McBride warns annual profit will miss expectations

McBride has warned annual profit will be lower than forecast after disappointing sales in the last two months of its financial year.

The maker of private label household products said sales in May and June were weaker than expected, taking adjusted pre-tax profit for the year to the end of June below the lower end of analysts’ range of forecasts.

The company also said it was selling its European personal care liquids business for £12.5m.

Second-half revenue at McBride’s household business rose 3.8% on a like-for-like basis and 15.8% in total including its acquisition of Danlind in October 2017. Sales were weaker than expected in May and an improvement in June was not enough to prevent profit missing expectations.

At McBride’s personal care and aerosols business, losses will be bigger than expected, caused mainly by weak revenue. After announcing the closure of its UK aerosols operation in Hull in May, the site is scheduled to close in Spring 2019 and to break even from July 2019.

In a trading update McBride said: “Following weaker than expected sales levels in May and June 2018, the group now expects full year adjusted profit before tax to be marginally below the lower end of analyst expectations.”

Group operating costs were higher than expected in the final quarter, rising temporarily because of higher warehouse costs and inefficiencies at some factories.

McBride agreed to sell factories at Bradford and Ieper, Belgium, to Royal Sanders Group for £12.5m in cash. The factories, which make up the European personal care liquids business, produce hygiene, hair care and oral care products. The business had a loss of £1.9m in the year to the end of June 2017.

Rik De Vos, McBride’s chief executive, said: "The transaction enables the business to be developed as part of a dedicated personal care manufacturer of greater scale and positions McBride's European operations as a focused household business with a clear strategy to deliver sustainable profitable growth."

A day earlier, Tesco and France's Carrefour, both McBride customers, announced a new buying partnership, which analysts at Peel Hunt noted will make McBride "subject to risk of having tighter buying terms, particularly if there are differences in pricing".

On the upside the analysts noted that the supermarkets' alliance "may also provide opportunities given that the company has an excellent relationship with Tesco, where McBride has sole supply on a wide number of lines and the company is seeing a stronger performance in the UK than in France".