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McBride warns over first-half operating profit
Personal care and cleaning products manufacturer McBride was under the cosh on Monday as it said full-year earnings would be broadly in line with the prior year while operating profit for the first six months of the year will below the board's expectations.
In a trading update for the six months to the end of December 2017, the company said it starts the second half with household sales growth prospects "significantly" ahead of expectations, but weak trading in the European Personal Care & Aerosols (PCA) division and ongoing cost inflation in the near term. As a result, it now expects full-year earnings to be broadly in line with the previous year,
The company said lower sales levels and a number of mainly external cost challenges, including raw materials, labour market pressures and transportation costs, have hit its first half profit performance, particularly within PCA, meaning that adjusted operating profit for the first six months of the year will be lower than the board's prior expectations.
Chief executive Rik de Vos said: "Whilst the accelerated growth opportunity we are now seeing is an encouraging validation of the group's strategy and the positioning of our Household business, the immediate task of accommodating such substantial growth presents challenges and choices.
"Despite the near-term margin pressures we are experiencing, we remain focused on delivering our medium-term financial targets and we will re-initiate various efficiency projects once this growth has been absorbed. Additionally, restoring the performance of our PCA business, the plans for which are under consideration, remains a top priority."
Looking ahead, McBride said its growth prospects have been significantly enhanced by recent business wins, mainly arising from competitor weakness, with a number of major customers turning to the group for support.
"We anticipate that these opportunities will lead to annualised high-single digit growth for the Household business. These additional sales are anticipated to phase in through the second half of the current financial year and Household is now expected to deliver mid-to-high single digit underlying revenue growth in the second half."
At 1255 GMT, the shares were down 10% to 201p.