Higher costs dampen profits at McBride

DETERGENTS maker McBride saw its pre-tax profits drop by 31% in the six months to December 31 to £15.5m.

Turnover also fell by 1% to £401.2m as the company blamed rising raw materials costs and a weak UK retail market for the slump in profits.

The company said that on a constant currency basis, sales were up by 2% and had been driven by growth in Central and Eastern European markets. The company said that restructuring programmes announced in 2010 (which included job cuts at its large operational base in Middleton, north Manchester) were delivering “in line” with the management’s plans.

Chief executive Chris Bull said that the firm was now concentrating on improving costs and servicing both growth categories and key customer accounts. The company makes both branded and private label detergents for major retailers.

“We believe that the economic environment will cause consumers to be ever more price sensitive, and, by investing in improving our competitiveness, we expect to be able to continue to offer excellent products and value for money,” he said.

Sales in the UK fell by 2% to £159m, whereas sales in Western Europe drooped by 5% to £203.4m. Sales to Eastern Europe grew by 20% to £67.6m fuelled by its recent acquisition in the Czech Republic.

Bull said that continued volatility in the market for raw materials remained the most significant threat to its fortunes, particularly in the short-term.

“The most recent market commodity price increases are already feeding into our material costs with the potential that material costs in the second half could increase by around £7m,” he said.

Bull added that the firm intended to carry out a further restructuring of its supply chain in a bid to save around £11m a year. However, this will lead to a one-off charge of £20m in its full-year results to June 30. This includes the implementation of a group-wide lean manufacturing programme.

“Longer term, we believe our strategy will ensure that the company will emerge well-placed to benefit as the more challenging economic conditions accelerate the switch to private label.”

Net assets increased to £133.9m, from £124.7m at its year end. McBride has four factories in the North West at Middleton, Burnley, Barrow and St Helens.