Risk-tolerant investors should follow respected fund manager Nick Train into PZ Cussons (PZC), the branded consumer goods group embarking on a multi-year turnaround under new chief executive Jonathan Myers.

Admittedly, the company’s profits have disappointed in the past, but there is extraordinary value in its portfolio of personal care, home care and beauty brands which Myers can unlock with the help of finance director Sarah Pollard, a new recruit from Nomad Foods.

Shares believes a refocus behind PZ Cussons’ strongest brands in key markets can boost sales growth, while a simplification of the business is eliminating unnecessary costs, actions which should eventually narrow a wide price to earnings discount to the group’s European home and personal care peers.

Discerning investor Nick Train backs companies that own beloved or essential consumer brands such as PZ Cussons, held in his Finsbury Growth & Income Trust (FGT).

PZ Cussons’ enviable portfolio of personal care and beauty brands includes Carex, the UK’s number one hand wash brand; Imperial Leather soap-to-shower gel; and tanning brand St Tropez.

Train believes owners of trusted brands can not only negotiate but harness digital disruption, giving us added confidence that Myers’ turnaround strategy can pay off.

He has already set about streamlining and focusing the business following an initial review, which helped PZ Cussons deliver 19% first quarter sales growth in combination with a Covid-driven boost in demand for its hand hygiene wares.

Conducted to account for pandemic-induced changes in consumer behaviour, the results of a further review, including Myers’ strategy to deliver sustainable revenue growth and improved margins, will accompany the half-year results on 26 January, potentially acting as a positive near-term catalyst for the share price.

Over the long term, we see scope for strong growth driven by a return to profitability in Africa, increased investment behind the company’s prized portfolio of brands and sharper execution under Myers’ leadership.

Encouragingly, the first quarter update highlighted ‘excellent’ performances in the UK and Indonesia, as well as recovery in the beauty business, Australia and Nigeria, the key Africa market that has long proved a trouble spot for PZ Cussons, yet boasts dramatic long-term potential for consumer goods brands.

Liquidity is strong and net debt is coming down at PZ Cussons, de-risking the investment case. Numis’ current estimates for the year to May 2021 suggest that PZ Cussons will deliver improved pre-tax profit of £63.7 million (2020: £62 million), ahead of £72.7 million in 2022.

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