- Q1 earnings ahead of forecasts
- Private label growth of 10.8%
- But inflationary pressures persist
Private-label cleaning products maker McBride (MCB) has delivered another earnings upgrade as the cost-of-living crisis continues to drive demand for its budget laundry detergents, dishwasher liquids and surface cleaners.
In an unscheduled update that sent the shares 22% higher to 39.75p, taking year-to-date gains to 90%-plus, McBride said earnings before interest, tax and amortisation (EBITA) were around £8 million ahead of internal forecasts for the first quarter to September 2023.
PRIVATE LABEL DEMAND SURGE
A trusted supplier to Europe’s leading grocery retailers, McBride explained the continued effect of the unprecedented cost-of-living squeeze on consumers continues to drive a surge in demand towards private-label products ‘across all markets’.
As a result, the positive momentum McBride saw in the second half of the year to 30 June 2023 continued into the first quarter of full year 2024.
Steered by chief executive Chris Smith, McBride insisted it has continued its focus as ‘a value-adding partner with our customers as they increasingly grow their own label proposition’.
The Manchester-headquartered firm said first quarter volumes were up 8% year-on-year, with private-label growth of 10.8%. With the economic situation remaining tough, consumers continue to switch away from pricier brands and move towards cheaper private-label products with little or no quality difference.
INFLATIONARY PRESSURES PERSIST
While elevated raw material and packaging material costs remain ‘relatively stable’, McBride warned other costs including wages and energy continue to be ‘a source of upward cost pressure’.
Meanwhile, world events could lead to macro-economic instability which ‘may result in an increased risk of volatility in commodity markets and ultimately into further input cost pressures’, the company cautioned.
Future shares tank as CEO Jon Steinberg makes an early exit
McBride demonstrated further positive progress with its ongoing turnaround in the year to June 2023, generating a swing from losses of £29.6 million to adjusted pre-tax profits of £300,000 amid a return to volume growth and improved profitability in all five divisions.
Reducing net debt, which stood at £166.5 million at year-end, remains ‘an important area of focus’ for management in the current financial year.
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