McBride successfully implements 'Repair' stage of strategy

Mcbride, a European manufacturer and supplier of co-manufactured private label products, is getting close to achieving its targets for adjusted operating margin and return on capital employed (ROCE).

The group presented the 'Manufacturing Our Future' strategy a year ago, which involved three phases - 'Repair, Prepare, Grow'. The strategy aims to restore the company to its core manufacturing capability and has set targets for adjusted operating margin (EBITA %) at 7.5% and ROCE at 25-30% over the next three to five years.

With the firm’s launch of the 'Repair' phase this year, both targets are close to being achieved with adjusted operating margin rising 1.3 percentage points to 5.3% and ROCE rising 4.6 percentage points to 23.4% for the year ending 30 June 2016.

Adjusted operating profit rose 27% to £36.2m and adjusted profit before tax rose 35.5% to £29.4m. The board said the profit improvement was due to cost savings initiatives, either in overheads or from structural buying improvements.

The group’s overall revenue however fell 3.3% to £680.9m. The board attributed half of this to the impact of a weak euro for most of the financial year. Another factor was the impact of the "Repair" phase, which aimed to reduce the levels of complexity in the company’s customer and product portfolio, cutting group revenues about £20m on an annual basis. Price pressures in most of the group's markets also played a part, especially in the UK, which saw pricing lower overall about 4%.

Cash flow from operations rose 18.8% to £52.5m. Net debt fell 1.6% to £90.9m.

Chief executive Rik De Vos said: "I am delighted to report on the significant progress we have made in the implementation of the Group's strategy, only one year since it was launched. The encouraging financial results for the last year are an early demonstration of what this strategy can achieve and the Board remains confident in the opportunity ahead as we now move into the "Prepare" phase.”

Adjusted diluted earnings per share rose 33.7% to 11.1p per share. Dividend per ordinary share was consistent with the previous period at 3.6p.

The shares fell 2.18% to 170.12p at 1454 BST on Wednesday.