- Upgrade absence disappoints
- Private label market share stabilises
- Good progress with debt reduction
A big beneficiary of the cost-of-living crisis, private-label cleaning products maker McBride (MCB) delivered a broadly positive trading update for the year ended 30 June 2025.
The budget laundry-detergent-to-surface-cleaner manufacturer insisted it had continued to build on the ‘significant improvement in financial performance achieved in recent years’ whilst strengthening its partnerships with European grocery retailers.
Manchester-headquartered McBride also signalled confidence in its long-run prospects by reiterating its intention to reinstate annual dividends.
So why did the shares tumble 15% to 129.4p in early dealings on 16 July? Well, investors appeared disappointed by the absence of another profit upgrade as well as a veiled warning that the inflation-driven shift from brands to private label products has plateaued.
MARKET HAS ‘STABILISED’
‘Whilst demand for private label products remains strong, there are signs that private label market share has stabilised at current levels,’ said McBride, which grew overall revenues by a modest 0.7% during the year to June 2025.
Trading in the second half became more challenging for the company as some retailers sought cheaper formulations and support for promotional campaigns. As McBride explained: ‘In light of continuing inflationary pressures, many retailers are seeking value to support their consumer proposition with an increased requirement for cost out actions to support lower market pricing.’
Total volumes ticked up 4.3% year-on-year with private label volumes up 1.4% and contract manufacturing volumes up 48.9%, driven by the full-year impacts of significant new long-term contracts.
BALANCE SHEET BOOST
There was disappointment among investors as McBride failed to deliver an upgrade to full-year 2025 guidance, with adjusted operating profit seen in line with expectations despite currency headwinds, although the company did hail further progress in strengthening its balance sheet.
Strong cash flow during the year helped McBride reduce its net debt pile by £26.3 million to a better-than-expected £105.2 million, representing a very manageable net debt cover level of 1.2 times.
Peel Hunt, which has a ‘buy’ rating on McBride, forecasts broadly flat adjusted pre-tax profits of £53 million for the year just-ended, rising to £54.7 million and £57 million in full years 2026 and 2027 respectively.
‘Since 2021, private label share has increased by 400 basis points to 35%, as consumers have offset the rise in the cost of living,’ commented the broker.
‘This now looks to have stabilised. However, McBride remains well positioned, in our view, to take share of this market, it continues to win new contracted business, and is actively looking for inorganic opportunities to support its long-term growth.’
MCBRIDE CAN BOUNCE BACK
AJ Bell investment analyst Dan Coatsworth observed there was big demand for supermarket own-brand products between 2022 and 2023 when the UK experienced a sharp rise in the rate of inflation.
‘As a provider of white label goods to supermarkets, cleaning products specialist McBride enjoyed a purple patch as shoppers shunned big brands and went for the cheapest options,’ explained Coatsworth. ‘It’s unfortunate that McBride has now disappointed the market precisely at the point where inflation has reared its ugly head again.
‘There is a line in its trading update that implies the supermarket own-brand boom is past its peak and is now reverting to more normal trends. Investors have taken that remark to mean McBride’s glory days are over.’
Coatsworth added: ‘Given we’ve just seen inflation hit its highest level in a year and a half as food prices rise again, there is a real chance that shoppers will once again think twice about what they put in their basket. That would imply McBride could bounce back, yet investors don’t seem to share this view given how the share price has crashed on the update.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
