Discounting puts pressure on Cussons

The price of palm oil, which is used in many of its products, has shot up, while it faces consumer belt-tightening across key UK and European markets.

Its UK arm is also suffering from intense competition as rivals steal market share with heavy cut-price promotions on shower gels and handwash products.

The firm, which also owns Original Source, Charles Worthington and The Sanctuary spa range, revealed that the more difficult conditions contributed to a 5 per cent fall in European operating profits to 23.7m in the six months to November 30, a decline also driven by the eurozone debt crisis.

Richard Harvey, chairman of PZ Cussons, said full-year expectations were still in place but that current trading conditions and rising raw material prices meant the company remained cautious going forward.

Some analysts reduced forecasts.