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  • Writer's pictureMark Watson-Mitchell

McBride – a much cleaner profits recovery is in sight

We all know this group’s household and personal care products and it sells over 1bn of them a year.

It is the leading European manufacturer and supplier of private label and contract manufactured products for the domestic and professional cleaning/hygiene markets.

However, over the last couple of years its trading has been tough.

The pace of cost inflation and price increase negotiation time lags helped to push the group into significant losses.

But it is now becoming apparent that measures taken by the group’s Management have been effective and will take it back into profitability in its next year to end June 2024.

For the six months to end December from its continuing operations the group had a turnover of £426.3m (£323.4m).

The half-year adjusted operating loss of £7.9m (£16.9m) was due primarily to exceptional raw material, packaging, logistics, energy and labour cost rises, which were unable to be fully recovered by price increases in the first half.

CEO Chris Smith stated that:

"The first half year required continued high levels of attention to margin recovery in light of ongoing inflationary pressures. Whilst there are some early signs of stabilisation in certain input costs, many raw material costs remain historically high.

Energy and employment costs continue to apply further inflationary pressure, and accordingly, we continue to action mitigations including price increases, product engineering and cost control.

It is pleasing to have returned to positive adjusted operating profit in the last two months of the period, with momentum improving into the second half as a result of higher volumes from new business wins, better customer service levels and pricing actions fully annualising.

All of this is supported by consumer behaviour creating a more favourable environment for private label products."

Group Operations

Established way back in 1927, the Manchester-based McBride (LON:MCB), manufactures and sells private label household and personal care products to retailers and brand owners in the UK, Germany, France, Australia, the rest of Europe, the rest of Asia-Pacific, and otherwise internationally.

The company operates through five segments: Liquids, Powders, Unit dosing, Aerosols, and Asia Pacific.

It employs 3,400 people across 18 locations in 12 countries.

The group develops, manufactures and distributes products for both Private Label clients in the retail segment and Contract Manufacturing for established brands.

In addition, it also has a growing portfolio of its own successful brands within the household category.

Analyst Opinion – estimates of profits in the next year

The consensus view is that the group will this year, to end June, see sales up £200m to £874m, while the massive £35.3m loss of 2022 will be sliced back by £10.0m to £25.3m.

For the coming 2024 June figures some £911m sales are estimated, with a bounce back to £3.55m of pre-tax profits.

Conclusion – shares could move forward again

Five years ago this group’s shares were trading at around 160p, a year ago they were down to 50p.

They are now 24p, at which level the whole group is only valued at £42.5m.

With the hopes of a recovery into profits over the next year or so the shares could well start to move forward again.


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