Shares in McBride (MCB) jumped 8.3% to 71.5p on Friday after the private-label household-to-personal care products maker said pre-tax profit for the year to next June is expected to be ‘at least 10% ahead’ of the £25.2 million market consensus.
Despite this positive news, McBride’s management ‘remains mindful’ of the continued economic uncertainty created by Brexit and Covid-19 and also anticipates increases in certain input costs in the second half.
CLEANING UP DURING COVID
McBride, which supplies Europe’s top 50 retailers with everything from multi-surface cleaners to washing up liquids and automated dishwash products, has seen demand for many of its cleaning products rise as a result of Covid-19.
In today’s brief trading update, the Manchester-headquartered household cleaning products supplier company said November and December 2020 are ‘now expected to trade very favourably ahead’ of 2019’s weak comparatives, with the result that the board now expects first half sales growth of ‘approximately 2%’.
This compares with the ‘modest growth’ announced in a very recent annual general meeting (AGM) update.
Given this improved top line performance, lower costs and ‘limited operational impact from Covid-19’, McBride now expects to see ‘a material year-on-year improvement in first half earnings’ and to deliver full year profits 10% ahead of current market expectations.
Numis Securities upgraded its adjusted pre-tax profit estimate from circa £25 million to £27.6 million following the update.
‘This is clearly good news and coming circa 10 days after its AGM update reflects improved confidence in the near-term performance of the business,’ remarked the broker, sticking with its ‘hold’ rating but increasing its target price from 69p to 76p to reflect upgrades.
Scheduled for 23 February 2021, McBride’s half year results will be followed by an update on ‘Programme Compass’, the company’s new strategic initiative devised by former finance director and relatively new chief executive Chris Smith, along with details on its new product-led divisional strategies.