McBride shares up 20% as it flags return to profit

Shares of Manchester-based household products firm McBride rose almost 20% on Friday after it published a trading update saying its full year results “will report a return to profitability following the exceptional input cost inflation of the past two years.”

McBride is one of Europe’s largest manufacturers and suppliers of private label and contract manufactured products for the domestic household and professional cleaning and hygiene markets.

The company said that across most of its markets “it is evident that there is a shift to private label as a result of consumers’ growing preference for better value, high quality, private label products as they seek to mitigate the effects of inflation on their household budgets.”

McBride said it now anticipates that adjusted operating profit will be materially ahead of current market expectations.

The firm’s website said that McBride’s biggest shareholder is activist hedge fund Teleios Capital Partners with 24.9%. Duke University Management Company (DUMAC) owns 17.65% and Zama Capital Advisors owns 12.07%.

The company’s trading update, for the 12 months ended June 30, 2023, said: “The group is pleased to confirm that its full year results will report a return to profitability following the exceptional input cost inflation of the past two years, driven first by post Covid-19 supply chain disruptions and more recently by the associated economic and inflationary impacts of the war in Ukraine.

“Volumes were up 5.4% for the full year, following 12.7% growth in the fourth quarter. 

“The improvement in demand for our products has been driven by a combination of business wins and strong demand increases on existing contracts. 

“Across most markets it is evident that there is a shift to private label as a result of consumers’ growing preference for better value, high quality, private label products as they seek to mitigate the effects of inflation on their household budgets.

Overall revenues for the full year, reflecting both volume increases and pricing actions, will show growth of 28.4% on a constant currency basis compared to the year to 30 June 2022.

As a result of the strong fourth quarter trading performance, the Group now anticipates that adjusted operating profit will be materially ahead of current market expectations* and at the top end of the range indicated at the time of our trading statement on 24 April 2023.

Sustainable working capital improvements resulted in Net Debt closing at £166.5m, better than expectations, and the group’s liquidity at £59.3m, significantly higher than the minimum liquidity requirement of £15m applicable under the group’s financing arrangements.”