percent, while the Asia Pacific region, including Australia, accounts for 26 percent of sales. In addition to its African manufacturing sites, the company operates manufacturing plants in Thailand, Poland, Australia, and Athens. In 2005, the company announced that it would shut down its U.K. soap producing facility by 2007. Listed on the London Stock Exchange, the Zochonis family, which includes Chairman A.J. Green, controls as much as 80 percent of the company's stock. The family also is highly active in the company's operations, filling most of the group's primary management positions around the world. In 2004, PZ Cussons posted revenues of £488 million ($935 million).

Trading Origins in the 19th Century

Known as Paterson Zochonis until its name change in 2002, the company's history reached all the way back to the late 19th century, when it was founded as a trading post, called West African Merchants, in Sierra Leone by two partners, George Paterson, originally from England, and George Zochonis, from Greece. Paterson and Zochonis started out by shipping palm oil and other produce, such as palm kernels, cocoa, groundnuts, and seed cottons, as well as animal hides and skins, to the United Kingdom, and bringing back goods from England, such as cloth from Manchester. The business proved strong, and in 1884 Paterson and Zochonis incorporated the company as Paterson Zochonis (PZ).

PZ gradually expanded its range of goods, establishing a degree of expertise in what was considered a difficult trading market. This expertise enabled the company to begin expanding into other African markets and, most important, into Nigeria. PZ set up its Nigerian subsidiary in Lagos in 1899. Like its Sierra Leone brand, the Nigerian subsidiary at first operated as a trading merchant.

George Paterson died in 1934, leaving George Zochonis in control of the company. The Zochonis family was by then already highly involved in the company's expansion, and a company tradition became the placing of members of the extended Zochonis family in key management positions. Indeed, by the beginning of the 21st century, the Zochonis family was said to represent about half of the group's total payroll.

PZ expanded into Ghana in 1934, setting up a trading office in Tema that year. Over its first 50 years, PZ grew from a simple trading house into a major wholesale and retailer of general merchandise for the West African region. The company operated its own shops—often simple stalls in local markets—selling a wide variety of goods. By the early 1950s, PZ's zone of operations covered Liberia, French Guinea, Cameroon, and the Gold Coast.

Public Offering in the 1950s

Yet PZ's interest began to turn toward manufacturing in the late 1940s. In 1948, the company purchased a small soap factory owned by PB Nicholls & Co in Nigeria. The company changed its subsidiary's name to Alagbon Industries Ltd. in 1953. In that year, PZ itself went public, listing its shares on the London Stock Exchange as Paterson, Zochonis & Company.

The rapid growth of the population in Africa, coupled with the development of a consumer market, encouraged PZ to begin seeking to expand its manufacturing operations in the late 1960s. The company turned to Ghana, launching a manufacturing facility there in 1969. White goods, including refrigerators, freezers, and air conditioners, were among the company's first products. In Nigeria, meanwhile, the company had expanded its soap production to include other personal care items. By 1973, the company had decided to launch the production of detergents and refrigerators in Nigeria as well.

The year 1975 marked a major milestone in PZ's history. In that year the company acquired Cussons Group Ltd. Based in Manchester, England, Cussons had originated in 1869 as a chemist's shop founded by Thomas Cussons. By 1909, the business, now under Alex Cussons, had begun to specialize in detergents, acquiring a bleach mill in Salford. The company then entered the production of soap in 1920.

Yet Cussons's fortunes were assured in the 1930s, when the company bought up perfumers Bayley's of Bond Street. That purchase brought Cussons among other things, a popular fragrance known as Imperial Russian Leather. Bayley's had created the fragrance in 1760, at the request of Russia's Count Orloff, a member of the Tsarist court, who wanted a fragrance with a leathery scent. In addition to the distinctive fragrance, Cussons's new soap featured novel packaging, as well as other features, such as a badge that remained visible to the end of the bar's use. These features helped Imperial Leather become England's bestselling bar soap brand, a position held into the next century. Cussons's growing sales led it to complete a new acquisition, of Gerard Bros Ltd. in Nottingham, which became the focus of the company's soap production in the United Kingdom.

Imperial became Cussons's flagship brand as the company established a strong export business, shipping to other parts of the British Empire, notably to Australia and New Zealand. The company also set up a subsidiary in Malaysia in order to market its brands, primarily through other distributors. In the 1960s, Cussons entered Africa, renting facilities to produce soaps and other toiletries and hair care products.

PZ acquired the Preservene Soap Company, based in Richmond, Victoria in Australia in 1976. The purchase allowed Cussons to establish its own manufacturing business in that country and take over its own marketing for Australia and New Zealand for the first time. The Australian business later expanded, adding a detergent factory in Dadenong, Victoria, in 1987.

International Growth in the 1990s

In the meantime, PZ continued its own expansion. In 1977, the company moved into a new direction though the acquisition of Minerva, a company founded in Athens in 1902 for the manufacture and marketing of olive oils, as well as margarine and cooking fats. That company had begun exporting to the North American, African, and Australian markets, as well as to the rest of Europe, in the 1950s. In 1957, Minerva expanded its production capacity with the construction of a new plant in Moschato, in Piraeus.

Yet the personal care market held the most interest for the company. Through the 1980s, PZ made a number of expansion moves, adding to its production capacity as well as extending its reach into new markets. In 1983, for example, the company acquired a soap factory in Kenya. This was followed in 1986 by the acquisition of the Lervia Soap Factory in Thailand. The company's Australian detergent plant launched production in 1987. The following year, PZ entered the Indonesian market as well through the acquisition of PT Jaya Makmur Raya, a manufacturer of soaps, toiletries, and baby powder and other baby products.

PZ's interest shifted to the European market in the early 1990s, especially to the Eastern Europe bloc, newly emerging from decades of Soviet dominance. In 1990, PZ entered Poland, launching exports to that country. By 1993, the company decided to install its own production capacity in Poland, buying up the former state-owned soap plant Pollena Wroclaw. Two years later, PZ acquired a second state-owned company in Poland, Pollena Uroda.

Company Perspectives:

PZ Cussons currently manufactures and distributes over 30 brands across its global network of companies in Europe, Africa and Asia. Our international policy has focused our efforts on specific geographical markets which demonstrate the potential for growth. We develop relevant, high quality and innovative products through having developed a deep understanding of the needs and aspirations of local consumers. These are distributed via the first class networks that have been established over our many years of global trading.

PZ expanded its distribution operations in the second half of the 1990s, starting with the creation of PZ Cussons India in 1995. That subsidiary supplied soaps and talcs to the Indian, Sri Lankan, Nepalese, and Bangladeshi markets. In 1997, PZ established a new subsidiary for its Middle East distribution, in Dubai. Then, in 1988, PZ launched a dedicated marketing subsidiary in Malaysia, which then took over the company's distribution needs for both Malaysia and Singapore. PZ also expanded its manufacturing base, transferring its olive oil production to a newly completed facility in Schimatari.

Personal Care Focus for the New Century

Into the 2000s, PZ adopted a new strategy focusing more strongly on its personal care products operations. As part of that effort, the company changed its name to PZ Cussons in 2002 in order to underline its core business. PZ then began seeking new acquisition opportunities to boost its range of personal care brands. The first of these came in 2003, when the company paid more than £11 million to acquire the Original Source brand. That business had been started only in 1997 with an investment of just £45,000.

PZ added to its personal care line with the purchase of hair care specialist Charles Worthington, for £25 million, in 2004. That acquisition not only gave the company an entry into the U.K. hair care market, it also provided a foothold into the U.S. market.

Difficulties in Russia led PZ to pull out of that country in 2005, representing an end to Imperial Leather's reign of nearly 250 years there. In 2005, also, PZ completed construction of a new production facility in Thailand. At the same time, the company announced that it intended to close its Nottingham, England plant and transfer that production to the Thai plant by 2007. PZ Cussons expected to remain an important name in the international personal care market.

Principal Subsidiaries

Minerva; PT PZ Cussons Indonesia; PZ Cussons Australia; PZ Cussons East Africa Ltd. (Nairobi); PZ Cussons Ghana Industries Limited; PZ Cussons India Private Limited; PZ Cussons Malaysia Sdn. Bhd.; PZ Cussons Middle East and South Asia FZE; PZ Cussons Poland; PZ Cussons Thailand; PZ Cussons UK; PZ Industries PLC (Nigeria); SIPCA S.A. (Cameroon).

Principal Competitors

Doyin Group of Cos.; Madhvani Group; Lever Brothers Private Ltd.; DiverseyLever Marsavco Congo; Procter and Gamble S.A. Proprietary Ltd.; Sinopec Jinling Co.; Unilever PLC; Colgate Palmolive Proprietary Ltd.; Procter and Gamble Co.; Johnson & Johnson.

Key Dates:

1760:: Bayley's of Bond Street creates Imperial Russian Leather fragrance at the request of Count Orloff.
1869:: Thomas Cussons founds a chemist shop in Manchester.
1879:: George Paterson and George Zochonis open a trading office in Sierra Leone, Western Africa Merchants.
1884:: Paterson and Zochonis incorporate their business.
1899:: Paterson and Zochonis open an office in Nigeria.
1909:: Cussons enters bleach production.
1934:: Paterson Zochonis opens an office in Ghana; Cussons acquires Bayley's and launches Imperial Leather as a bar soap.
1948:: Paterson Zochonis acquires a soap manufacturing business in Nigeria.
1953:: Paterson, Zochonis & Company lists on the London Stock Exchange.
1969:: PZ launches manufacturing in Ghana.
1975:: PZ acquires Cussons.
1977:: PZ acquires Greek olive oil producer Minerva.
1983:: PZ acquires a soap factory in Kenya.
1986:: The company begins manufacturing in Thailand.
1988:: A subsidiary is launched in Indonesia.
1993:: Pollena Wroclaw, in Poland, is acquired.
1995:: The company acquires Pollena Uroda in Poland; a marketing subsidiary is established in India.
1998:: Minerva moves production to a new facility.
2002:: The company name is changed to PZ Cussons.
2003:: The company acquires the Original Source personal care brand.
2004:: The company acquires the Charles Worthington hair care brand.