Shares in white-label cleaning products company McBride (MCB) slumped 8.5% to 76.5p after the company delivered a major downgrade to its earnings outlook just seven weeks into the new financial year.

The Manchester-headquartered company is now forecasting pre-tax profits for the year to next June between 55% and 65% lower than last year due to supply chain disruption and an inability to pass on higher raw material and transport costs to its customers.


In today’s update, the maker and distributor of everything from laundry detergents and dishwasher tablets to surface cleaners and aerosols warned the previously highlighted raw material environment ‘remains extremely challenging both in terms of exceptional price increases and supply availability’.

More recently, McBride has also started to encounter distribution challenges, particularly in the UK and Germany, due to the shortage of Heavy Goods Vehicle (HGV) drivers which has impacted upon transport availability and cost.

With margins pressured by higher costs for raw materials including chemicals and plastics, McBride has agreed to pass on costs to customers, but the effective start dates for price increases are ‘later than targeted’.


McBride now expects the first half of full year 2022 to see EBITA at around breakeven, with profits heavily weighted towards the second half.

As a result, adjusted pre-tax profit for the year to June 2022 is expected to be 55%-to-65% below the market’s £19.7 million consensus estimate for the recently-ended year to June 2021, itself a downgrade on earlier expectations following a profit warning in May.

The company also warned that net debt at 30 June 2022 is now expected to be 5%-to-10% above the full year 2021 consensus of £121.5 million.


AJ Bell Investment Director Russ Mould commented: ‘McBride’s difficulty in putting up prices quickly enough to compensate for higher input costs are a reminder to investors that pricing power is a key attribute for any firm to have, even if markets are currently being remarkably tolerant of, and generous to, companies which do not make profits and almost seem to lose more money they more customers they grab.’

Mould continued: ‘If inflation does take hold, promises of future profits after the current dash for market share and critical mass may well look less attractive. Investors may shy away from such profitless prosperity and instead focus on companies which can demonstrate their ability to protect margins and still generate profits and cash flow.

‘McBride’s role as a contract manufacturer, or at least a maker of own-label cleaning agents for retailers, means it does not have any pricing power from brands, as it has no brands of its own. Many of its customers are larger and have more muscle when it comes to pricing discussions. And there are other suppliers who can be used as a bargaining chip by customers for good measure.’


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Issue Date: 19 Aug 2021