McBride falls as costs, HGV driver shortage bite

Shares of Manchester-based cleaning products firm McBride plc fell about 10% on Thursday after it published a trading update for the current financial year ending June 30, 2022.

McBride said it is experiencing “exceptional price increases and supply availability” for raw materials and is having distribution problems due to the shortage of HGV lorry drivers.

The company said it now expects adjusted profit before tax for financial year 2022 to be 55% to 65% lower than current market consensus for full year 2021.

The company is one of Europe’s largest makers of retailer own brand household goods.

“On 14 July 2021, as a result of both the uncertainty surrounding the volatile input cost environment and the success and timing of pricing actions, the board indicated that, at that time, it would not be offering guidance on the outlook for financial year 2022,” said McBride.

“Although only seven weeks into the new financial year, the previously highlighted raw material environment remains extremely challenging both in terms of exceptional price increases and supply availability.

“More recently, and in line with the general trading environment experienced by others, the group has also started to experience distribution challenges, particularly in the UK and Germany as a result of the shortage of Heavy Goods Vehicle (HGV) drivers which has impacted upon both transport availability and cost.

Also as previously indicated, the group continues to discuss margin recovery actions with its customers, mostly across liquids categories.

“McBride’s approach has been to seek a variable pricing surcharge to sales contracts, based upon certain key commodity prices.

The board’s view on input costs for the new financial year remains in line with prior estimates. 

“In terms of customer pricing, although discussions have resulted in agreement for price increases, the effective start dates for price increases are later than targeted.

“The first half of FY22 is now expected to see EBITA at approximately break-even, with profits therefore heavily weighted towards the second half of the year, with the business exiting the year with run-rate profit levels in line with the average of the last few years. 

“As a consequence, the Board expects adjusted profit before tax for financial year 2022 to be 55% – 65% lower than current market consensus for full year 2021, and for net debt at 30 June 2022 to be 5%-10% higher than full year 2021 consensus.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.