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McBride Seeks To Chart New Course In 'Tough Trading Environment'

Published on Sep 5 2019 8:41 AM in Private Label tagged: Featured Post / UK / Personal Care / McBridde / Contract Manufacturing / Household Products

McBride Seeks To Chart New Course In 'Tough Trading Environment'

Contract manufacturer McBride has said that it will be focusing on its Household business, as well as seeking to 'realise its ambitions' in Asia, following a full year that saw profits take a hit.

The group, which produces private label products for a number of top retailers, is in the midst of its 'Repair, Prepare, Grow' strategy, in which it has identified a number of actions required to set the business on the right path – a key part of which is the disposal of loss-making operations.

'Repair, Prepare, Grow'

As part of the 'Prepare' phase of its recovery, in the past year it has exited it Personal Care Liquids business (following the disposal of its skincare business in the Czech Republic the previous year), while reducing its loss-making Aerosols business to a single site, after the closure of a facility in Hull earlier this year.

If the Personal Care business is excluded from the group's full-year results, revenue from continuing operations was up 5.0% to £721.3 million (€799.6 million), on a constant currency basis, with adjusted operating profit down 22.9% to £28.9 million (€32 million).

If the Personal Care operation is included, McBride posted a 1.2% decline in sales (on a constant currency basis) for its total operations in the full year to 30 June, to £743.2 million (€832.9 million), while adjusted operating profit was down 21.9% to £28.1 million (€24.2 million).

Elsewhere, the group said that its previously 'break-even' Asian business is now making healthy profits.

Postponed Actions

'As the Group absorbed significant volume growth over the past twelve months, inevitably a number of 'Prepare' actions had to be postponed,' the group said. 'Many of these actions are now underway, together with further initiatives which, given the development of the industry in the meantime, we consider necessary to further prepare McBride for the future.'

It said that it plans to 're-invigorate' the Prepare phase as it enters a new financial year, with the introduction of customer and category segmentation measures, methodology to focus on customer needs, and better management of complexity and overheads'.

In terms of the 'Grow' phase of the business, it will seek to capitalise on fast-growing categories such as laundry capsules and auto dishwash tablets, in which the group is the market leader, embrace the discounter and convenience channels, and seek new branded partners for contract manufacturing.

Tough Environment

McBride said that despite a tough retail environment, it managed to achieve 'good growth' in the UK, Spain, Germany and Asia, as well as making progress in the auto dishwash, laundry capsules and fabric conditioner markets.

It did report 'ongoing weakness' in French and Northern markets, however.

"As previously announced, the past year has seen a shortfall in profit performance versus our core ambitions. The actions taken over the past three years have enabled the Group to improve its competitive advantage and market share in most product ranges, despite difficult trading conditions," commented Chris Smith, the group's interim chief executive.

"The margin environment remains challenging and whilst we see certain input costs stabilising, we will continue to be vigilant on overhead costs and continue to pursue growth opportunities in line with our strategic plans."

McBride said that its expectations for the coming year remain in line with its July trading update, with Household revenues expected to be flat in the year to 30 June 2020, and earnings to be slightly below those of this year.

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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