Household goods firm issues profit warning

Full year pre-tax profits are expected to fall by 15% on current market expectations due to worsening sales, said Manchester-based cleaning and hygiene products firm McBride.

The Middleton firm made the announcement in a trading update for the six months ended December 31, 2019.

Following the appointment of Ludwig de Mot as chief executive on the November 1, 2019, the group initiated a review of its strategy and operations which it expects to report on during the fourth quarter of this financial year.

It added that cost improvement initiatives continue across the group and these are expected to show increased benefits in the second half year.

Revenues from European operations have been affected, compared with its South East Asia markets.

The group’s first half household revenues, at constant currency, were 1.4% lower compared with the prior year following a slowdown in the last two months of the period, especially in the UK.

First half UK revenues were eight per cent lower year-on-year, reflecting weaker private label activity in the period.

France and North continued to see declines versus the prior year (6.8% and 3.7%, respectively), consistent with the second half of the last financial year.

The South, East and Asian geographies performed well in the half year, reporting growth versus the prior year of 15.7%, 1.6% and 10.7%, respectively.

Reflecting the first half performance, the expectations for the rest of the year are reduced and the group now expects full year household revenues to decline by approximately two per cent year-on-year.

Reflecting the decision to exit UK aerosol manufacture in the fourth quarter of the previous financial year, group continuing revenues at constant currency were down 4.4% versus the prior year.

During the first half year, raw material and packaging costs remained largely stable and in line with expectations.

Logistics costs as a percentage of revenues continued to increase, reflecting the higher distribution costs associated with the group’s growing business in Germany.

Net debt closed the period at £113.5m, compared with £120.9m at June 30, 2019, excluding the effect of IFRS 16.

McBride said: “The group remains comfortably within all of its banking covenants. The group will confirm its final net debt balance for the period ending December 31, 2019, including IFRS 16, at the time of its interim results announcement.”

The group’s interim results will be announced on February 20.